china tourismresearch

Copyright © 2007 SA Tourism – not to be used without permissionMarketing SA in China Second Edition 2007 1

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This booklet is the result of research South African Tourism did in China since 2004 and is to help market South Africa in China. The aim of the project was to understand the whole of the Chinese market and not the section we are currently seeing. We also did qualitative research in Hong Kong to understand its market and the links in the trade channel. Against this research, the Asia Portfolio and our country office in China have developed activation plans for the market. These plans are available from our office in Beijing (see address on the back cover).

Current information on arrivals from China to South Africa are available on our website www.southafrica.net/research and www.southafrica.net/trade

This booklet is the result of research South African Tourism did in China since 2004 and is to help market South Africa in China. The aim of the project was to understand the whole of the Chinese market and not the section we are currently seeing. We also did qualitative research in Hong Kong to understand its market and the links in the trade channel. Against this research, the Asia Portfolio and our country office in China have developed activation plans for the market. These plans are available from our office in Beijing (see address on the back cover).

Current information on arrivals from China to South Africa are available on our website www.southafrica.net/research and www.southafrica.net/trade

South African Tourism is the official tourism marketing organisation of South Africa. We market across the world focusing on three groups of travellers: international leisure travellers, the domestic and regional traveller, and business tourists who travel to South Africa for conferences and incentives. A key part of our business is to:

South African Tourism is the official tourism marketing organisation of South Africa. We market across the world focusing on three groups of travellers: international leisure travellers, the domestic and regional traveller, and business tourists who travel to South Africa for conferences and incentives. A key part of our business is to:

SA Tourism is the Tourism Marketing Organisation of South Africa

Understand the market

Understand the market

Choose the attractive segments

Choose the attractive segments

Market the destinationMarket the destination


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers

– Our Target Market

– Target Segments

� Current Chinese Travellers to South Africa

– Demographics

– Travel Behaviour

� Potential Market and Their Perceptions

� Activation Strategy

� Hong Kong


Market OverviewMaturity of the Market

* The duration of the four phases of the life cycle may vary significantly; their graphical representation with equal distances may thus be misleading Note: Framework based on Michael Porter: Competitive Strategy, 1980, Chapter 8 (Industry Evolution)

China, as an emerging travel market, is entering the growth phase

Consumer

Product

Marketing

Overall strategy

Competitor

Channel

� Uninformed, Price insensitive, multi-purpose

� Very individualized

� Status oriented

� few

� One-stop-shops

� Unsophisticated, isolated, experience based

� Combine with trade initiatives

� Develop positioning

� Seek information & opportunity; discover leisure

� Emergence of packages (seeking scale effects)

� Emerging specialization / focus

� Integrate products; information/choice provider

� “shout”: get as many as you can

� Facilitate scale effects (e.g., packages)

� Very informed, price sensitive, focus on leisure

� Specialized packages

� High competition

� Clear focus

� Specialization; Information provider

� Adapt trade and market to select segments

� Understand segments and select

MarketMarketSymptomsSymptoms

TourismTourismAuthorityAuthorityActionsActions

introduction growth maturity

KenyaNigeria

US

Germany, Netherlands,

France, UK, Japan

% of population

travelling for leisure

Time*

Tourism Industry Life Cycle Italy

SADCChina, India

South Africa

This phase may be very long

Australia

Botswana

Canada


Facts about ChinaFacts about ChinaFacts about China

Geographic Characteristics

� Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam

� 9,596,960 Square Kilometers (slightly smaller than the US)

Population

� 1,313,973,713 (July 2006 est.)

� Annual population growth (2006): 0.59%

Gross Domestic Product

� $10 Trillion (2006 est.)

� GDP per capita $7,198*

� Annual GDP growth 10.5% (2006 est.)

Geographic Characteristics

� Eastern Asia, bordering the East China Sea, Korea Bay, Yellow Sea, and South China Sea, between North Korea and Vietnam

� 9,596,960 Square Kilometers (slightly smaller than the US)

Population

� 1,313,973,713 (July 2006 est.)

� Annual population growth (2006): 0.59%

Gross Domestic Product

� $10 Trillion (2006 est.)

� GDP per capita $7,198*

� Annual GDP growth 10.5% (2006 est.)

Market OverviewGeneral Statistics

China accounts for 20% of the world's population

Note: * International dollarsSource: CIA Fact Book, China, 2007; International Monetary Fund, World Economic Outlook Database, September 2006; Time Magazine, 11 January 2007

Sichuan

Yunnan

Hainan

Fujian

Guangdong

Zhejiang

Jiangsu

Shanghai

Shandong

Heilongjiang

Hubei Anhui

HenanShaanxi

Shanxi

Hebei

Beijing

Guangxi

Xinjiang

Qinghai

Tibet

Gansu

Guizhou

Ningxia

Inner Mongolia

Jilin

Liaoning

JiangxiHunan

Chongqing

Tianjing


Chinese Population by Age Group Chinese Population by Age Group –– Male and FemaleMale and Female

Market Overview Age Characteristics

Source: www.iiasa.ac.at/Research/LUC/ChinaFood/data/anim/pop_ani.htm; United Nations (1999): World Population Prospects, The 1998 Revision, New York

A fertility decline since the mid-1970s and the further increase in life expectancy gives rise to an ageing Chinese population


Market Overview Regional Characteristics – Population and Income

Tier 1: < 10,000 RMB

Tier 2: > 10,000 RMB

Liaoning Pop: 42.2MM

BeijingPop: 14.9MM

XinjiangPop:

19.6MM

QinghaiPop:

5.4MM

Xizang/TibetPop: 2.7MM

YunnanPop:

44.2MM

Sichuan Pop:

87.3MM

GansuPop: 26.2MM

NingxiaPop: 5.9MM

ShaanxiPop:

37.1MM

Shanxi Pop:

33.4MM

HenanPop:

97.2MM

HubeiPop: 60.2MM

GuizhouPop: 39MM

GuangxiPop:

48.9MM

HainanPop:

8.2MM

GuangdongPop: 83MM

JiangxiPop:

42.8MM

FujianPop: 35.1MM

Zhejiang Pop: 47.2MM

AnhuiPop:

64.6MM

Jiangsu Pop: 74.3MM

ShandongPop: 91.8MM

HebeiPop: 68.1MM

Inner MongoliaPop: 23.8MM

JilinPop: 27.1MM

HeilongjiangPop: 38.2MM

HunanPop: 67MM

ShanghaiPop:

17.4MMChongqing

Pop: 31.2MM

TianjinPop:

10.2MM

Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not Special Report, September 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound Market

Guangzhou

Annual Urban Disposable Income

Close to a third of the country’s population can be found in four provinces (Henan, Sichuan, Shandong, Guandong) while wealth is concentrated in the coastal regions


Market Overview Regional Characteristics – Income

Shanghai and Beijing residents enjoy the highest standard of living in China

16,68315,638

14,54613,628

11,467 11,17510,482

9,438 9,221 9,1068,008

0

3,000

6,000

9,000

12,000

15,000

18,000

Shanghai Zhejiang Tianjin Jiangsu Chongqing Liaoning

Per Capita Annual Disposable Income of Urban Households, 2004

RMB

Beijing Guangdong Fujian Shangdong Tibet

Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005


3340

49

48

1812

0%

20%

40%

60%

80%

100%

2001 2006

Agriculture

Industry(includingconstruction)

Services

Market OverviewGDP and Relative Wealth

Note: * International dollarsSource: CIA World Factbook; International Monetary Fund, World Economic Outlook Database, September 2006; www.asiasource.org/profiles

Composition of the GDP – 2001 vs. 2006

Percentage Contribution

China remains a poor country with a relatively low GDP per capita even when compared to other developing nations

Wealthiest Countries vs. Developing Countries, 2005

34,273 Canada7

33,479 Hong Kong8

33,432 Austria9

32,571 Switzerland10

18,341Czech Republic38

14,109Argentina50

12,161South Africa55

11,937Chile57

11,523Libya58

34,740 Denmark6

35,115Iceland5

40,610 Ireland4

41,399 United States3

42,364 Norway2

69,800Luxembourg1

10,186Mexico65

7,198China (People’s Republic)87

8,561Brazil68

8,368Thailand69

3,320India122

GDP per capita ($*)CountryRank


31,817

25,718

22,731 22,633 22,413 22,08120,867 20,666 20,064 19,843

2,9621,010 651

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

U.S

.

UK

Fra

nce

Ger

man

y

Can

ada

Bel

gium

Sw

eden

Italy

Aus

tralia

Japa

n

Bra

zil

Chi

na

Indi

a

Per Capita Personal Disposable Income per Annum1 (PPP), 2006

USD

The disposable income of the Chinese population is fractionally higher compared to that of India, but lower than fellow developing nation, Brazil

Market OverviewRelative Market Attractiveness (Wealth)

1 Personal Disposable Income is personal income after the deduction of personal direct taxes and fees, and current transfers abroad (such as gifts) – EIU DefinitionSource: EIU 2006


83

66 64

38

33

22 22 22 21 19 18 17 16 16 14 14 12 10 10 8 8 8 8 7 7 7 7 7 7 6 6 6 5 5 5 5 4 4 4 4

0

30

60

90

Ger

man

y

UK

US

A

Chi

na

Mal

aysi

a

Japa

n

Rus

sia

Italy

Hon

g K

ong

Can

ada

Fran

ce

Net

herla

nds

Sin

gapo

re

Ukr

aine

Mex

ico

Sw

eden

Sw

itzer

land

Rep

Kor

ea

Bel

gium

Turk

ey

Taiw

an

Hun

gary

Aus

tria

Pol

and

Egy

pt

Bel

arus

Den

mar

k

Rom

ania

Cze

ch

Indi

a

Finl

and

Nor

way

Irela

nd Iran

Spa

in

Indo

nesi

a

Bul

garia

Aus

tralia

Sau

di

Lith

uani

a

Market OverviewRelative Market Attractiveness (Travel Propensity)

Note: Long-Haul outbound data was calculated using the proportions estimated from WTO data source and applying it to the Euromonitor data. It is the closest approximation as this data is not available. Data for the USA was sourced from U.S. Department of Commerce, ITA, Office of Travel and Tourism Industries, September 2006 as 2005 WTO data was incomplete and skewed the results.

Source: Euromonitor

Top 40 Outbound Markets in the World — 2005

Mill

ion

Mill

ion

14.8

12.4

5.1

4.7

4.3

3.9

3.8

3.4

3.2

3.0

2.9

2.9

2.1

2.1

2.0

1.7

1.4

1.3

1.1

41

0

9

18

27

36

45

US

A

UK

Japa

n

Sw

eden

Mal

aysi

a

Can

ada

Chi

na

Ger

man

y

Aus

tralia

Fran

ce

Sin

gapo

re

Indi

a

Indo

nesi

a

Rep

Kor

ea Italy

Egy

pt

Rus

sia

Bra

zil

Isra

el

UA

E

38%34%55%8%27%10%21%60%47%19%17%83%5%10%22%14%36%56%22%64%

Long-Haul as a % of

Total Outbound

Top 20 Long-Haul Outbound Markets — 2005


Market OverviewOverseas Travel

31.028.5

20.2

16.6

12.110.5

9.28.4

4.53.73.7

34.5

2.9

5.35.1

0

10

20

30

40

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Total Outbound Travellers, 1992–2006

Number of Travellers (Millions)

’92–’06 CAGR:

19.3%

Source: Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; Combined SAT Departure Survey Dataset, 2002–2005

The Chinese travel market has been growing rapidly and the WTO predicts it will be the biggest travel market in the world by 2020


Market OverviewVacation Participation

10%

4%

2%

0%

2%

4%

6%

8%

10%

12%

Total Population Urban Population Population of Guangzhou, Shanghaiand Beijing

Travel Intensity of the Chinese Population, 2004

Percentage of

Population that Travel

Source: CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not, September 2005

In 2004, outbound departures represented only two percent of the population of China


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Travel PatternsMain Destinations

Hong Kong and Macau

71%

Source: Asia Travel Tips.com (www.asiatraveltips.com) “New ETC / UNWTO Study on Chinese Outbound Tourism Market to Be Launched at ITB 2007”; U.S. Dept. of Commerce “China Outbound Tourism Industry”

The market is dominated by travel to Hong Kong and Macao: outbound departures to these destinations constitute 71% of all Chinese outbound travel

Other 7%

Other Asia 17%

Europe5%

Regional Distribution of Outbound Travel, 2005

13,525

8,479

1,117

845

843

770

596

532

477

355

0 6,000 12,000 18,000

Korea

Macau

Hong Kong

Thailand

USA

Singapore

Top 10 Outbound Destinations, 2005

Number of Travellers (Thousands)

Japan

Vietnam

Russia

Malaysia

WTO estimates 100MM outbound

Chinese tourists by 2020

WTO estimates 100MM outbound

Chinese tourists by 2020

SA represented 2% of “Other” arrivals and 0.5% of non-Hong

Kong/Macau arrivals


60

27

40

73

0%

20%

40%

60%

80%

100%

1993 2003

Travel forprivate reasons

Travel for non-private reasons

Travel PatternsTravel Purpose

Source: Xu Fan, Marketing on China Outbound Tourism

The structure of the Chinese outbound market has changed dramatically over the last decade: in contrast to the situation in 1993, more than 70% of Chinese outbound tourists travelled for private reasons in 2003

Structure of Outbound Passengers, 1993 and 2003

Percent Travellers


Chinese arrivals to South Africa are comparable to arrivals from Canada and India

443

249

183

110 112

7048 34 34 37 26

488

259 255

125106

8954 49 44 42 32

0

100

200

300

400

500

600

UK

Ger

man

y

US

A

Net

herla

nds

Fra

nce

Aus

tralia

Italy

Can

ada

Indi

a

Chi

na (i

nlc

Hon

g K

ong)

Japa

n

2002

2006

Source: SAT

5.08%3.23%6.81%9.74%2.93%6.37%-1.36%3.09%8.68%0.94%2.46%‘02–‘06 CAGR

Thou

sand

s of

Arr

ival

s

Total Volume by Market (excluding Africa), 2002 and 2006

Travel PatternsImportance to South Africa


389,525,83444,3528,7051.8910%China

347,925,64551,4647,2282.3343%Italy

393,259,79936,04513,0581.705%India

720,711,128101,1397,1792.5010%France

1,212,223,110116,24410,6792.5021%Netherlands

2,762,411,837249,50411,1422.2515%Germany

2,409,343,703233,41810,3481.903%USA

4,534,943,950469,7309,8321.908%UK

425,044,53540,81810,6242.136%Canada

Value (Rand)3ArrivalsSpend Per Trip in SA (Rand)3Distribution2Seasonality

Index1Market

1 An index value of 0% represents perfect seasonality, i.e. the market is not characterised by large fluctuations from month to month. A value of 100% means that seasonality is very poor, i.e. the market is characterised by large fluctuations month by month; 2 Average number of provinces visited by all foreign tourists; 3Total Foreign Direct Spend (excl capex)Source: Combined SAT Departure Survey Dataset, 2005

Travel PatternsImportance to South Africa

Although Chinese arrivals to South Africa are higher than arrivals from Canada and India, the economic impact of Chinese travellers is currently smaller

Importance to South Africa, 2005


41,96244,352

51,265

30,595 29,804

37,129

42,991

0

10,000

20,000

30,000

40,000

50,000

60,000

2000 2001 2002 2003 2004 2005 2006

Travel PatternsTravel to South Africa

Source: Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; Combined SAT Departure Survey Dataset, 2002–2005; SAT Arrivals, 2006

Chinese arrivals to South Africa grew at an annual average rate of 3% between 2002 and 2006

Chinese Inbound Tourists to SA, 2000–2006

’02–’06 CAGR:

3.2%

Number of Travellers


Travel PatternsTravel to South Africa

37,12942,991

51,26544,352

0

20,000

40,000

60,000

2002 2003 2004 2005

Arrivals to SA

No. of nights

Spend per trip to SA

(Rand)

Spend per day in SA

(Rand)

Source: Combined SAT Departure Survey Dataset, 2002–2005

Despite arrivals showing positive growth over the period 2002-2005, spend has decreased considerably

12.4

21.3 21.7

16.0

0

5

10

15

20

25

2002 2003 2004 2005

14,01911,872

8,7059,458

0

5,000

10,000

15,000

20,000

2002 2003 2004 2005

1,236

551 530451

0

500

1,000

1,500

2002 2003 2004 2005

(’02–’05)CAGR

6.1%

(’02–’05)CAGR

-14.7%

(’02–’05)CAGR

-24.6%

(’02–’05)CAGR

9.1%

Arrivals from China to South Africa, 2002–05 Spend Per Trip from China to SA, 2002–05

Spend per Day in SA, 2002–05Length of Stay in SA, 2002–05


Travel PatternsGrowth in Arrivals

42,991

51,265

44,352 41,96237,129

34,500,000

31,000,00028,500,000

20,200,000

16,602,300

0

20,000

40,000

60,000

80,000

100,000

2002 2003 2004 2005 20060

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000China Inbound to SAChina Outbound

South Africa is not yet fully capitalising on the Chinese outbound tourism boom

Chinese Travellers: Total Outbound vs. Inbound to South Africa, 2002–2006

Travellers

20.1%3.2%

Total OutboundInbound to SA’02–’06 CAGR

Source: Combined SAT Departure Survey Dataset, 2002–2005; Dr Wang / Xinjun, A Study on the Development of China’s Outbound Tourism Market; International Forum on Chinese Outbound Tourism, 2006; SAT Arrivals, 2006


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


ChannelStrategic Position of South Africa in the China Travel Market

Low maturity of Product

Lowmaturity of

Chinese travel market

high

low

low high

Low number of

pax (market share)

Low variety of packages

Low market penetration

Increasing growth rates

High price levels

Low market transparency

Low consumer sophistication

and experience

Low tendency of channel to specialize

High relative price

Low frequency of tour groups

South Africa is a low scale product within a market which has not yet developed sophisticated demand or supply structures

Low knowledge of sales staff re

product

Profitability driven by market access

SA as a tourist SA as a tourist product in product in

ChinaChina


ChannelStrategic Position of South Africa in the China Travel Market

Product Evolution

Market Evolution

Mature

New

Emerging

Established

Tourism Product and Market Life Cycles in Group Package Tour Prevalent Markets

SA Product in Hong

Kong

Invention / Reinvention

Strategy

Scale Strategy

SA Product in Japan

SA Product in ChinaConcentration

Strategy

South Africa as a travel product in China remains in its emerging phase


Consumer Insights and Activation Strategies should be recalibrated earlier than in other markets

Consumer Insights and Activation Strategies should be recalibrated earlier than in other markets

ChannelMarket Characteristics

Source: Development of Chinese Travel Agencies; Monitor Analysis

Emerging and Fast Changing MarketEmerging and Fast Changing MarketEmerging and Fast Changing MarketCurrent Structural Characteristics of the Market

Current Structural Characteristics of Current Structural Characteristics of the Marketthe Market

� Leisure travel is concentrated in 3 golden weeks

� Group tour is the dominant form of leisure travel

� Organization sponsored leisure travel is significant

� ADS positively influences choices of outbound travel destinations

� There are 3 distinct regional markets

� Integrated travel agencies dominate the self-funded leisure travel market

� Foreign companies participate mostly through HK

� Leisure travel is concentrated in 3 golden weeks

� Group tour is the dominant form of leisure travel

� Organization sponsored leisure travel is significant

� ADS positively influences choices of outbound travel destinations

� There are 3 distinct regional markets

� Integrated travel agencies dominate the self-funded leisure travel market

� Foreign companies participate mostly through HKC

hann

els

Con

sum

ers

� Highly fragmented market with large number of players at city level

� No true national players, largest travel agencies have regional influences

� Little differentiation, all players are very similar in structure and selling commodity products

� No universally well recognized brand in the market

� Intense competition due to large number of players and little differentiation

� Particularly for smaller volume destinations, group failure is prevalent so scale is key

� Highly fragmented market with large number of players at city level

� No true national players, largest travel agencies have regional influences

� Little differentiation, all players are very similar in structure and selling commodity products

� No universally well recognized brand in the market

� Intense competition due to large number of players and little differentiation

� Particularly for smaller volume destinations, group failure is prevalent so scale is key

Fast changing market conditions drive marketing uncertainties


ChannelPolicy Environment

1949� Communist party

established People’s Republic China

� Foreign participation generally barred in Chinese economy

1954� CITS established

for inbound travel only

1950 1960 1970 19901980 2000

1957� CTS established

to service overseas Chinese travel in China

1980� CYTS established

as an all purpose travel agency

1980s� China broke away

from centralized economy

� Organizational outbound travel becomes pervasive

1987� CITS, CTS, CYTS

formally break apart� More independent

travel agencies established

� Number of travel agencies growing rapidly

1983� HK was first

approved ADS destination

1990s� Chinese economy

becomes highly regionalized

� Beijing, Shanghai and Guangzhou become 3 key economic centres

1999� First year of golden

week policy� Aimed to boost

domestic consumption

� Might be replaced by paid vacation

Source: Development of Chinese Travel Agencies; Monitor Analysis; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not, September 2005

Social andeconomic change

Travel industrychange

2006

2006� Now 81 ADS

countries / regions; the USA is not on this list

2003� SA is granted

ADS

China’s tourism market has historically been shaped by government policy


ChannelStructural Issues

Consumer PerspectiveConsumer Consumer

PerspectivePerspective

Golden WeeksGolden WeeksApproved Destination Status (ADS)Approved Destination Status (ADS)

� ADS countries have the lowest visa barriers and are best promoted– Attracts large number of self-funded

leisure travellers� The number of ADS destinations is

expanding rapidly, so ADS alone is not sufficient to stimulate growth

� ADS countries have the lowest visa barriers and are best promoted– Attracts large number of self-funded

leisure travellers� The number of ADS destinations is

expanding rapidly, so ADS alone is not sufficient to stimulate growth

� The Chinese government has instituted a policy creating three week-long holidays

� Intent was to stimulate domestic consumption, but its future now appears to be confirmed

� The Chinese government has instituted a policy creating three week-long holidays

� Intent was to stimulate domestic consumption, but its future now appears to be confirmed

Product StructureProduct StructureSponsored TravelSponsored Travel

� The Chinese market is marked by an unusually high percentage (almost 50%) of sponsored travellers

� Sponsored travel typically follows a distinct buying process

� The Chinese market is marked by an unusually high percentage (almost 50%) of sponsored travellers

� Sponsored travel typically follows a distinct buying process

� SA is priced relatively high in the market as compared to its competitors

� SA tours are fairly uniform and based roughly on the HK tour model

� SA is priced relatively high in the market as compared to its competitors

� SA tours are fairly uniform and based roughly on the HK tour model

111

222

333

444

Four key structural issues powerfully influence traveller behaviour


-20

0

20

40

60

80

100

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2006

� Outbound travel agencies can only organize vacation package tours to ADS locations – Can’t promote leisure travel to a a non-ADS

destination� Outbound travel agencies are responsible for

screening tourist candidates for potential over-stayers

� Chinese citizens can individually travel to non-ADS countries provided they get visas

� Outbound travel agencies can only organize vacation package tours to ADS locations – Can’t promote leisure travel to a a non-ADS

destination� Outbound travel agencies are responsible for

screening tourist candidates for potential over-stayers

� Chinese citizens can individually travel to non-ADS countries provided they get visas

ChannelStructural Issues: Approved Destination Status

Approved Destination Status

Number of ADS

Countries

Hong KongMacao (1983)

Thailand (1988)

Singapore Malaysia (1990)

Philippines (1992)

South Korea (1998)

Australia New

Zealand (1999)*

Japan*Vietnam

Cambodia Myanmar

Brunei (2000)

Nepal Malta

TurkeyEgypt

Indonesia (2002)

2 3 5 6 7 914

19

28

* Selected ADS countries are only approved for Beijing, Shanghai and GuangdongSource: China National Tourism Administration

EUIndia

Maldives Sri Lanka

S. AfricaCroatia Hungary Pakistan

Cuba (2003)

81

Sweden Iceland Norway

Switzerland Lichtenstein

Jordan Ethiopia Kenya

Mauritius Tanzania Tunisia Zambia

Zimbabwe Northern Marianas

Fiji Vanuatu Russia

Brazil Mexico Peru Antagua

& Barbuda Barbados

Laos Mongolia Tonga Island

Grenada Bahamas St Lucia

UK (2004–2006)

11

China had established ADS agreements with 28 countries / regions when the research was originally undertaken in 2004, it reached 73 by December 2005 and climbed to 81 by March 2006


ChannelStructural Issues: Sponsored Travel

Reasons for Sponsored TravelReasons for Sponsored Travel

Sichuan

Yunnan

Hainan

Fujian

Guangdong

Zhejiang

Jiangsu

Shanghai

Shandong

Heilongjiang

Hubei Anhui

HenanShaanxi

Shanxi

Hebei

Beijing

Guangxi

Xinjiang

Qinghai

Tibet

Gansu

Guizhou

Ningxia

Inner Mongolia

Jilin

Liaoning

JiangxiHunan

Chongqing

Tianjing

Beijing� 12,000 South

African PAX� 70% Sponsored

Shanghai� 4,000 + South


Guangdong� 9,000 South


� Common in state owned enterprises (SOE) and joint ventures (JV)– Salaries are low for SOE employees and

Chinese employees in JVs– Sponsored travel is a form of compensation

� Less common in wholly owned foreign enterprises (WOFE)– Salaries are high in WOFE

� Also common are company sponsored government trips– An effective means of government

relationship building

� Common in state owned enterprises (SOE) and joint ventures (JV)– Salaries are low for SOE employees and

Chinese employees in JVs– Sponsored travel is a form of compensation

� Less common in wholly owned foreign enterprises (WOFE)– Salaries are high in WOFE

� Also common are company sponsored government trips– An effective means of government

relationship building

Sponsored Travellers Are Valuable Consumers

Sponsored Travellers Are Valuable Consumers

� Concentrated demand, no need for aggregation – Organizational buyer acts as demand

aggregator� Less price sensitive

– Not paying out of own pockets– Company established budget

� Relatively easier to identify targets – Number of organizations is relatively small

� Concentrated demand, no need for aggregation – Organizational buyer acts as demand

aggregator� Less price sensitive

– Not paying out of own pockets– Company established budget

� Relatively easier to identify targets – Number of organizations is relatively small

Source: Monitor Interviews; Monitor Analysis

22

Close to 50% of leisure travel is sponsored by organizations


ChannelStructural Issues: Golden Weeks

Source: Development of Chinese Travel Agencies; Monitor Analysis

EffectsEffectsRationalesRationales

� Government sees growth in service industry as a solution to unemployment in the failing state owned sector

� Government believes the high saving rate inhibits economic growth

� Government wants to stimulate the domestic economy by encouraging domestic consumption

� Government sees growth in service industry as a solution to unemployment in the failing state owned sector

� Government believes the high saving rate inhibits economic growth

� Government wants to stimulate the domestic economy by encouraging domestic consumption

� Not yet clear if the golden week policy has stimulated domestic consumption or merely changed the consumption pattern

� Travel and other leisure activities became highly concentrated around the 3 golden weeks

� Airports and train stations are over-crowded, hotels over-booked and prices higher during the golden weeks

� “Prices are generally 10%–20% higher during the golden weeks because our costs are higher.”

– CYTS HO

� Not yet clear if the golden week policy has stimulated domestic consumption or merely changed the consumption pattern

� Travel and other leisure activities became highly concentrated around the 3 golden weeks

� Airports and train stations are over-crowded, hotels over-booked and prices higher during the golden weeks

� “Prices are generally 10%–20% higher during the golden weeks because our costs are higher.”

– CYTS HO

DecisionsDecisions

� Switch work days around public holidays with weekend days to make 3 one week holidays

� The intent was to encourage consumption of goods and services, especially travel related services, with longer holidays

� Switch work days around public holidays with weekend days to make 3 one week holidays

� The intent was to encourage consumption of goods and services, especially travel related services, with longer holidays

33

Golden Weeks are a policy started in 1999 to boost the domestic economy


ChannelStructural Issues: Golden Weeks


33

Sponsored Travellers Travel Outside the Golden Weeks

Sponsored Travellers Travel Outside the Golden Weeks Policy Could Be Changing SoonPolicy Could Be Changing SoonChinese Self-funded Travellers Don’t

Have Flexible Vacation TimesChinese Self-funded Travellers Don’t

Have Flexible Vacation Times

� Sponsored travel is “business”– Although 80% of the activities

are leisure, it is still considered work. Therefore it doesn’t overlap with national holidays

� Sponsored leisure travel could loose part of its appeal if scheduled during national holidays– Takes away personal leisure

time– Lower enjoyment because of

crowded transportation and attractions

� Sponsored travel is “business”– Although 80% of the activities

are leisure, it is still considered work. Therefore it doesn’t overlap with national holidays

� Sponsored leisure travel could loose part of its appeal if scheduled during national holidays– Takes away personal leisure

time– Lower enjoyment because of

crowded transportation and attractions

� Golden weeks strain transportation infrastructure– Overcrowded airports and

railway stations

� Strain domestic product capacity– Overbooked / sold hotels,

attractions– Travellers have bad

experiences; lots of complaints

� Policy may shift towards annual paid holiday– Internal discussion within

government at present– Unclear when, if ever, the new

policy will be implemented

� Golden weeks strain transportation infrastructure– Overcrowded airports and

railway stations

� Strain domestic product capacity– Overbooked / sold hotels,

attractions– Travellers have bad

experiences; lots of complaints

� Policy may shift towards annual paid holiday– Internal discussion within

government at present– Unclear when, if ever, the new

policy will be implemented

� Most Chinese don’t have paid holidays other than the 3 golden weeks– They have no choice but to

travel during Chinese New Year, May Day and National Day holidays

� Chinese like to travel with family and / or friends– It’s difficult to fit the schedules

together other than during the 3 golden weeks

� Most Chinese don’t have paid holidays other than the 3 golden weeks– They have no choice but to

travel during Chinese New Year, May Day and National Day holidays

� Chinese like to travel with family and / or friends– It’s difficult to fit the schedules

together other than during the 3 golden weeks

Golden Weeks are the busiest leisure travel times


ChannelStructural Issues: Golden Weeks – Constrained Airlift Capacity To SA

Sichuan

Yunnan

Hainan

Fujian

Guangdong

Zhejiang

Jiangsu

Shanghai

Shandong

Heilongjiang

Hubei Anhui

HenanShaanxi

Shanxi

Hebei

Beijing

Guangxi

Xinjiang

Tibet

Qinghai

Gansu

Guizhou

Ningxia

Inner Mongolia

Jilin

Liaoning

JiangxiHunan

Chongqing

Tianjing

South Africa

Hong Kong

Malaysia

Singapore

Beijing (12,000 PAX)�Hong Kong �South Africa�Singapore �South AfricaAirline presence: Singapore Air, Malaysia Air, Cathay

Beijing (12,000 PAX)�Hong Kong �South Africa�Singapore �South AfricaAirline presence: Singapore Air, Malaysia Air, Cathay

Shanghai (4,000 PAX)�Hong Kong �South Africa�Singapore �South Africa�Kuala Lumpur �South AfricaAirline presenceCathay, Singapore Air, Malaysia Air

Shanghai (4,000 PAX)�Hong Kong �South Africa�Singapore �South Africa�Kuala Lumpur �South AfricaAirline presenceCathay, Singapore Air, Malaysia Air

Guangdong (9,000 PAX)�Hong Kong �South Africa

Airline presenceSingapore Air, Malaysia Air

Guangdong (9,000 PAX)�Hong Kong �South Africa

Airline presenceSingapore Air, Malaysia Air

SAA 7 flights per weekCathay 5 flights per week

Singapore Airlines 7 flights per week

Channels complain of airlift capacity constraints during golden weeks

Channels complain of airlift capacity constraints during golden weeks

� Chinese travellers make purchasing decisions late– Difficult to do advance booking– Airlines don’t trust Chinese travel agency’s

advance booking plans� Ad hoc booking made difficult by

– SAA does not fly to Beijing or Shanghai but now has an office in Beijing

– There is no market mechanism to consolidate last minute bookings

� There are insufficient flights during 3 golden weeks– International airlines do not respond to

Chinese golden weeks demand because of yearly fluctuations and last minute booking

� There is a general frustration within the channel for golden weeks flight tickets

� Perception within the channel that sending groups to SA is difficult

� Chinese travellers make purchasing decisions late– Difficult to do advance booking– Airlines don’t trust Chinese travel agency’s

advance booking plans� Ad hoc booking made difficult by

– SAA does not fly to Beijing or Shanghai but now has an office in Beijing

– There is no market mechanism to consolidate last minute bookings

� There are insufficient flights during 3 golden weeks– International airlines do not respond to

Chinese golden weeks demand because of yearly fluctuations and last minute booking

� There is a general frustration within the channel for golden weeks flight tickets

� Perception within the channel that sending groups to SA is difficult


Malaysia Airlines 3 flights per week

Note: Consumer research findings indicate that late

bookings are the exception rather than the norm

33


ChannelStructural Issues: Product Structure

EuropeEuropeEurope

South East Asia

South East South East AsiaAsia

Australia and New ZealandAustralia and Australia and New ZealandNew Zealand

SASASA

RussiaRussiaRussia

Destinations Price (RMB)Price (RMB)

14,000–16,000

4,000–9,600

10,000–16,800

11,000–18,000

12,000–23,000

Average Number of Days


8

7

9

10

10

Price per DayPrice per Day

1,875

800

1,489

1,500

1,500

Direct FlightDirect Flight

No

Daily

Daily

2x per week

Daily

Flight Time (Hours)

Flight Time (Hours)

14

7

13

8

9

Note: CITS (Head Office) used as sampleSource: Channel Interview and Visits

SA is priced above its competitors in the Chinese market

44



* Product diversity is defined by days and itinerary. Variety by types of hotels / airlines are not accounted** Excluding Eastern EuropeSource: Channel Interview; Retail Survey; Monitor Analysis; CITS (Head Office) Used as Sample

Group Package Tours

Group Package Tours

Non-group Package Tours

Non-group Package Tours

Number ofProducts

10

2

2

19

03

0

0

0

0

Availability of Direct Flight


�

—

�

—

�

Europe**Europe**Europe**

Australia and New ZealandAustralia and Australia and New ZealandNew Zealand

Eastern EuropeEastern EuropeEastern Europe

South East AsiaSouth East AsiaSouth East Asia

SASASA

44

SA has low product diversity as compared to other long-haul destinations



DAY 1DAY 1 � Depart to Johannesburg, SA

DAY 2DAY 2 � Sightseeing in Johannesburg. Visit the Gold Mine city and watch the mining process

DAY 3DAY 3 � Leave for Sun City after breakfast. Enjoy a day with the wildlife at Pilanesburg. Try your luck at the casino at night

DAY 4DAY 4 � Visit the Lion Park in the morning and head for the Museumafter lunch. Spend the afternoon watching diamond mining

DAY 5DAY 5 � Arrive at Cape Town in the morning. Stop at the ostrich farmand eat an ostrich lunch

DAY 6DAY 6 � Start your route to Seal Island. Sightseeing at the Cape of Good Hope. Visit penguin beach and then back to Cape Town

DAY 7DAY 7 � Shop in V&A shopping center and head for the airport after lunch

DAY 8DAY 8 � Arrive in Shanghai the next day

44

SA has a standardized package based on the HK model


ChannelChannel Map

* Domestic flights, if any, are purchased directly form airlines; special players, like Longway, bridge multiple categories (inbound operator and business specialist). In this diagram, Longway is considered a business trip specialist; in peak season, volume shifts to self-funded travellers; FIT leisure travel to SA estimated at less than 5%; retail only travel agents for SA might act as integrated travel agents for domestic and more popular international destinations


Product Owners Intermediaries China Outbound Travel Agents

Consumers

Chi

na re

gula

tions

bar

fore

ign

play

ers

from

Chi

na o

utbo

und

mar

ket

40%, 0%

15%, 0%

40%, 0%

40%, 95%

<5%, <5%<20%, 20%

30%, 30%SA Attractions

SA Hotels

SA Transportation

Retail Only Travel Agents*

Integrated Travel Agents

Self-funded Travellers

Organizational Buyers

Sponsored Travellers

0%, 95%

0%, <5%

20%, 20% 50%, 50%

15%,15%

HK Wholesalers Large Travel

Agencies

Ticketing Agents

15%, 0%

Business Trip Specialist

30%, 30%

<5%, 0%

<5%, <5%

SA Inbound Tour Operators

Airlines

% = Airline% = Others

SA group packages flow through multiple channels to Chinese consumers


Aggregate

Focus

Sponsored

Doesn’t Aggregate

Self-funded

Role of Travel Agent Archetypes

Aggregates

30%30%

50% 50% (+15% (+15% wholesale)wholesale)

20%

Role filled by organizational

buyers

Role filled by organizational

buyers

Business trip specialists

Integrated Travel Agents

Retail only travel agencies

Note: Bubble size denotes total SA bound volume; percentage is percent of total SA volumeSource: Monitor Interviews; Monitor Analysis

Consumer pull from organizational buyers is most important for sponsored travellers

Travel agents for the self-funded market are

sub-scale for SA. Current group failure

rate is very high (above 50%) with few

exceptions

ChannelStrategy

To grow demand for South Africa, sponsored and self-funded travel require distinct strategies: this strategy focuses on self-funded travel


IntegratedTravel Agents

IntegratedTravel Agents

� The market is highly fragmented with top 100 travel agencies controlling 50% of the market

� All large travel agencies do both wholesale and retail

– The share of direct sales through owned retail outlets to end consumers is usually above 50%

– Most of these travel agencies also have significant sales to organizational buyers (business and / or government)

– Most of the wholesale comes through non-exclusive reseller networks� Wholesale margin is slim (2%–5%)

� Players include CITS (Beijing), CTS (Beijing), CGZL (Guangzhou), Jinjiang (Shanghai), Spring International

� Main channel for reaching end consumers are newspapers� Consumers do preliminary research on their own. By the time they visit or call the

travel agencies, they have a pretty good idea of where they want to go and are looking for detailed product information

� Resale networks are established through personal relationships and trade shows� Customer acquisition costs are high. 70%+ of the gross profit goes to retailers in a

wholesale transaction

� Sell to organizations through personal relationships or formal biding process(usually annually)

� The market is highly fragmented with top 100 travel agencies controlling 50% of the market

� All large travel agencies do both wholesale and retail

– The share of direct sales through owned retail outlets to end consumers is usually above 50%

– Most of these travel agencies also have significant sales to organizational buyers (business and / or government)

– Most of the wholesale comes through non-exclusive reseller networks� Wholesale margin is slim (2%–5%)

� Players include CITS (Beijing), CTS (Beijing), CGZL (Guangzhou), Jinjiang (Shanghai), Spring International

� Main channel for reaching end consumers are newspapers� Consumers do preliminary research on their own. By the time they visit or call the

travel agencies, they have a pretty good idea of where they want to go and are looking for detailed product information

� Resale networks are established through personal relationships and trade shows� Customer acquisition costs are high. 70%+ of the gross profit goes to retailers in a

wholesale transaction

� Sell to organizations through personal relationships or formal biding process(usually annually)

OverviewOverview

InteractionsInteractions

ChannelIntegrated travel agents play the most significant role in the Chinese trade

Source: Interviews with the Chinese Trade


ChannelBusiness travel specialists help organizational buyers to set up their itineraries

Business Travel Specialists

Business Travel Specialists

� Business travel specialists focus on serving organizations– They have have few retail outlets (often only one location)– Over 70% of their outbound business are from organizations– They usually have long term relationships with buying organizations– Approximately 100–150 business specialists nationally

� The biggest of these business travel specialists are in Beijing– Ministries of Chinese central government are among the biggest customers– Local governments tend to go to local travel agents– There are considerable less business travel specialists outside of Beijing

� Players include China Merchant Travel Services (Beijing), CYTS Guangzhou, China Travel International (Beijing) and CTS Shenzhen Port, etc.

� There are two ways of getting organizational business– Through long term relationships with organizations– Through a formal bidding process (but one needs to have a reputation in order

to be invited to the bidding)� Businesses are less price sensitive and require more services

– Business travel specialists are less price sensitive– They prefer inbound operators who have the ability to customise itineraries (e.g.,

Crown)

� Business travel specialists focus on serving organizations– They have have few retail outlets (often only one location)– Over 70% of their outbound business are from organizations– They usually have long term relationships with buying organizations– Approximately 100–150 business specialists nationally

� The biggest of these business travel specialists are in Beijing– Ministries of Chinese central government are among the biggest customers– Local governments tend to go to local travel agents– There are considerable less business travel specialists outside of Beijing

� Players include China Merchant Travel Services (Beijing), CYTS Guangzhou, China Travel International (Beijing) and CTS Shenzhen Port, etc.

� There are two ways of getting organizational business– Through long term relationships with organizations– Through a formal bidding process (but one needs to have a reputation in order

to be invited to the bidding)� Businesses are less price sensitive and require more services

– Business travel specialists are less price sensitive– They prefer inbound operators who have the ability to customise itineraries (e.g.,

Crown)

OverviewOverview

Source: Trade Interviews



ChannelBusiness Travel Specialists and Sponsored Travel

Companies sponsor leisure travel because . . .

Companies sponsor leisure Companies sponsor leisure travel because . . .travel because . . .

� It is a form of compensation, especially in SOEs

� It is a relationship building tool, especially with government agencies

� It is a form of compensation, especially in SOEs

� It is a relationship building tool, especially with government agencies

Destination is chosen by the organizer

Destination is chosen by the Destination is chosen by the organizerorganizer

� Typically the trip organizer chooses the destination– The person could be a sales

person, a department manager or a sponsored government official

� The travel participants have significant influence on destination choice

� Most of the organizers are SOE / government officials

� Typically the trip organizer chooses the destination– The person could be a sales

person, a department manager or a sponsored government official

� The travel participants have significant influence on destination choice

� Most of the organizers are SOE / government officials

Companies have set annual travel budgets

Companies have set annual Companies have set annual travel budgetstravel budgets

� In some instances they invite travel agencies to bid on the budgets

� More often companies have a few long term relationship travel agencies to assist all their travel needs

� In some instances they invite travel agencies to bid on the budgets

� More often companies have a few long term relationship travel agencies to assist all their travel needs

Travel agencies provide access to travel productsTravel agencies provide Travel agencies provide

access to travel productsaccess to travel products

� The destination is already determined by the time the travel agent becomes involved

� Travel agents put together the itinerary and handle all of the bookings

� Usually someone from the travel agency accompanies the group as a guide

� In this market, travel agents spend most of their time building and maintaining relationships

� The destination is already determined by the time the travel agent becomes involved

� Travel agents put together the itinerary and handle all of the bookings

� Usually someone from the travel agency accompanies the group as a guide

� In this market, travel agents spend most of their time building and maintaining relationships

Sponsored travel will require a consumer focused strategySponsored travel will require a consumer focused strategy

Sponsored travel destination choice is typically driven by the consumers or decision-makers in the organization


ChannelRetail Travel Agencies

Retail Only Travel Agencies

Retail Only Travel Agencies

� There is no retail only agency in the strict sense but a significant percentage of travel agents do resell low volume destinations products– Sometimes because they don’t have the required scale to form groups to

that destination– They might be outside of the major urban areas in rich provinces such as

Guangdong and Zhejiang– They may or may not have the necessary outbound tour licenses

� There are over 9,000 travel agencies in China– These are mostly independent economic entities– Divisions within these travel agencies could be owned and operated by

independent contractors (without licences) who pay a fee to the agency– 528 travel agencies have licences to organize outbound tours

� For SA, retail only players include Shanghai Luwan Tourist Info Centre, CITS Hangzhou, etc.

� Retailers advertise in local newspapers to drive traffic to their outlets� They pass on the consumer to wholesalers for a commission

– Sometimes the retailers do lose the opportunity for repeat sales to the wholesaler

– But consumers rarely repeat to long-haul destinations

� There is no retail only agency in the strict sense but a significant percentage of travel agents do resell low volume destinations products– Sometimes because they don’t have the required scale to form groups to

that destination– They might be outside of the major urban areas in rich provinces such as

Guangdong and Zhejiang– They may or may not have the necessary outbound tour licenses

� There are over 9,000 travel agencies in China– These are mostly independent economic entities– Divisions within these travel agencies could be owned and operated by

independent contractors (without licences) who pay a fee to the agency– 528 travel agencies have licences to organize outbound tours

� For SA, retail only players include Shanghai Luwan Tourist Info Centre, CITS Hangzhou, etc.

� Retailers advertise in local newspapers to drive traffic to their outlets� They pass on the consumer to wholesalers for a commission

– Sometimes the retailers do lose the opportunity for repeat sales to the wholesaler

– But consumers rarely repeat to long-haul destinations

OverviewOverview


Source: Interviews with the Chinese Trade

Retail travel agencies help fill in the (often large) gaps in the integrated travel agencies’distribution network


ChannelIn self-funded travel, the current market dynamics require scale

Decreased Cost� Increased margin� Decreased price


Increased PromotionsIncreased Promotions Increased Tour Varieties� Increased frequency� Increased products

Increased Tour Varieties� Increased frequency� Increased products

Improved Sales SkillsImproved Sales Skills

� Reduced price increases affordability of SA trips and reduces competitive price gap

� Increases awareness of SA as a destination and competitiveness of price

� Attracts more consumers as well as more consumer types

� Allows for greater conversion rates toward SA products

� Reduced price signals that greater volume can be generated

� Signals that other travel agents are gaining significant volume

� Indicates that product is selling well

� N/A

Number of Intended Travellers

Effects On

Number of Group-forming TAs

Demand / Number of TA


(Demand) (Supply) Number of Group Forming TAs

Number of Group Forming TAs



Product Momentum

Product Momentum


ChannelGroup Formation

2 Months 1 Month 1–2 Weeks3 Weeks

Initial Date Selection

Source: Monitor Trade Interviews; Monitor Quantitative Survey

Trade Process

Consumer Process

Marketing Efforts and Group Formation

Initial Booking of Flights and Ground Components

(nothing confirmed)

Form or Form or Fail Fail

DecisionDecision

Fee Collection (≈≈≈≈ 1 week)

Visa Processing

Finalize Price

SA Needs to Increase Scale of Group Forming Travel AgentsSA Needs to Increase Scale of Group Forming Travel Agents

Failure occurs due to lack of scale

Consolidation effort usually fails due to conflict of interest among travel agencies (ie fear of losing valuable LH customers)

Departure

Approx. 90% of those who commit actually join

the group

Decision about Travel Dates

Tentative Decision about Destination

Talk with Friends, Do Other Research

Gather Brochures

Commit to Group (destination and time)

Talk with Travel Agents

If Forms, Pay Full Fee

If Fails, Look for Other Destination and / or Other TA

Depending on the travel agency consumer may pay a deposit

which will be returned in case of group formation failure

Final deadline driven by visa

application duration

Airlines delay providing final price because (1) would rather fill seats with higher paying customers, (2) are wary of group failure and (3)

have poor communication with the trade

Group formation failure happens in the final three weeks prior to travel



South Africa

2 Weeks

Australia

1 week

Thailand

Less than a week

Domestic

2 days

Group Formation Cut Off Points

By reducing visa processing and booking times, SA could become a beneficiary of other destinations’ group failure

By reducing visa processing and booking times, SA could become a beneficiary of other destinations’ group failure

� Currently SA visa processing time varies from 1 to 2 weeks —unpredictability forces travel agents to assume the longer period

� Flight booking is complicated because neither SAA nor CX have had local presence

� Australia has a streamlined visa application process with consistent timing

� Direct flights and local presence of airlines simplify booking process

� Visas are fast

� Do to high volume and local presence, airline seats are easy to confirm � No visa required

� Simple ticketing process

Note — this process varies somewhat by location. E.g. TAs in Guangzhou must mail documents to SA embassy in Beijing vs.

bringing directly to Australian consulate in Guangzhou

Note — this process varies somewhat by location. E.g. TAs in Guangzhou must mail documents to SA embassy in Beijing vs.

bringing directly to Australian consulate in Guangzhou

With Cathay’s recent entrance into the China market, communication

should improve

The key determinant of timing is visa application processing, and secondarily airline bookings



Group Group Failed Failed

TravellerTraveller

Same destination, different dateStick with

Current TA

3

1

2

Switch to Other TA

Do Not Travel in

This Period

Different destination, same date

Same destination, Different date

Different destination, same date

Same destination, next vacation period

Different destination, next vacation period

7

4

5

6

Note: Some small (and for SA insignificant) volume will switch to FITSource: Monitor Trade Interviews

Limited

≈≈≈≈ 50%

≈≈≈≈ 20%

Same destination, Same date

≈≈≈≈ 25%

For to-scale destinations, most volume will just switch dates or tour packages, not destination

For SA, over half of attempted

groups fail

Timing

Destination

Timing and Agent

Destination and Agent

Agent

Period

Period and Destination

>5%

>5%

South Africa is particularly impacted by group failure dynamics because of lack of scale


ChannelIn the Chinese market, to deliver scale SAT will need to . . .

Control the number of group forming

TAs to protect scale development

Conduct direct promotion through

other media to target segments 1

2

42

3

Ensure that increased TAs increase volume

and concentration

Cooperate with select travel agents to tailor promotions to target segments

Educate wholesale and retail arms to

help them push SA. Equip them with selling and / or training tools

Build bridges with the trade to enhance

access to information about

products

1












Product Momentum

Product Momentum

Facilitate group formation by

shortening visa and ticket timelines

5


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Consumers: Our Target MarketTravel Propensity

Tier 1: < 10,000 RMB

Tier 2: > 10,000 RMB

Liaoning Pop: 42.2MM36 TA

BeijingPop: 14.9MM

69 TA

XinjiangPop:

19.6MM15 TA

QinghaiPop:

5.4MM5 TA

Xizang/TibetPop: 2.7MM

3 TA

YunnanPop:

44.2MM16 TA

Sichuan Pop:

87.3MM15 TA

GansuPop: 26.2MM

9 TA

NingxiaPop: 5.9MM

4 TA

ShaanxiPop:

37.1MM14 TA

Shanxi Pop:

33.4MM17 TA

HenanPop:

97.2MM19 TA

HubeiPop: 60.2MM

19 TA

GuizhouPop: 39MM

7 TA

GuangxiPop:

48.9MM22 TA

HainanPop:

8.2MM9 TA

GuangdongPop: 83MM

111 TA

JiangxiPop:

42.8MM13 TA

FujianPop: 35.1MM

21 TA

Zhejiang Pop: 47.2MM29 TA

AnhuiPop:

64.6MM10 TA

Jiangsu Pop: 74.3MM36 TA

ShandongPop: 91.8MM

32 TA

HebeiPop: 68.1MM

15 TA

Inner MongoliaPop: 23.8MM

10 TA

JilinPop: 27.1MM

15 TA

HeilongjiangPop: 38.2MM

23 TA

HunanPop: 67MM

17 TA

ShanghaiPop:

17.4MM35 TA

ChongqingPop:

31.2MM13 TA

TianjinPop:

10.2MM13 TA

Note: “TA” represents the number of travel agentsauthorized to sell international tickets

Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; CLSA Asia-Pacific Markets, Chinese Tourists: Coming, Ready or Not Special Report, September 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound Market

Guangzhou

Share of Outbound Tourists by Province� Beijing: 30%� Guangdong: 22% � Shanghai: 12%

Annual Urban Disposable Income

Wealth and travelling population are concentrated in the coastal areas


22

12

4 4

30

0

20

40

Beijing Guangdong Shanghai Zhejiang Jiangsu

69

36 36 35

111

0

25

50

75

100

125

Guangdong Beijing Jiangsu Liaoning Shanghai

16,68315,638 14,546 13,628

11,467

0

10,000

20,000

30,000

Shanghai Beijing Zhejiang Guangdong Tianjin

Consumers: Our Target MarketTravel Propensity

Source: National Bureau of Statistics of China, China Statistical Yearbook, 2005; Tourism Australia, China Country Overview 2006; Dr Wang Xinjun, The Current Situation and the Characteristics of China’s Outbound Market

RMB

Per Capita Annual Disposable Income of Urban Households, 2004 (Top 5 Provinces)

Number of Agencies

Number of Authorized Travel Agencies for Outbound Travel, 2006 (Top 5 Provinces)

Percent of Outbound Tourists

Share of Outbound Tourists, 2004 (Top 5 provinces)

Beijing, Shanghai and Guangdong appear to be the travel centers


Consumers: Our Target MarketTravel Behaviour

BeijingBeijing� High concentration of sponsored travel

� Consumers less willing to spend out of own pockets

� Prices not as transparent as in Guangdong

� Price sensitive

� Fast to adopt new trends

� High concentration of sponsored travel

� Consumers less willing to spend out of own pockets

� Prices not as transparent as in Guangdong

� Price sensitive

� Fast to adopt new trends

GuangdongGuangdong� Some sponsored travel,

primarily from local sources

� Consumers are more willing to spend out of own pocket . . . but are highly “value” conscious

� Consumers have greatest access to price information (due to proximity to HK)

� Rapid acceptance of new products

� Some sponsored travel, primarily from local sources

� Consumers are more willing to spend out of own pocket . . . but are highly “value” conscious

� Consumers have greatest access to price information (due to proximity to HK)

� Rapid acceptance of new products

ShanghaiShanghai� Some sponsored travel,

significant portion of which is from wealthy surrounding regions

� Consumers are less willing to spend out of own pockets

� Prices are not as transparent as in Guangdong

� Not only price sensitive but value sensitive as well

� Slow acceptance of new products

� Some sponsored travel, significant portion of which is from wealthy surrounding regions

� Consumers are less willing to spend out of own pockets

� Prices are not as transparent as in Guangdong

� Not only price sensitive but value sensitive as well

� Slow acceptance of new products

Source: Trade Interviews; Australian Embassy

0

40,000

80,000

Business Visas Tourist Visas

Australian Visas Issued by Geography (2000–2001)

Visas

Beijing

Shanghai

Guangzhou

39,259

57%

26%

17%

66,903

34%

25%

41%

Chinese travelling behavior varies across these three geographies



Source: Interviews with the Chinese Trade; Monitor Analysis

Chinese Travellers Like To� (Running horses and seeing flowers). To observe but not to experience something different

� Like to go back to a comfortable room at the end of the day but also want nightlife and different cuisine

� Like to travel in groups

� Want to see lots of landmarks and take pictures of themselves with the land mark and show the pictures back home

Cultural Differences Emerging Travel Culture

� Widespread opening of travel market occurred only over last decade

– Majority of travellers are relatively inexperienced

– Travel culture is only gradually forming — no critical mass of adventurous travellers

– Relatively conservative travellers

� Accustomed to sponsored travel– Traditional type of travel

– Sponsored travel is usually in groups

� Like to see as much as possible

� Individualism emphasized in West far more than in Chinese culture– Children are taught to be different in West– Children are taught to have discipline in

China� “Experience recreation” is popular in the West

but not in China

– E.g., extreme sports are popular in the West, but not in China

– E.g., most Chinese have never gone camping

� The ability to travel internationally is a status symbol in China

Differences in travel behaviour reflect culture differences between China and western countries as well as the development of a travel culture



Group Visa Is Simplified by ADSGroup Visa Is Simplified by ADS

Better Value for MoneyBetter Value for MoneyGreater ConvenienceGreater Convenience

Source: WTO; Monitor Analysis; Tourism Boards of Thailand, Singapore and Malaysia

77.3%

60.4% 64.0%

0%

50%

100%

Thailand Singapore Malaysia

Group Tourist to Thailand, Singapore and Malaysia, 2000

Percent of Leisure

Travellers Taking Group

Package Tours

� Group travel is cheaper than individual travel– Better bargaining position– Less trial and error

� Low level of variety among travellers – Lack of flexibility lowers cost

� Psychological benefit of group travel– Feel safer

� Group travel is cheaper than individual travel– Better bargaining position– Less trial and error

� Low level of variety among travellers – Lack of flexibility lowers cost

� Psychological benefit of group travel– Feel safer

� Visa barrier is high for some travel destinations– Success rate is higher if applying through a

travel agency� ADS is the most accessible form of visa

– ADS by definition, only applicable to group travel

� Visa barrier is high for some travel destinations– Success rate is higher if applying through a

travel agency� ADS is the most accessible form of visa

– ADS by definition, only applicable to group travel

� Most Chinese face language barriers when travelling overseas– Need language services to help them get

around� Typical Chinese have little knowledge about

foreign countries– Need help to plan and book itineraries

� Can’t convert RMB into foreign currency freely in China– Need currency service

� Most Chinese face language barriers when travelling overseas– Need language services to help them get

around� Typical Chinese have little knowledge about

foreign countries– Need help to plan and book itineraries

� Can’t convert RMB into foreign currency freely in China– Need currency service

Generally, Chinese prefer to travel in group package tours


Consumers: Our Target MarketDestinations Travelled

0%

20%

40%

Thailand Malaysia Japan Korea,South

Germany Italy Netherlands Vietnam

BeijingShanghaiGuangzhouShenzhen

Percent of Respondents

Long-HaulShort-Haul

Please Tell All the Countries You Have Been to in the Past 5 Years for HOLIDAY Purposes(Multiple Allowed)

Source: Monitor Quantitative Research (F1 — Base: All Respondents)

37%

27%

21%19%

16%

13% 13%12%

11%9% 8%

6% 6% 6% 6%

Singapore Australia U.S. France New Zealand Canada U.K.

1.4% of our sample have

visited SA in the past five years

Thailand, Malaysia and Singapore are the primary international holiday destinations of Chinese travellers


13%

24%

32%

28%

4%

0%

10%

20%

30%

40%

Below 5,000 10,001~20,000 Above 50,000

14%

31% 30%

20%

5%

0%

25%

50%

Below 5,000 10,001~20,000 Above 50,000

Consumers: Our Target MarketTravel Spend

How Much Do You Expect to Spend on Leisure Travel in the Coming Year (RMB)?

Spend per Person on Best Holiday in Past Five Years (RMB)

Source: Monitor Quantitative Research (F20, F23 — Base: All Respondents)

5,001~10,000 20,001~50,000 5,001~10,000 20,001~50,000



The price of a package tour to SA is

between 10,000 to 18,000 RMB

Chinese travellers in aggregate are the seventh highest spenders, spending US $15.4Bper year

Average annual budget = 21,293

RMB

Average spend per person = 20,550 RMB


Consumers: Our Target MarketPositivity and Interest in South Africa

Source: Monitor Quantitative Research (F35a, F35c — Base: All Respondents)

How Likely Are You in Going to SA in Next Two Years?


18%

20%

27%

21%

14%

0% 25% 50%

When You Think About SA as a Holiday Destination, How Positive Are You?


22%

16%

10%

6%

46%

0% 25% 50%

Very Positive Extremely Likely

Positive Likely

Neutral Not Sure

Negative Unlikely

Very Negative Extremely Likely

Though 14% of our market is positive towards SA, only 6% is extremely likely to visit SA in the next 5 years


Consumers: Our Target MarketBarriers to Travel to South Africa

12%

13%

16%

17%

21%

22%

25%

27%

30%

41%

42%

44%

5%

6%

16%

20%

0% 25% 50%

Other

Visa

SA too Poor

Not Enough Time

Not for Family

Food

Prefer Asia

Expensive

Flight too Long

Not Good for Independent Travel

Other Better Destinations

Language

Concern on Health

Don't Know Enough

Personal Safety

Not Comfortable with African Blacks

Which Reasons Describe Why You Do Not Want / Haven’t Yet Been to SA?


Source: Monitor Quantitative Research (F45 — Base: All respondents)

Biased perception about SA people, safety concerns and lack of knowledge present strong barriers for Chinese travellers to visit South Africa

Visas are not perceived to be

a barrier


Consumers: Our Target MarketAccommodation Preference in South Africa

16%

37%

9%

18%

8%

12%15%

17%

7%10%

19%

31%

0%

25%

50%

Prefer at Least 5 Star

Accommodation

Prefer 5 Star But Can Also

Do 4 Star

Combination of 5, 4, and 3 Star Accommodation— Save Money


Accommodation

Prefer Staying with Friends and-or Family

Other

China

All Visitors

Preference of Accommodation in SA

Share of Respondents

Note: “China” are visitors to SA who live in China with Chinese nationality; question was only asked in 2002 surveySource: South African Tourism Exit Survey 2002 and 2003Q1–2

Chinese tourists prefer to stay in high end accommodations


Consumers: Our Target MarketConsumer Market Definition and Size

Using the Urban Population in Beijing, Shanghai, Guangzhou, and

Shenzhen as the Starting Point:

Who have travelled internationally on leisure

trips (outside of close Asia) in the last 5 years

CURRENTTotal Number of

People in Our Market

46.6M

Between the ages of 25 and 60

And, who have a household income of 10,000 RMB + per

month (or have been on sponsored trips)

2.5M

2.9M

27.2M

China Market Definition

Source: China City Statistical Yearbook, 2002, Based on 2001 Census Data and 4% Urban Population Growth Rate; Monitor RDD Survey, Oct 2003

Using the Greater Urban Population in the Wealthiest Provinces in China as the

Starting Point:

MAXIMUM potential number of people in our

EXTENDED market

241.9M

12.9M

15.0M

129.6M

By extending our market definition to include the urban population of the wealthiest provinces (instead of only the 4 main cities), the market size can be expanded to 12.9M people


Consumers: Our Target MarketWhere to Focus: Sizing the Relevant Market – Narrow Definition

Total Number of People in

Our Market

= 2.5M100%

Using the urban population in Beijing, Shanghai, Guangzhou and Shenzhen as a filter, the market size is 2.5M people

Total Chinese population*

Urban population in Beijing, Shanghai,

Guangzhou, and Shenzhen


Have travelled internationally on leisure trips in the last 5

years (outside of close Asia)

And, who have HH income of 10,000 RMB+ per month (or

have been on sponsored trips)

* Source for total population: http://www.cia.gov

1,298.8M(100% of total)

2.9M(1.2% of total)

27.2M(10% of total)

46.6M(18.6% of total)

2.5M(1.0% of total)

CURRENT FUNNEL


Consumers: Our Target MarketWhere to Focus: Sizing the Relevant Market in Greater City Region

Total Number of People in

Our Market

= 12.9M100%

A decision was taken to use the extended market definition, effectively enlarging the size of the actual market from 2.5M to 12.9M Travellers


Urban population in wealthiest provinces






1,298.8M(100% of total)

15.0M(1.2% of total)

129.6M(10% of total)

241.9M(18.6% of total)


EXTENDED FUNNEL

EXTENDED FUNNEL



Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Consumers: Target SegmentsWhere to Focus: Breakdown of Total Market – Narrow Definition of 4 Cities

Total Number of People in Our Market

Focus Segments

= 1,218k49%

Experienced Wanderlusters

408k

Upcoming Wanderlusters

189k

Purpose Travellers

285.5k

Organised Wanderlusters

335.5k

Actual Size: 2.5M Travellers


Urban population in Beijing, Shanghai,

Guangzhou and Shenzhen




1,298.8M(100% of total)


27.2M(2% of total)

46.6M(4% of total)




CURRENT FUNNEL


= 2.5M100%


Consumers: Target SegmentsWhere to Focus: Breakdown of Total Market in Greater City Region

Total Number of People in Our Market

Focus Segments

= 6,284k49%

Experienced Wanderlusters

2,105k

Upcoming Wanderlusters

975k

Purpose Travellers

1,473k

Organised Wanderlusters

1,731k

Four focus segments were identified, representing 49% of the market size

Total Chinese population*Urban population in

GREATER REGIONS OF Beijing, Shanghai,

Guangzhou and Shenzhen




1,298.8M(100% of total)

15M(1.2% of total)

129.6M(10% of total)

241.9M(18.6% of total)





= 12.9M100%

EXTENDED FUNNEL

EXTENDED FUNNEL


Importance of Importance of Associations*****Associations*****Past / Future LH TravelPast / Future LH Travel Trip Reason and ActivitiesTrip Reason and Activities Perceptions of South AfricaPerceptions of South Africa

DemographicsDemographics Information SourcesInformation SourcesTrip BehaviourTrip Behaviour

Top 5 Sources (General)� Friends / relatives 56%� Newspapers 33%� TA 25%� Travel magazines 23%� TV travel programmes /

documentaries 13%

Seasonality� Travel anytime 47%� Travel Oct 30%

Travel Partner� Spouse only 43% � Friend 36%� Family 23%

Group Travel� Open to 65%

Time Taken between Booking and Taking Trip� <2 weeks 30%� 2 weeks–1 month 58%� >1 month 11%

General Characteristics� Avg. Age 37� Married 82%� Children 66%� Top Region(s)

– Guangzhou 33%– Shanghai 32%– Beijing 20%

Social Characteristics� HH Income p.a., (‘000s RMB)

– <10 26%– 10–15 34%– >15 40%

� Higher education 67%� Higher profession* 36%

Purchasing BehaviourPurchasing Behaviour

Purchase Channels**** (For international travel)� CTS 45%� CITS 30%� CYTS 18%� Others 12%

Reasons for TA Usage� Helping decide activities 58%� Making bookings 54%� Offer variety of packages 43%

Consumers: Target SegmentsOrganised Wanderlusters: Segment Overview

Organised Organised WanderlustersWanderlusters

Segment Size

% of Market 13.4%

# of People 1,731k

HH Travel Spend p.a: >15,000 RMB

Conversion Challenge

Awareness of SA 58%

Positivity towards SA 27%

Consideration 33%

Plans to go next18 months 18%(Annualized: 12%)

* Those people with a ‘higher level profession’ are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data

Average of Score of 1–7� Safe and secure

environment 6.33� Rest and relaxation 6.17� Authentic travel

experience 6.09� Easy to get around 6.04� Offers wide variety of

experiences 5.96� Offers historical and

cultural experience 5.92� Welcoming People 5.79� Value for money 5.74� Offers beach experience 5.61� Offers natural wildlife

experience 5.49� All year round travel 5.19

Frequency of Vacations� Avg. # of vacations: 2 or more

(in last 5 years)

Past 5 Years� Thailand 60%� Singapore 46%� Malaysia 38%� Australia 37%� Japan 19%

Future (Upcoming 3 Years)� Japan 21%� Australia 16%� France 14%� United States 12%� Canada 9%

Trip Reason (Top 5)**� Scenery 85%� Relaxation 77%� Experience foreign

culture/ food 71%� Beach 71%� Architecture 66%

Main Activities (Top 5)***� Taste local food 96%� Visit cities 95%� Shop 92%� Relax on beach 92%� See most local icons 90%

Positive� Plentiful Wildlife 86%� Welcoming to tourists 82% � Luxury Safaris 65% � All year round destination 60% � Value for money 58%

Negative� Apartheid 77%� Very hot 74%� Politically unstable 68%� AIDS 66%� Expensive to fly to 60%� Dangerous 49%


Channel� Travels in groups because they are

convenient and makes visas easier to obtain� Highly likely to use one of China’s large

travel agencies for the following services:– Decide on activities at destination,

making bookings, provide different packages to choose from

South Africa� Generally do not hold strong negative

perceptions of South Africa– Lower than market average believe that

apartheid still affects SA and AIDS is an important issue

� Few (15%) have friends and relatives who have been to South Africa

� Top barriers are lack of knowledge on what to do in South Africa, concerns about health and safety, and fear that they will face a language barrier

Travel Desires� Considers scenery and relaxation most important when choosing

destinations� Popular holiday activities include tasting local foods, visiting cities,

shopping and relaxing at the beach� Australia is the most favourite holiday destination

Potential Travel to South Africa� Would like to visit SA on a group package tour � As with their other holidays, segment would also prefer to relax at

the beach and to see natural beauty in SA� Above average length of stay and spend per person: 13 days for

a price of RMB 24,000 per person

Demographics� 57% females� Above average share (33%) in Guangzhou and

below average share (20%) in Beijing� Work experience reflects regional differences

– Relatively high share of 21% are self-employed or work at family firm

– Relatively high share of 14% are business owners

� Lower education level — 32% only have high school education

� Higher income level — 40% earn over RMB 15,000 per month household income

Past Travel Profile� Self-paying travellers � High number of destinations in past 5 years

– All have travelled to 2+ destinations � Many travel during golden weeks, as a large

share (45%) have no paid vacation days

Interest and Awareness� Low worldly� Lower interest and awareness of South Africa� Friends and relatives, newspapers and travel

agents are where most first hear about destinations

Behaviour Profile� Very few (19%) prefer independent travel� Most make bookings 2 weeks to 1 month before travelling� Very high dependence on travel agents and word-of-mouth when seeking information about

destinations� High share (43%) travelled with only their spouse on their favourite holiday

Spend� Highest holiday budgets amongst the 4 priority segments

– 100% have budget of RBM 15,000 or more per year� 72% spent RMB 15,000 or more on their favourite holiday

Channel� Travel agents are used for almost all bookings, with the two most popular being CTS and CITS

Consumers: Target SegmentsOrganised Wanderlusters: Customer Portrait®

Desired ExperienceDesired Experience Beliefs and AssociationsBeliefs and

AssociationsPurchase and

Usage EnvironmentPurchase and

Usage Environment

Purchase andUsage BehaviorPurchase and

Usage Behavior


Consumers: Target SegmentsOrganised Wanderlusters: Consumer Portrait® Story

A well-travelled Chinese woman looking for a new destination

Christina Chung is a competent businesswomen. Living in Guangzhou, she is 37, married, and has one son. Despite working fairly long hours to run her own import clothing store, she is satisfied with her high income and her ability to splurge on international holidays every so often. She has taken numerous trips with her husband, always to different destinations, whenever both can get away from work. Five years ago when many countries did not welcome Chinese tourists, Christina already took her first tour to Thailand, Singapore, and Malaysia. She particularly enjoyed the food and beaches in Thailand and the clean, modern city feel of Singapore. More recently, during the past October National week, she visited Australia and found that Australia was by far her favourite destination—the beautiful natural scenery helped her relax and forget the worries of her hectic life.

Convenience and reliability are most important in the buying process

Because she is so busy at work and at home, Christina doesn’t have the time to do much investigation and comparison between different types of holiday packages. Instead she finds that asking friends and relatives for recommendations followed by a visit to the travel agent is generally the most efficient way to organize a holiday. After all, a travel agents job is to help her plan holiday activities and book the trip. She prefers group packages because they are convenient and saves her the headache of applying for visas. Christina also believes large travel agencies are more reliable, particularly China Travel Services (CTS), and turns to them first.

Why not South Africa next?

On her next holiday, Christina plans to spend about RMB 30,000 (for herself and her husband) and is considering several long-haul destinations. Christina’s travel agent mentioned that he just sent a group to South Africa recently. Christina doesn’t really know much about South Africa though, as she doesn’t have much time to read international news nor watch TV news programs regularly. None of her friends have been there before, so she wonders, what would one do there? In her mind, South Africa is just a part of Africa, and Africa has always seemed a bit more dangerous than other destinations. If she finds out more, South Africa could be a possibility. France seems more likely at this point though because travel agencies seem to have more packages for her to choose from.

A well-travelled Chinese woman looking for a new destination

Christina Chung is a competent businesswomen. Living in Guangzhou, she is 37, married, and has one son. Despite working fairly long hours to run her own import clothing store, she is satisfied with her high income and her ability to splurge on international holidays every so often. She has taken numerous trips with her husband, always to different destinations, whenever both can get away from work. Five years ago when many countries did not welcome Chinese tourists, Christina already took her first tour to Thailand, Singapore, and Malaysia. She particularly enjoyed the food and beaches in Thailand and the clean, modern city feel of Singapore. More recently, during the past October National week, she visited Australia and found that Australia was by far her favourite destination—the beautiful natural scenery helped her relax and forget the worries of her hectic life.

Convenience and reliability are most important in the buying process

Because she is so busy at work and at home, Christina doesn’t have the time to do much investigation and comparison between different types of holiday packages. Instead she finds that asking friends and relatives for recommendations followed by a visit to the travel agent is generally the most efficient way to organize a holiday. After all, a travel agents job is to help her plan holiday activities and book the trip. She prefers group packages because they are convenient and saves her the headache of applying for visas. Christina also believes large travel agencies are more reliable, particularly China Travel Services (CTS), and turns to them first.


On her next holiday, Christina plans to spend about RMB 30,000 (for herself and her husband) and is considering several long-haul destinations. Christina’s travel agent mentioned that he just sent a group to South Africa recently. Christina doesn’t really know much about South Africa though, as she doesn’t have much time to read international news nor watch TV news programs regularly. None of her friends have been there before, so she wonders, what would one do there? In her mind, South Africa is just a part of Africa, and Africa has always seemed a bit more dangerous than other destinations. If she finds out more, South Africa could be a possibility. France seems more likely at this point though because travel agencies seem to have more packages for her to choose from.




Top 5 Sources (General)� Friends / relatives 45%� Travel magazines 24%� TV travel programmes /

documentaries 21%� TA 19%� Newspapers 16%


Travel Partner� Friend 31% � Spouse only 30%� Family 20%




– Shanghai 40%– Guangzhou 27%– Beijing 26%


– <10 43%– 10–15 27%– >15 30%



Purchase Channels**** (For international travel)� CTS 47%� CITS 35%� CYTS 23%� Others 19%

Reasons for TA Usage� Helping decide activities 59%� Making bookings 43%� Offer variety of packages 38%








(in last 5 years)

Past 5 Years� Thailand 51%� Singapore 41%� Malaysia 36%� France 26%� Australia 24%

Future (Upcoming 3 Years)� Japan 21%� Australia 17%� United States 14%� France 12%� Switzerland 11%

Trip Reason (Top 5)**� Scenery 86%� Relaxation 78%� Experience foreign

culture / food 75%� Beach 75%� Architecture 73%

Main Activities (Top 5)***� Taste local food 98%� Learn about culture 96%� See most local icons 94%� Visit cities 93%� Relax on beach 92%

Consumers: Target SegmentsExperienced Wanderlusters: Segment Overview

Experienced Experienced WanderlustersWanderlusters

Positive� Plentiful Wildlife 92%� Welcoming to tourists 76% � Luxury Safaris 74% � All year round destination 72% � Value for money 70%

Negative� Apartheid 82%� Very hot 78%� AIDS 71%� Politically unstable 66%� Expensive to fly to 57%� Dangerous 51%

Segment Size% of Market 16.3%# of People 2,105kHH Travel Spend p.a. (‘000s RMB):� <10 13%� 10–20 48%� >20 39%

Conversion ChallengeAwareness of SA 58%Positivity towards SA 27%Consideration 33%Plans to go next18 months 18%(Annualized: 12%)

* Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data


Channel� Believes the advantages of group travel lie in

convenience, little effort, and ease of getting a visa

� Travel agents are influential, as more than half use them for helping to decide on activities at the destination, and over one-third get advice on destination choice

South Africa� Many positive perceptions about SA: believes that

South Africa offers plentiful wildlife, is welcoming to tourists, and has good value for money

� However, very few believe SA is a developed country and most think it is very hot, politically unstable, and still affected by Apartheid

� More likely than others to have friends or relatives who have visited SA; though, this word of mouth is likely to be neutral

� Top barriers preventing a trip to SA are concern about personal safety, lack of knowledge, and concerns about health

Travel Desires� While on holiday, almost all like to taste local food and learn

about the culture– Also likely to want to seeing local icons, relax on the beach, and

visit cities– More likely than others to want to meet local people and stay

with local people in their homes� Important factors when choosing a destination include scenery,

relaxation, architecture, and foreign culture / food� Favourite past destinations include Thailand and Australia� Future trips are likely to include Japan, Australia, USA, and France

Potential Travel to South Africa� If visiting SA, extremely likely to want to view wildlife

– Also interested in relaxing on the beach and enjoying natural scenery; less likely than others to want to do the wine route

– Most would want a group package tour, though more likely than other segments to want to stay at a resort and have a luxury holiday

� Would spend about RMB 25,000 per person for 1–2 week holiday in South Africa

Demographics� An average age of 35� About half males / half females� Most are married and about half have kids� Almost half living in Shanghai, working for either SOEs

or MNCs� Highly educated — 82% have university education

Past Travel Profile� All are self-paid travellers� Well-travelled, with one-quarter having been to five

or more destinations over the past five years– TSM are most popular past destinations,

followed by France, Australia, Germany, Japan, South Korea

� More likely than others to travel when the weather is better at destination than in China; – One-third travel in October

Interest and Awareness� Highly worldly, by definition, and especially likely to

read international news� Influenced by friends, travel magazines, and TV travel

programmes� Very aware and actively interested in SA; 40% have

even searched the Internet for SA information

Behaviour Profile� Many in Segment 5 prefer independent travel and only

about half (lower than other segments) typically book full package group tours

� Most book about one month before going on their holidays, but tend to plan for slightly more time

Spend� Much higher budgets than the average, with about 40%

spending over RMB 20,000 each year on holidays

Channel� Internet is significantly the most popular information

source; others sources used may include word of mouth, travel agents, and travel magazines

� When travelling independently, more likely than others to book directly from airlines or hotels

� Most likely to travel with friends or a spouse� Very unlikely to travel with colleagues

Consumers: Target SegmentsExperienced Wanderlusters: Customer Portrait®




Usage Environment


Usage Behavior


Consumers: Target SegmentsExperienced Wanderlusters: Consumer Portrait® Story

Seasoned traveller looking for a new country to visit

Derek is a successful entrepreneur. Living in Shanghai, he is 35, recently married to Angela, and does not have kids yet. He is well-educated and worldly. Derek and his businessmen friends are proud of how well-travelled they are. They have gone to a different country for vacation every year for the past 5 years and are now beginning to exhaust the checklist of interesting countries to visit. He has already gone to the standard destinations like Thailand, Singapore, and Malaysia as well as more distant destinations like France, Germany, and Australia. Derek and his wife travel to learn about foreign culture, and they always look forward to trying the local foods. For instance, on his tour of France 2 years ago, after going to see the Mona Lisa, they took some time to sit in a coffee shop in St Germain to watch passersby.

Interest in both group tours and independent travel

“The next destination” is frequently a topic of conversation for Derek and his friends. Many times friends and relative recommendations were his first source of information about a destination. To destinations like France, Derek prefers to travel independently so he has more time to relax and to see the rich culture and architecture. However, he reverts back to group package tours when going to locations where crime is a problem. Over his years of travelling, Derek has gotten used to using one of the large travel agencies, CTS, for all his bookings. They do not help to decide on destination or to choose activities at the destination though.


For his next holiday, Derek is quite interested in a trip to South Africa. He has already talked to travel agents about the various package types available, and the travel documentary he saw on South Africa has given him a positive impression and desiring to go. It would be a good country to add to his travel resume as not many of his friends have been there yet. A trip toSouth Africa is well within his holiday budget, though he would want at least 10 days there so he can see more of the country. Derek is hesitating a bit from making plans because he reads international news and knows that crime is a problem for South Africa. Perhaps he should go to Hawaii instead where he can experience its interesting Polynesian culture and try tasty tropical fruits. Derek will speak to his wife and search the Internet for more information before making a final decision.

Seasoned traveller looking for a new country to visit

Derek is a successful entrepreneur. Living in Shanghai, he is 35, recently married to Angela, and does not have kids yet. He is well-educated and worldly. Derek and his businessmen friends are proud of how well-travelled they are. They have gone to a different country for vacation every year for the past 5 years and are now beginning to exhaust the checklist of interesting countries to visit. He has already gone to the standard destinations like Thailand, Singapore, and Malaysia as well as more distant destinations like France, Germany, and Australia. Derek and his wife travel to learn about foreign culture, and they always look forward to trying the local foods. For instance, on his tour of France 2 years ago, after going to see the Mona Lisa, they took some time to sit in a coffee shop in St Germain to watch passersby.

Interest in both group tours and independent travel

“The next destination” is frequently a topic of conversation for Derek and his friends. Many times friends and relative recommendations were his first source of information about a destination. To destinations like France, Derek prefers to travel independently so he has more time to relax and to see the rich culture and architecture. However, he reverts back to group package tours when going to locations where crime is a problem. Over his years of travelling, Derek has gotten used to using one of the large travel agencies, CTS, for all his bookings. They do not help to decide on destination or to choose activities at the destination though.


For his next holiday, Derek is quite interested in a trip to South Africa. He has already talked to travel agents about the various package types available, and the travel documentary he saw on South Africa has given him a positive impression and desiring to go. It would be a good country to add to his travel resume as not many of his friends have been there yet. A trip toSouth Africa is well within his holiday budget, though he would want at least 10 days there so he can see more of the country. Derek is hesitating a bit from making plans because he reads international news and knows that crime is a problem for South Africa. Perhaps he should go to Hawaii instead where he can experience its interesting Polynesian culture and try tasty tropical fruits. Derek will speak to his wife and search the Internet for more information before making a final decision.


Importance of Importance of Associations****Associations****Past / Future LH TravelPast / Future LH Travel Trip Reason and ActivitiesTrip Reason and Activities Perceptions of South AfricaPerceptions of South Africa


Top 5 Sources (General)� Friends / relatives 48%� Newspapers 25%� Travel magazines 19%� TV travel programmes /

documentaries 17%� Internet 16%

Seasonality� Travel between Jul–Oct 85%

Travel Partner� Friend 30% � Family 27%� Alone 20%


Time Taken Between Booking and Taking Trip� <2 weeks 33%� 2 weeks–1 month 53%� >1 month 14%


– Shanghai 36%– Guangzhou 31%– Beijing 17%


– <10 34%– 10–15 41%– >15 25%



Purchase Channels (For independent travel)� TA / Tour operator 57%� Direct from airline 20%� Internet TA 18%� Direct from hotel 7%

Reasons for TA Usage� Helping decide activities 35%� Making bookings 33%� Deciding destination 31%







Frequency of Vacations� Avg. # of vacations: 1 in last 5

years

Past 5 Years� Thailand 18%� South Korea 14%� Japan 14%� Australia 10%� United States 8%

Future (Upcoming 3 Years)� Australia 20%� Japan 18%� France 15%� Singapore 9%� Europe 9%

Trip Reason (Top 5)**� Relaxation 81%� Scenery 79%� Value for money 76%� Beach 72%� Experience foreign

culture / food 70%

Main Activities (Top 5)***� Taste local food 94%� Visit cities 93%� Learn about culture 91%� See most local icons 89%� Relax on beach 84%

Consumers: Target SegmentsUpcoming Wanderlusters: Segment Overview

Upcoming Upcoming WanderlustersWanderlusters

Positive� Plentiful Wildlife 84%� Welcoming to tourists 66% � Luxury Safaris 54% � Value for money 53% � All year round destination 50%

Negative� Very hot 82%� AIDS 76%� Apartheid 72%� Politically unstable 66%� Dangerous 60%� Expensive 57%

Segment Size

% of Market 7.6%

# of People 975k

HH Travel Spend p.a >10,000 RMB


Awareness of SA 58%


Consideration 33%


* Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data


Channel� Most do not use travel agents to help decide

on activities at destinations� Travel in group tours mainly for convenience and

safetySouth Africa� Personal safety is the main barrier to travel to SA

– Also more likely to mention high costs and lack of time to see the country as barriers

� Strong positive perceptions that South Africa offers plentiful wildlife and is a welcoming destination to tourists

� Common negative beliefs that SA is very hot, faces an AIDS issue, and is still affected by apartheid

� One-quarter know friends and relatives who have been to South Africa, though many of them give it a neutral rating

Travel Desires� Good value for money is an important consideration in

destination choice� Travels to relax and to enjoy beautiful natural scenery� Enjoys tasting local food and visiting cities, similar to most Chinese

travellers– Also more likely to enjoy more atypical activities of staying

with locals in their homes, off-road driving, golfing and gambling

� Japan is very popular — Japan is the 3rd most common destination they have travelled to in the past and the 3rd most likely destination to travel to in the future

Potential Travel to South Africa� If travelling to South Africa, interested in seeing wildlife and the natural

beauty� They would prefer to travel in a group package tour� On average, plan to spend RMB 19,000 per person for a 10 day trip

Demographics� Half male, half female, with an average age of 35

– A large share (27%) is single and 51% do not have kids yet

� 31% live in Guangzhou and another 36% live in Shanghai

� 76% earn over RMB 10,000 household income per monthPast Travel Profile� All are self-paying travellers � All have visited only 1 destination in the past 5 years

– 18% went to Thailand, 14% to South Korea and 14% to Japan

� Most have travelled during the summer months of July through September

Interest and Awareness� Highly worldly, with 70% eating foreign foods regularly

and 49% participating in adult hobby classes (e.g., history)� Interested in SA and a high proportion (22%) have

asked travel agents about holidaying in South Africa� Friend and relative recommendations are the most popular

ways to first hear about a destination

Behavior Profile� Total planning time (from origination to actual trip) is

about 1–2 months� Over half regularly travel in group package tours� Most common travel companions are friends and family

Spend� High enough holiday budgets and holiday spend to

afford a holiday in South Africa*– 52% have annual holiday budgets RMB 15,000+ per

person – 63% spent RMB 15,000+ per person on their

favourite trip

Channel� 57% rely on travel agents and tour operators when

they do independent travel� CTS and CITS are the most popular travel agencies

used� 46% looks into 3 different sources of information when

deciding on holiday destinations and planning them– Most popular information sources are Internet and

friend and relative recommendations

Consumers: Target SegmentsUpcoming Wanderlusters: Customer Portrait®




Usage Environment


Usage Behavior


Consumers: Target SegmentsUpcoming Wanderlusters: Consumer Portrait® Story

A less experienced traveller seeking beautiful natural sceneryIvy Wang is young and energetic. At 32, she has just married and moved to Guangzhou with her husband. As they have both started new jobs, she is not yet ready for a child. She loves travelling but doesn’t have much opportunity and money to do so in her current position as a saleswomen. Instead she saves her hard-earned salary and few vacation days to go on one international holiday every few years. Two years ago, she went on a tour to Japan with her friends. She chose Japan because her parents had gone and come back with beautiful pictures of Mt. Fuji.

Prefers group tours with some free timeThough it still may be a year before she goes, Ivy is already thinking about her next holiday. She watches TV travel programs and reads the travel sections of newspapers regularly to search for cheap deals. She also periodically surfs the Internet to find out more information about destinations. Ivy prefers to travel on tour groups because she doesn’t have much travel experience and believes that they are more convenient and safe. However, she does not want the travel agent to organize all the activities on her trip — she wants a few hours to walk around the city by herself, seeing the culture and trying a local delicacy.


She’s also watched travel documentaries about South Africa and knows that the country offers beautiful wildlife and mountains and beaches. The programs convince her that South Africa would be a good holiday destination, as it is very welcoming to tourists. However, a friend of hers actually went earlier this year and told Ivy that South African cities are dangerous — in Johannesburg, the tour guide told everyone on the tour to stay in the hotel after dark because there is crime. Ivy also knows South Africa has an AIDS issue from watching the news. She is in discussions with her husband about where to go for their next holiday. Although South Africa is within budget, Australia may be a better value for money. Also, with only7 vacation days, Australia is attractive because there is a direct flight and the flight time is shorter. She will go to the CTS and CITS retails stores near her office to see what kind of group packages they offer to both destinations.

A less experienced traveller seeking beautiful natural sceneryIvy Wang is young and energetic. At 32, she has just married and moved to Guangzhou with her husband. As they have both started new jobs, she is not yet ready for a child. She loves travelling but doesn’t have much opportunity and money to do so in her current position as a saleswomen. Instead she saves her hard-earned salary and few vacation days to go on one international holiday every few years. Two years ago, she went on a tour to Japan with her friends. She chose Japan because her parents had gone and come back with beautiful pictures of Mt. Fuji.

Prefers group tours with some free timeThough it still may be a year before she goes, Ivy is already thinking about her next holiday. She watches TV travel programs and reads the travel sections of newspapers regularly to search for cheap deals. She also periodically surfs the Internet to find out more information about destinations. Ivy prefers to travel on tour groups because she doesn’t have much travel experience and believes that they are more convenient and safe. However, she does not want the travel agent to organize all the activities on her trip — she wants a few hours to walk around the city by herself, seeing the culture and trying a local delicacy.


She’s also watched travel documentaries about South Africa and knows that the country offers beautiful wildlife and mountains and beaches. The programs convince her that South Africa would be a good holiday destination, as it is very welcoming to tourists. However, a friend of hers actually went earlier this year and told Ivy that South African cities are dangerous — in Johannesburg, the tour guide told everyone on the tour to stay in the hotel after dark because there is crime. Ivy also knows South Africa has an AIDS issue from watching the news. She is in discussions with her husband about where to go for their next holiday. Although South Africa is within budget, Australia may be a better value for money. Also, with only7 vacation days, Australia is attractive because there is a direct flight and the flight time is shorter. She will go to the CTS and CITS retails stores near her office to see what kind of group packages they offer to both destinations.




Top 5 Sources (General)� Friends / relatives 35%� Travel magazines 22%� Internet 21%� Newspapers 15%� TV travel programmes /

documentaries 16%


Travel Partner� Colleague 52% � Friend 17%� Spouse only 16%




– Shanghai 50%– Beijing 30%– Shenzhen 15%


– <10 55%– 10–15 20%– >15 25%



Purchase Channels**** (Total Accommodation)� CITS 30%� CTS 28%� CYTS 20%� Others 13%

Reasons for TA Usage� Making bookings 52%� Helping decide activities 46%� Offer variety of packages 36%








(in last 5 years)

Past 5 Years� Thailand 37%� Singapore 34%� United States 30%� France 26%� Australia 24%

Future (Upcoming 3 Years)� Australia 20%� United States 20%� France 17%� Italy 10%� Hawaii 9%

Trip Reason (Top 5)**� Scenery 80%� Architecture 73%� Relaxation 70%� Beach 65%� Historical sites 64%

Main Activities (Top 5)***� See most local icons 96%� Visit cities 94%� Taste local food 92%� Learn about culture 92%� Relax on beach 88%

Consumers: Target SegmentsPurpose Travellers: Segment Overview

Segment 8: Segment 8: Purpose Purpose

TravellersTravellers

Positive� Plentiful Wildlife 88%� Welcoming to tourists 81% � Value for money 75% � All year round destination 68% � Good weather 65%

Negative� AIDS 86%� Apartheid 82%� Very Hot 64%� Politically unstable 63%� Expensive to fly to 54%� Dangerous 47%

Segment Size% of Market 11.4%

# of People 1,473k

HH Travel

Spend p.a.(‘000s RMB):

� <10 24%

� 10–20 46%

� >20 29%

Conversion ChallengeAwareness of SA 58%


Consideration 33%


* Those people with a “higher level profession” are either senior employees, or higher managers, or directors; ** Refers to the general reasons why this segment goes on holiday; *** Refers to those activities that this segment would like to do when on holiday in South Africa; **** Refers to the names of TA’s or Tour operators with whom this segment have made bookings for holidays; ***** Data Sourced from 2006 Brand Tracking Study; Information in red comes from Brand Tracking data


Consumers: Target SegmentsPurpose Travellers: Customer Portrait®

Channel� Travel agents are used for fulfilment

primarily: for making bookings on trips segment decided

� Group travel is attractive because it is more convenient, safe and cheap; not as likely to use group for language or visa reasons

South Africa� Strong positive perceptions of South Africa,

including good wildlife and welcoming to tourists� AIDS is the strongest negative perception of

SA� Over one-third have friends or relatives who

have travelled to SA compared to other segments– World of mouth is more positive than

market average� Top barriers include concern for personal safety,

health, and lack of knowledge– More likely than others to be concerned by

lower value for money and lack of time to see the country

Travel Desires� Besides having beautiful natural scenery, unique architecture is

also a key criteria for choosing a destination� When on holiday, likely sees most of the local icons, visits the

cities, and tastes local cuisine� Australia and the United States are the most likely future

destinations as well as the most common favourite past destinations

� Holidays within Asia are less popularPotential Travel to South Africa� On a trip to South Africa, the desired activities are seeing the

natural beauty and relaxing at the beach � Most want to travel in a group a package tour� A significant portion (40%) want a mix of an active holiday

and relaxing time on the beach� An average trip to SA should last about one week and cost RMB

10,000 to 15,000 per person

Demographics� Predominantly a male segment� Higher average age of 40� Most are married and have kids� Half live in Shanghai and one-third live in Beijing� The majority work in state-owned enterprises /

government and another 31% work for multinational companies

Past Travel Profile� All sponsored travellers� Extremely well travelled: all have visited 2 or more

destinations in past 5 years� Most do not travel at any particular time of the

year� 90% receive vacation days from their employer

– Those with vacation days generally will take 8+ days off each year

Interest and Awareness� Highly worldly segment who are particularly

likely to interact with foreign suppliers and clients and go on international business trips

� Friend and relative recommendations are less important when compared with the overall market and Internet is more important as sources of influence for hearing about holiday destinations

Behaviour Profile� Preferences for group vs. independent

travel are mixed– 38% prefer independent travel —

much higher than market average� Relatively short time between origination

and making a booking– 30% make reservations within 2

weeks of choosing destination� Very likely to travel with colleagues on

holiday

Spend� Average-sized holiday budgets which are likely to be

RMB 15,000 to 20,000 per year� Spend on favourite trip is slightly higher than budget,

at RMB 20, 000+ per personChannel� Highly involved travellers — 65% use 3 different

sources to evaluate and plan a holiday– Internet is by far the most common source of

information– Also significantly more likely to use travel

magazines, and country tourism boards




Usage Environment


Usage Behavior


Consumers: Target SegmentsPurpose Travellers: Consumer Portrait® Story

Sponsored traveller out to see the world

Tony Wang has been working for the past 10 years at a state-owned enterprise (SOE) in Beijing. He is 40 and married with one daughter but rarely travels on international holidays with is family. Instead he mostly travels with colleagues on sponsored trips, either combination business-leisure trips or incentive trips for good performance. Tony likes that these trips tend to take place when others don’t travel, in the off-season times avoiding the golden weeks. He is well-travelled and has already been to far destinations like the United States as well as closer ones like Thailand and Singapore. As a sponsored traveller, his company travel-organizer makes the bookings soon after the company decides where the trip destination. When Tony can have some choice and influence over the travel destination, he prefers one that is relaxing, offers beautiful natural scenery, and has famous architecture. On his recent trip to the U.S., he saw the Golden Gate Bridge, visited the Grand Canyon, and also tried “American junk food” (pizzas and beer) at a diner along the freeway.

An educated and informed traveller

Although Tony sometimes does not have direct influence over where he specifically travels, he is highly informed about his travel destinations and enjoys research about travel as a his hobby. He often watches travel programs and surfs the Internet to learn about the local icons various countries have to offer. He is not easily influenced by family and friends nor travel agents — he prefers to look into a few different sources of information himself before deciding how attractive a destination is. Though his salary won’t currently permit it, given the opportunity, Tony would want to travel independently to see more of the local culture of a foreign country.


One of Tony’s friends working at a state-owned mining company was already lucky enough to go on a company-sponsored trip to South Africa last year. His friend came back and showed him the beautiful pictures of the Cape Point and and the surrounding beaches. From regularly reading newspapers and watching TV, he knows that AIDS and crime are issues and wants to travel in a tour group to South Africa to be safer. One of the website he visits, a bulletin board with messages from other travellers, convinces him that South Africa has some of the best hotels in the world and is a good value for money holiday destination. For the incentive trip coming up next summer, Tony plans to persuade his colleagues to vote for South Africa over France as the destination of their sponsored trip.

Sponsored traveller out to see the world

Tony Wang has been working for the past 10 years at a state-owned enterprise (SOE) in Beijing. He is 40 and married with one daughter but rarely travels on international holidays with is family. Instead he mostly travels with colleagues on sponsored trips, either combination business-leisure trips or incentive trips for good performance. Tony likes that these trips tend to take place when others don’t travel, in the off-season times avoiding the golden weeks. He is well-travelled and has already been to far destinations like the United States as well as closer ones like Thailand and Singapore. As a sponsored traveller, his company travel-organizer makes the bookings soon after the company decides where the trip destination. When Tony can have some choice and influence over the travel destination, he prefers one that is relaxing, offers beautiful natural scenery, and has famous architecture. On his recent trip to the U.S., he saw the Golden Gate Bridge, visited the Grand Canyon, and also tried “American junk food” (pizzas and beer) at a diner along the freeway.

An educated and informed traveller

Although Tony sometimes does not have direct influence over where he specifically travels, he is highly informed about his travel destinations and enjoys research about travel as a his hobby. He often watches travel programs and surfs the Internet to learn about the local icons various countries have to offer. He is not easily influenced by family and friends nor travel agents — he prefers to look into a few different sources of information himself before deciding how attractive a destination is. Though his salary won’t currently permit it, given the opportunity, Tony would want to travel independently to see more of the local culture of a foreign country.


One of Tony’s friends working at a state-owned mining company was already lucky enough to go on a company-sponsored trip to South Africa last year. His friend came back and showed him the beautiful pictures of the Cape Point and and the surrounding beaches. From regularly reading newspapers and watching TV, he knows that AIDS and crime are issues and wants to travel in a tour group to South Africa to be safer. One of the website he visits, a bulletin board with messages from other travellers, convinces him that South Africa has some of the best hotels in the world and is a good value for money holiday destination. For the incentive trip coming up next summer, Tony plans to persuade his colleagues to vote for South Africa over France as the destination of their sponsored trip.


Consumers: Target SegmentsChina Priority Segments Summary

Segment 3Segment 3

� All self-paid travellers� All high worldly� Average age: 35� Half males / half females� Very well travelled� One-third travel in October

Segment 4Segment 4 Segment 5Segment 5 Segment 8Segment 8

Purchase and Usage

Environment

Purchase and Usage

Environment

Desired Experience

Desired Experience

Beliefs and AssociationsBeliefs and

Associations

Purchase and Usage Behaviour

Purchase and Usage Behaviour

� All self-paid travellers� All low worldly� Average age: 37� More females (57%)� Well travelled + high budget� Travel during golden weeks

� All self-paid travellers� All high worldly� Average age: 35� Half males / half females� Inexperienced travellers� Travel July–October

� All sponsored travellers� Mostly high worldly� Average age: 40� Mostly males (76%)� Very well travelled� Most flexible re: timing

� Destination choice: culture, architecture, scenery

� Activities: culture, local foods, cities, relaxation

� In SA: wildlife, culture, relax at beach

� SA for 10–15 days at 25K rmb

� Destination choice: scenery and relaxation

� Activities: local foods, cities, shopping, relaxing

� In SA: relax at beach + natural scenery


� Destination choice: value for money, relax, scenery

� Activities: local foods, cities, meeting locals

� In SA: wildlife + natural scenery


� Destination choice: scenery and architecture

� Activities: local foods, cities, local icons

� In SA: see all icons, then relax at beach


� Travel agents influential: itinerary + destination choice

� Group travel: convenient, easier to get visa

� 1/3 know others that travel to SA: neutral WOM

� Barriers: safety, health, lack of knowledge

� Travel agents very influential� Group travel: convenient,

easier to get visas� Few know others that travelled

to SA� Barriers: lack of knowledge,

health, safety, language

� Travel agents less influential� Group travel: convenient, safer� 1/4 know others that travel to

SA: neutral WOM� Barriers: safety, health, high

costs, lack of time

� Travel agents useful for fulfilment only

� Group travel: convenient, safer, cheaper

� 1/3 know others that travel to SA: positive WOM

� Barriers: safety, health, lack of knowledge, value for money, lack of time

� Info sources: Internet, travel agents, WOM, mags

� Half like independent travel� Planning time: 2–3 months� Travel with spouse or friends� High spend� Use TAs for most bookings:

CTS and CITS

� Info sources: travel agents, word of mouth

� Little independent travel� Planning time: 1–2 months� Travel with spouse� High spend� Use TAs for all bookings: CTS

and CITS

� Info sources: Internet, word of mouth

� Little independent travel� Planning time: 1–2 months� Travel with friends + family� Mid-level spend� Use TAs for all bookings: CTS

and CITS

� Info sources: Internet, magazines, tourism boards

� Half like independent travel� Planning time: 1–2 months� Travel with colleagues� Mid-level spend� If make own booking; TAs: CITS

and CTS

Upcoming Experienced Organised Purpose


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Chinese travellers to South Africa are typically aged between 25 and 44; the number of arrivals aged 18 to 24 has seen strong growth over the period 2002-2005

16%

6%

1% 1%

34%

9%

33%

0%

10%

20%

30%

40%

50%

18-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs 65+ yrs Refused

Source: Combined SAT Departure Survey Dataset, 2002-2005

Current Chinese Travellers to South Africa: DemographicsAge

20.0% -7.9%9.4% -2.4%5.6%5.5%’02–’05 CAGR

Percent of arrivals

China: % of Volume by Age, 2002–2005 Combined


19%14%

20%22%26%

0%

25%

50%

75%

100%

< R5, 000 R5,000 toR9,999

R10,000 toR19,999

R20,000 toR39,999

> R40,000

Current Chinese Travellers to South Africa: DemographicsIncome and OccupationChinese visitors to South Africa are distributed fairly evenly across different income categories

China: % of Volume by Income, 2003–2005 Combined1

Percent of

arrivals

Note: 1Breakdown of income category data not available for 2002Source: Combined SAT Departure Survey Dataset, 2002-2005

12%

43%

2%6%10%

3%

24%

0%

25%

50%

75%

100%

Business Clerical -sales

Executive Other Professional Retired Student

China: % of Volume by Occupation, 2002–2005 Combined

-19.8%156.4% 30.9%1.7%7.8%10.3%-6.6%‘02-’05 CAGR-8.8%-27.6%17.0%23.4%-8.9%‘03-’05

CAGR


Current Chinese Travellers to South Africa: DemographicsCity of Residence

410

414

419

736

875

1,205

1,336

1,580

1,803

2,889

3,395

4,541

12,703

28,942

373

0 10,000 20,000 30,000 40,000

Haimen

Changsha

Chengdu

Sian

Nanking

Xiamen

Victoria Harbor

Tiajin

Fuzhou

Shenyang

Shenzhen

Guang X'hou

Peking

Shangai

Beijing

Arrivals (Thousands)

The majority of Chinese visitors to South Africa hail from Beijing and Shanghai


Top 15 Cities of Residence, 2004–2005


Current Chinese Travellers to South Africa: DemographicsTravel Partner

57

3

18

5

10

19 20

0

10

20

30

40

50

60

70

Alone Children under 18 Colleagues Family/childrenover 18

Friends Spouse/partner Tour group

Chinese visitors tend to travel alone

-16.2%29.8% 70.6%-7.0%19.6%39.1%22.6%’03–’05 CAGR

Volume of Tourists by Travel Partners, 2003–2005


Arrivals (Thousands)


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Current Chinese Travellers to South Africa: Travel BehaviourKey Numbers

Note: Spend without CapexSource: Combined SAT Departure Survey Dataset, 2002-2005

138,60811,30940,43912,30364,024Total Volume (’03–’05)

2.4

11.0

0.58

R891MM

R820

0.8

R515MM

82,639

General Holiday

1.8

25.5

0.77

R105MM

R329

0.66

R81MM

15,316

VFR All China Arrivals

Business TourismBusiness

1.5

16.1

0.76

R557MM

R565

1.05

R423MM

51,779

1.4

8.0

0.38

R162MM

R736

0.55

R62MM

13,979

2.0Avg. Number of Provinces Visited (2002–2005)

16.02005 Average Length of Stay

0.66TFDS excl. Capex to Prepaid Spend (’03–’05)

R1,820MMTotal Prepaid Spend (’03–’05)

R511Average Spend / Day (’03–’05)

NAValue / Volume Index (’03–’05)

R1,196MMTFDS excl. Capex (’03–’05)

175,737Total Volume (’02–’05)


Current Chinese Travellers to South Africa: Travel BehaviourSeasonality of Travel

8%

11%

6%

10%

9%

11%

8%

10%

6%

7%

8%

8% 9% 8%

9%

8%8%

8% 7%

7%

9%9% 9%

9%

0%

4%

8%

12%

16%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China

All Visitors

Seasonality, 2005

Share of Respondents

Source: Combined SAT Departure Survey Dataset, 2005

Seasonality out of China has worsened with peaks occurring in February, May, September and November; the peaks are closely correlated with the Golden Weeks national holidays in China


Current Chinese Travellers to South Africa: Travel BehaviourTimes Visited

54.8%38.7% -100.0%23.5%-1.1%6.3%‘02–’05 CAGR

Thousands of Arrivals

Change in Volume by Times Visited, 2002–2005


27.5

7.4

20.8

5.2

37.1

76.6

13.44.6 2.4 3.9 0.7 138.6

104.1

0.6

2.9

0.5

4.3

0.5

1.4

0.7

0

40

80

120

160

2002 First Time 2–3 Times 4–5 Times 6–9 Times 10+ Times Lived in SABefore

2003–2005

Lived in SABefore

10+ Times

6–9 Times

4–5 Times

2–3 Times

First Time

The majority of arrivals are first time visitors



In both 2004 and 2005 the split between leisure and business travellers was relatively evenly distributed

Percent of Arrivals

44% 43%

39% 39%

11% 9%

10%6%

0%

25%

50%

75%

100%

2004 2005

Other

VFR

Business

Holiday

Visits of Chinese Travellers to SA, 2004 and 2005

7%

38%

47%

9%

0%

20%

40%

60%

GeneralHoliday

Business VFR Other

41.6%8.7%7.6%0.7%’02-’05 CAGR

China: Percent of Volume by Purpose2002–2005 Combined

Current Chinese Travellers to South Africa: Travel BehaviourPurpose of Visit to South Africa


Current Chinese Travellers to South Africa: Travel BehaviourSouth African Package Tour Types

43%

55%

0% 10% 20% 30% 40% 50% 60%

Package

Independent

76%

20%

16%

42%

4%

5%

28%

1%

1%

3%

3%

0%

20%

40%

60%

80%

100%

Air Accom

Independent Travellers –Where Purchased?

(1) Package = Flight & Accommodation; Full Package = Flight, Accommodation & Food; Fully Inclusive Package = Flight, Accommodation, Food & Coach(2) Includes ONLY travellers whose primary purpose of travelling is holiday(3) Based on Q14) Which one of the following packages did you buy for your trip to South Africa? (4) Based on Q12) Where was airfare to SA/ accommodation in SA bought/paid for?Source: SAT Annual Tourism Report 2005; Combined SAT Departure Survey Dataset, 2005

Package travel accounts for more than 40% of Chinese visitors to South Africa

Package Type, 2005

85% 83%

6% 6%

1% 2%2%7% 7%

1%

1%

0%

20%

40%

60%

80%

100%

Air Accom

Package Travellers –Where Purchased?

Travel/ Agent Retailer Tour Operator Direct from Airline/ Accommodation Internet Other

Full-Package – 7.9%Fully-inclusive Package –35.2%

Myself Stayed with Family or Friends


Current Chinese Travellers to South Africa: Travel BehaviourReasons for VisitingChinese tourists are keen to explore business opportunities in South Africa and are also attracted by the country’s natural beauty

Volume of Chinese Tourists by Reasons for Visiting SA, 2005

Source: Combined SAT Departure Survey Dataset, 2005

8,620

6,579 6,430 6,2075,806 5,617

4,481

3,760 3,5292,991

2,210 2,147

1,286794 641

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Bus

ines

sop

portu

nitie

s

The

scen

ic b

eaut

y

Exp

erie

ncin

g a

diffe

rent

cou

ntry

Bus

ines

s/in

vest

men

tin

tere

sts

Exp

lorin

g po

tent

ial

busi

ness

ven

ture

s

The

wild

life

Sou

th A

frica

'sdi

ffere

nt c

ultu

res

Fam

ily/fr

iend

s

To b

e ab

le to

rela

xan

d es

cape

The

clim

ate

Sto

p ov

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Div

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fat

tract

ions

Sou

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'sun

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ness

Val

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Stu

dy/e

duca

tion

Travellers


Current Chinese Travellers to South Africa: Travel BehaviourTop Activities

27,116

24,56222,541 22,002

18,70117,545

10,475 10,166

6,696

2,3071,208 1,164 947 728

0

10,000

20,000

30,000

40,000

Vis

iting

nat

ural

attra

ctio

ns

Vis

ited

a C

asin

o

Wild

life

Cul

tura

l, hi

stor

ical

and

herit

age

Bea

ch

Bus

ines

s

Soc

ial

Them

e pa

rks

Adv

entu

re

Spo

rting

Non

e

Trad

ing

Hea

lth

Med

ical

Note: Excludes nightlife and shoppingSource: Combined SAT Departure Survey Dataset, 2005

Natural attractions, casino visits and the wildlife on offer are favourite Chinese tourist activities

Volume of Chinese Tourists by Activity, 2005

Travellers


Current Chinese Travellers to South Africa: Travel BehaviourReasons for Satisfaction

1

2

2

2

3

3

3

3

4

4

6

11

16

16

35

0 5 10 15 20 25 30 35 40

Entertainment

Business

Attractions

The diverse experiences

Restaurants/food/w ine

Weather/climate

The culture & heritage

The diverse experience

Good infrastructure

Good serivce

Visiting family/friends

Hospitality and friendly people

The w ildlife/game parks/safari

I had no outstanding experience

The scenic beauty

Volume of Chinese Tourists (Thousands)

Most Chinese visitors were satisfied with South Africa’s scenic beauty; many tourists however felt that they had no outstanding experiences

Top 15 Reasons for Satisfaction with SA, 2004–2005



Current Chinese Travellers to South Africa: Travel BehaviourDestinations within South Africa

Northern Cape2%

Western Cape55%

Eastern Cape5%

Free State3%

KwaZulu Natal12%

North West23%

Limpopo1%

Mpumalanga*6%

Provinces Visited by Chinese Travellers, 2005

Gauteng76%

Among Chinese travellers, Gauteng, the Western Cape and the North West were the most visited provinces

* Includes Kruger Park (1) Includes travellers whose primary or secondary purpose of travelling is holiday(2) Based on Q2a) During your visit to South Africa, which of the following provinces did you visit? (3) Based on Q7, what were the main attractions or landmarks that you visited in South Africa.Source: Combined SAT Departure Survey Dataset, 2005

>50%10-50%

Legend

<10%


Current Chinese Travellers to South Africa: Travel BehaviourGeographic Spread

General Holiday Geographic Spread by Accommodation Type, 2002-2005

55%

79% 84%

70%

95%

65%

100%89%

53%

45%

21%

47%

11%0%

35%

5%

30%

16%

0%

20%

40%

60%

80%

100%

Gauteng WesternCape

Eastern Cape Kwa-ZuluNatal

Mpumalanga Limpopo North West NorthernCape

Free State

Paid Accommodation Unpaid Accommodation

Other than in Gauteng and the Free State, most Chinese visitors stayed in paid accommodation

Note: Paid accommodation includes all accommodation types except for staying with friends and familySource: Combined SAT Departure Survey Dataset, 2002-2005


Seasonality by Province, 2003-2005Seasonality by Province, 2003Seasonality by Province, 2003--20052005

Current Chinese Travellers to South Africa: Travel BehaviourSeasonality by Province

0

1

2

3

4

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Gauteng Western Cape Eastern Cape KZN China

0

1

2

3

4

5

J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D

Mpumalanga North West Northern Cape Free State China

Monthly arrivals indexed to monthly arrivals

Monthly arrivals indexed to monthly arrivals

2003 2004 2005

2003 2004 2005

Arrivals of Chinese tourists are seasonal in most provinces



Current Chinese Travellers to South Africa: Travel BehaviourOther African Countries Visited

Other African Countries Visited, 2002-2005

Congo

Liberia

Gabon

Togo

Rwanda

Seychelles

Algeria

Sudan

Libya

Mali

ChadNiger

Egypt.

Angola 2.5%

Dem. Rep. Congo

EthiopiaNigeria 0.7%

Namibia

Mauritania

Zambia3.1%

Tanzania

Kenya2.7%

Somalia

Botswana2.4%

Mozambique2.7

Morocco

Madagascar

Cameroon

Zimbabwe6.7%

GhanaGuinea

Tunisia

Uganda

Cote d'Ivoire

SenegalBurkina Faso

Western Sahara

Eritrea

Malawi

Swaziland1.6%

Lesotho 1.7%

Cen. Afr. Rep.Sierra LeoneBeninGuinea-Bissau

Gambia

Equat. Guinea

Burundi

Djibouti

Mauritius

Chinese visitors tend not to visit other African countries while in South Africa; only Zimbabwe receives some Chinese tourists from South Africa

(1) Includes travellers whose primary or secondary purpose of travelling is holiday(2) Based on Q8d) Including this trip, what other African countries are you visiting?Source: Combined SAT Departure Survey Dataset, 2002-2005

>5%

4-5%

Legend

2-3%

1%

Not mentioned / Score below 1%


Mean = R12,598Mean = R12,598 Mean = R11,013Mean = R11,013

Average Prepaid Spend, 2002–2005 Average SA Spend Per Trip, 2002–2005

While Chinese tourists have been spending more in preparation for their trip to SA, they have been spending less once they arrive

14,019

11,872

9,4588,705

0

5,000

10,000

15,000

20,000

2002 2003 2004 2005

Exp

endi

ture

per

trip

, exc

l cap

ex (R

ands

)

11,107 10,884

13,329

15,070

0

5,000

10,000

15,000

20,000

2002 2003 2004 2005

Exp

endi

ture

per

trip

, exc

l cap

ex(R

ands

)


Current Chinese Travellers to South Africa: Travel BehaviourSpending in South Africa


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Potential Market and Their PerceptionsMarket Potential

While Chinese travellers to South Africa remain small in contrast to the total outbound market, 33% now indicate that they are likely to visit the country in the future

11% 17% 60%5% 3% 4%

0% 25% 50% 75% 100%

South Africa

Current & Likely Past & Likely Never, but LikelyCurrent, but Unlikely Past, but Unlikely Never & Unlikely

Current & Likely: Have visited for leisure in past 18 months (Q16b) and intend to visit for leisure in the future (Q14)Past & Likely: Have visited for leisure more than 18 months ago but less than 5 years ago (Q16b) and intend to visit for leisure in the future (Q14)Never, but Likely: Have not visited for leisure in the past 5 years (Q16b) and intend to visit for leisure in the future (Q14)Current, but Unlikely: Have visited for leisure in past 18 months (Q16b) and do not intend to visit for leisure in the future (Q14)Past, but Unlikely: Have visited for leisure more than 18 months ago but less than 5 years ago (Q16b) and do not intend to visit for leisure in the future (Q14)Never & Unlikely: Have not visited for leisure in the past 5 years (Q16b) and do not intend to visit for leisure in the future (Q14)

Source: Brand Tracking Survey, November 2006 (n = 525)

The combined The combined ““likelylikely”” segments translate to 4,257,000 segments translate to 4,257,000 people (33% of 12.9M total market size)people (33% of 12.9M total market size)

Loyalty Segments (based on all respondents), 2006


15%8%

36%

34%25%

47%

54%

44%

31%

2%1%2%2%9%

6%

58%

0%

20%

40%

60%

80%

Mar-04 Feb-05 Nov-05 Nov-06

Top-of-Mind Awareness Unaided AwarenessAided Awareness Percent Very Familiar With

Total Awareness and Familiarity (based on all respondents)

Potential Market and Their PerceptionsAwareness Over Time

2004� Aided (Q14): Which of the following international destinations for leisure purposes have you ever seen or heard travel information about? (By information we mean advertisements, special

offers, brochures, website information, articles, travel posters, television programming, etc.) (Select all that apply)� Unaided (Q13): I would like to begin by asking you about international destinations for leisure purposes. By this we mean “foreign countries that you might consider visiting for enjoyment.” When

you think about “international destinations for leisure purposes,” which countries come to mind? � Top-of-Mind (Q13): First mention to unaided awareness question.� Percent “Very Familiar” with Each Country (Q15): Of all respondents, the percentages who are “very familiar” with each as an international travel destination.2005/2006� Aided (Q9): Which of the following countries have you heard of as an international destination for leisure purposes prior to this survey?� Unaided (Q7): I would like to begin by asking you about international destinations for leisure purposes. By this we mean “foreign countries that you might consider visiting for leisure and

enjoyment.” When you think about “international destinations for leisure purposes,” which countries come to mind? � Top-of-Mind (Q7): First mention to unaided awareness question.� Percent “Very Familiar” with Each Country (Q11): Of all respondents, the percentages who are “very familiar” with each as an international destination for leisure purposes.Source: Brand Tracking Survey, November 2006

n=525n=399n=681n=813Based on all respondents

7%4%10%7%Percent very familiar with


Potential Market and Their PerceptionsReasons for Visiting SA vs. Reasons for Not Visiting SA

60%52%

49%30%

30%27%

27%19%

12%10%

2%

0% 25% 50% 75%

General issues of safetyConcerns for my personal safety

Uncertain about political climate / civil unrestConcern about AIDS

Don’t know anyone thereToo much time to get there

Not a relaxing destinationToo expensive to get thereToo expensive once there

Nothing interesting to do thereOther (please specify)

64%

62%

58%

47%

47%

44%

41%

36%

35%

33%

0% 25% 50% 75%

To relax

To experience a different culture

To see the scenery / beauty

Engage in a variety of activities

Warm climate

My friends / family recommended it

To fulfill a dream

Friendly people

I went as part of a group

My travel agent recommended it

Reasons for Visiting South Africa*, 2006

Reasons for Not Visiting South Africa**, 2006

* Based on those who have visited South Africa for leisure in the past 5 years ((n=121); 23% of all respondents); **Based on those who have not visited South Africa in the past 5 years for either business or pleasure ((n=186); 35% of all respondents); Reasons for Visiting South Africa (Q35a): Why did you choose to visit South Africa as a destination for leisure purposes? (Select all that apply); Reasons for Not Visiting South Africa (Q34): Why haven’t you visited South Africa for leisure purposes in the past 5 years? (Select all that apply)

Source: Brand Tracking Survey, November 2006


57%

46%

46%

29%

21%

14%

2%

3%

0% 10% 20% 30% 40% 50% 60% 70%

Special offer on safari

Chance to explore "off thebeaten path"

Use South Africa as a base tovisit surrounding countries

Special offer on flights

See friends / family

Special offer on hotels

Nothing would make me want toreturn

Other (please specify)

What Would Encourage First Time Visitors to Go to South Africa? (2006)

Potential Market and Their PerceptionsEncouraging First Time Visitors

Special offers on safari, a chance to explore off the beaten path and visits to surrounding countries are the most important factors encouraging visitation

Based on those who have not visited South Africa in the past 5 years and do not intend to in the future ((n=134); 26% of all respondents)Encourage Visitation (Q40): What, if anything, would encourage you to visit South Africa for leisure purposes in the future? (Select all that apply)Source: Brand Tracking Survey, November 2006


Reasons for Interest in Leisure Visit to South Africa in the Future (based on those who have not visited South Africa in the

past 5 years, but intend to in the future for leisure), 2006

Based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure ((n=91); 17% of all respondents)Interest in South Africa (Q42): Why are you interested in visiting South Africa for leisure purposes in the future? (Select all that apply)

Potential Market and Their PerceptionsDrivers of Attraction for Future Visitors

Interest in a different culture and scenic beauty are the two key drivers for future visits to South Africa

68%

51%

42%

32%

26%

26%

25%

22%

21%

20%

19%

14%

12%

11%

1%

0% 25% 50% 75%

To experience a different culture

To see the scenery / beauty

To fulfill a dream

To relax

To see the change since apartheid/see historic sites

My friends / family recommended it

My travel agent recommended it

Engage a variety of activities

Saw a special offer

Friendly people

Warm climate

To go on safari

Business

To visit friends / relatives

Other (please specify)



Based on those who have not visited South Africa in the past 5 years, but intend to in the future for leisure ((n=52); 10% of all respondents)Interest in South Africa (Q42): Why are you interested in visiting South Africa for leisure purposes in the future? (Select all that apply)

Potential Market and Their PerceptionsReasons for Not Returning

Safety-related concerns prevent some Chinese visitors from returning


Reasons for Not Returning for Leisure (n=52)

� General issues of safety (health, weather, roads, crime, etc.) 50%

� Concern about AIDS 38%

� Afraid of political climate/civil unrest 38%

� Too much time to get there 37%

� Concerns for my personal safety 35%

� Did not feel safe 27%

� Would prefer to visit other places first 19%

� Don’t know anyone there 17%

� Not a relaxing destination 13%

� Nothing interesting to do there 12%

� It’s boring 12%

� Too expensive once there 6%

� Too expensive to get there 4%

� Unfriendly people 4%

� Other (please specify) 2%

Reasons for Not Returning to South Africa(based on those who visited South Africa for leisure in the past 5 years)

Warning some bases below 75


Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Activation StrategyOrganised Wanderlusters


Product� Would be a relaxing, natural scenery

oriented holiday in SA with some planned activities to taste local food, visit cities, and shop

� Trip format should be a group package tour

� As there is a higher budget for this segment, package options should be available (some variation in activities) so traveller can effortlessly choose the most suitable one

Product� Would be a relaxing, natural scenery

oriented holiday in SA with some planned activities to taste local food, visit cities, and shop


� As there is a higher budget for this segment, package options should be available (some variation in activities) so traveller can effortlessly choose the most suitable one

Place / Channel� Focus on large travel agencies. Train

agency sales force so they are knowledgeable about South Africa’s offerings and can design packages that are most suitable for these high-budget consumers:– Travel agents are main source of

travel information– There is high reliance on travel

agents to plan activities at destination, prepare packages, and make bookings

Place / Channel� Focus on large travel agencies. Train

agency sales force so they are knowledgeable about South Africa’s offerings and can design packages that are most suitable for these high-budget consumers:– Travel agents are main source of

travel information– There is high reliance on travel

agents to plan activities at destination, prepare packages, and make bookings

Activation StrategyOrganised Wanderlusters

The 4 Marketing “Ps”

Promotion� Educate the segment about what there

is to do in SA: – South Africa can offer you a unique

holiday experience of visiting the stunning natural scenery of the tip of Africa

– There are also great beaches and relaxation opportunities

– South Africa is a developed and safe country to visit

Promotion� Educate the segment about what there

is to do in SA: – South Africa can offer you a unique

holiday experience of visiting the stunning natural scenery of the tip of Africa

– There are also great beaches and relaxation opportunities

– South Africa is a developed and safe country to visit

Price� 20,000–30,000 RMB per person for a

10–14 day trip (all inclusive of flights, accommodation, etc.)

� Mid-point 24,000 RMB for a 13 day trip� Higher holiday budgets than other

segments

Price� 20,000–30,000 RMB per person for a


� Mid-point 24,000 RMB for a 13 day trip� Higher holiday budgets than other

segments


Overall DriversOverall DriversOverall Drivers Overall BarriersOverall BarriersOverall Barriers

� Believe holidays are a time to relax and see beautiful natural scenery

� Shopping abroad appeals to Segment 4 —they have a high income and shopping is a main activity during their holidays

� International vacations are a regular part of life. They are experienced travelers and set aside a high holiday budget every year

� Believe holidays are a time to relax and see beautiful natural scenery

� Shopping abroad appeals to Segment 4 —they have a high income and shopping is a main activity during their holidays

� International vacations are a regular part of life. They are experienced travelers and set aside a high holiday budget every year

� Most do not receive any paid vacation days� Most do not receive any paid vacation days

Drivers for South AfricaDrivers for South AfricaDrivers for South Africa

� Relatively high desire to go to South Africa

� Perceive South Africa as a destination with beautiful natural scenery and is welcoming to tourists

� Already traveled to many countries and South Africa is a destination they have not been to yet

� Relatively high desire to go to South Africa

� Perceive South Africa as a destination with beautiful natural scenery and is welcoming to tourists

� Already traveled to many countries and South Africa is a destination they have not been to yet

Barriers for South AfricaBarriers for South AfricaBarriers for South Africa

� Lack awareness of South Africa and knowledge on what there is to do there as a tourist

� Concerned about safety in South Africa, and to a lesser degree health and communication difficulties

� Lack awareness of South Africa and knowledge on what there is to do there as a tourist

� Concerned about safety in South Africa, and to a lesser degree health and communication difficulties

Activation StrategyOrganised Wanderlusters: Drivers and Barriers


Activation StrategyOrganised Wanderlusters: Critical Leverage Points in the Buying Process

� Key leverage point for Segment 4 — there is high conversion rate between awareness and positivity, desire, making plans and actually going to South Africa

� Lack of information about what there is to do in South Africa isSegment 4’s main barrier

� Train travel agents to be knowledgeable about South Africa so they can share the information with Segment 4

� Distribute posters and brochures widely amongst the major travel agencies with pictures of South Africa’s natural scenery

� Key leverage point for Segment 4 — there is high conversion rate between awareness and positivity, desire, making plans and actually going to South Africa

� Lack of information about what there is to do in South Africa isSegment 4’s main barrier

� Train travel agents to be knowledgeable about South Africa so they can share the information with Segment 4

� Distribute posters and brochures widely amongst the major travel agencies with pictures of South Africa’s natural scenery

The key stages for Organised Wanderlusters are Destination Awareness, Origination of Need / Desire to Take a Holiday and Destination and Trip Type Selection

� Promote South Africa as the destination where they can relax while viewing stunning natural scenery

� Launch a campaign to portray South Africa as the world’s best place for diamond shopping

� Promote South Africa as the destination where they can relax while viewing stunning natural scenery

� Launch a campaign to portray South Africa as the world’s best place for diamond shopping

� This segment prefers travelling via group package tours and does so because they are convenient

� All South Africa products should be full group package tours� Offer several package options with variations in activities so

traveller can easily choose the package they prefer most

� This segment prefers travelling via group package tours and does so because they are convenient

� All South Africa products should be full group package tours� Offer several package options with variations in activities so

traveller can easily choose the package they prefer most

Origination of Need / Desire toTake a Holiday


Destination and Trip Type SelectionDestination and

Trip Type Selection

Trip BookingTrip Booking

Usage / Trip BehaviourUsage / Trip Behaviour

Post-trip EvaluationPost-trip Evaluation

Destination AwarenessDestination Awareness

Trip PlanningTrip Planning


Activation StrategyExperienced Wanderlusters


Product� Desires a trip to view the rich wildlife of

South Africa, with some activities to experience Africa culture, to see natural scenery, and to relax at the beach


� Package options include upgrade to luxury accommodation, as many in segment do have higher budgets

Product� Desires a trip to view the rich wildlife of

South Africa, with some activities to experience Africa culture, to see natural scenery, and to relax at the beach


� Package options include upgrade to luxury accommodation, as many in segment do have higher budgets

Place / Channel� Direct to consumer communication via

the Internet would work best, as they:– Use Internet significantly more than

other information sources– Lack of knowledge about South

Africa is a key barrier� Additionally, educate travel agencies on

South Africa product offerings so agents can help travellers decide on activities at destination

Place / Channel� Direct to consumer communication via

the Internet would work best, as they:– Use Internet significantly more than

other information sources– Lack of knowledge about South

Africa is a key barrier� Additionally, educate travel agencies on

South Africa product offerings so agents can help travellers decide on activities at destination

Activation StrategyExperienced Wanderlusters


Promotion� South Africa offers rich diversity of (safe

and developed) cultural experiences and nature-based activities:– Beautiful natural scenery and wildlife– Famous cities such as Cape town

with fresh local seafood

Promotion� South Africa offers rich diversity of (safe

and developed) cultural experiences and nature-based activities:– Beautiful natural scenery and wildlife– Famous cities such as Cape town

with fresh local seafood

Price� 20,000–30,000 RMB per person for an

8–14 day package (all inclusive of flights, accommodation, etc.)

� Mid-point is 25,000 RMB per person for 13 days, or 1,900 RMB per day

� Higher price point reflects high budget and holiday spend of segment

Price� 20,000–30,000 RMB per person for an

8–14 day package (all inclusive of flights, accommodation, etc.)

� Mid-point is 25,000 RMB per person for 13 days, or 1,900 RMB per day

� Higher price point reflects high budget and holiday spend of segment



� Like to go on holiday to explore foreign cultures and try different kinds of foreign cuisines

� Vacations are opportunities to see beautiful natural scenery which one cannot find at home

� Occasion to go to a place with better weather than in China

� Like to go on holiday to explore foreign cultures and try different kinds of foreign cuisines

� Vacations are opportunities to see beautiful natural scenery which one cannot find at home

� Occasion to go to a place with better weather than in China

� Tend to have destination in mind before going to travel agents and not easily influenced by agents

� Tend to have destination in mind before going to travel agents and not easily influenced by agents


� High interest, positivity and desire to go to South Africa

� Many positive impressions of South Africa, including plentiful wildlife, welcoming to tourists, luxury safaris, all year round destination and good value for money

� Many have friends and relatives who have been to South Africa and returned with good word-of-mouth

� High interest, positivity and desire to go to South Africa

� Many positive impressions of South Africa, including plentiful wildlife, welcoming to tourists, luxury safaris, all year round destination and good value for money

� Many have friends and relatives who have been to South Africa and returned with good word-of-mouth


� Particularly worried about personal safety in South Africa

� Associate South Africa with apartheid and AIDS

� Particularly worried about personal safety in South Africa

� Associate South Africa with apartheid and AIDS

Activation StrategyExperienced Wanderlusters: Drivers and Barriers


Activation StrategyExperienced Wanderlusters: Critical Leverage Points in the Buying Process

The key stages for Experienced Wanderlusters are Destination and Trip Type Selection and Trip Booking

� Segment 4 likes to do diverse types of activities on holiday, ranging from nature to culture

� Promote South Africa as a destination which has a variety of offerings, from scenery and wildlife to an unique African-European culture to fresh seafood

� Segment 4 likes to do diverse types of activities on holiday, ranging from nature to culture

� Promote South Africa as a destination which has a variety of offerings, from scenery and wildlife to an unique African-European culture to fresh seafood

� There is a need to translate high interest, positivity and desire to go into actually making plans. With high spending and rich travel experience, Segment 5 is also the target of competitors

� Emphasize positive perceptions that South Africa is an all-year-round destination and good value for money to differentiate from competitors

� Train travel agencies so they are more knowledgeable and can help travellers decide on activities to do in South Africa

� Offer more high-end packages with longer stays and optional luxury upgrades

� Include activities of viewing wildlife and natural scenery, experiencing African culture and relaxing at the beach

� There is a need to translate high interest, positivity and desire to go into actually making plans. With high spending and rich travel experience, Segment 5 is also the target of competitors

� Emphasize positive perceptions that South Africa is an all-year-round destination and good value for money to differentiate from competitors

� Train travel agencies so they are more knowledgeable and can help travellers decide on activities to do in South Africa

� Offer more high-end packages with longer stays and optional luxury upgrades

� Include activities of viewing wildlife and natural scenery, experiencing African culture and relaxing at the beach




Trip Type Selection







Activation StrategyUpcoming Wanderlusters


Product� Would like a planned itinerary that

combines safari, great, nature, (and potentially the beach and a visit to developed cities)

� Should also include meals to taste local cuisine

� Ideal organization would be a group package tour including a Chinese-speaking guide, where everything is organized and convenient for the traveller

Product� Would like a planned itinerary that

combines safari, great, nature, (and potentially the beach and a visit to developed cities)

� Should also include meals to taste local cuisine

� Ideal organization would be a group package tour including a Chinese-speaking guide, where everything is organized and convenient for the traveller

Place / Channel� Emphasis on information over the

Internet because: – Seek information on the Internet

more than any other place– Involved travellers who want to have

rich information before choosing and planning holidays

� Travel agents should be also educated in order to drive up desire by offering good value for money and targeted packages

Place / Channel� Emphasis on information over the

Internet because: – Seek information on the Internet

more than any other place– Involved travellers who want to have

rich information before choosing and planning holidays

� Travel agents should be also educated in order to drive up desire by offering good value for money and targeted packages

Activation StrategyUpcoming Wanderlusters


Promotion� Addressing drivers: South Africa is a

unique destination to see the striking natural scenery of Cape Point as well as exotic African wildlife

� Addressing barriers: South Africa is a safe holiday destination that offers good value for money as well as provides enough time to see all its important offerings in a short trip

Promotion� Addressing drivers: South Africa is a

unique destination to see the striking natural scenery of Cape Point as well as exotic African wildlife

� Addressing barriers: South Africa is a safe holiday destination that offers good value for money as well as provides enough time to see all its important offerings in a short trip

Price� 15,000–25,000 RMB per person for


� Mid-point 19,000 RMB per person for 10 days,190 RMB per day

� Wide range due to wide range of desired trip length

Price� 15,000–25,000 RMB per person for


� Mid-point 19,000 RMB per person for 10 days,190 RMB per day

� Wide range due to wide range of desired trip length



� Relaxation is by far the most important part of a holiday

� Beautiful natural scenery makes destinations very attractive

� Friend and relative recommendations excite them to go on holiday to particular destinations

� Relaxation is by far the most important part of a holiday

� Beautiful natural scenery makes destinations very attractive

� Friend and relative recommendations excite them to go on holiday to particular destinations

� Limited time to travel — do not travel on sponsored trips and most take 7 or less days of vacation each year

� Although they have a high holiday budget, they are price sensitive want good value for their money

� Limited time to travel — do not travel on sponsored trips and most take 7 or less days of vacation each year

� Although they have a high holiday budget, they are price sensitive want good value for their money


� High awareness and active interest in South Africa

� South Africa’s natural beauty and wildlife seem very attractive

� High awareness and active interest in South Africa

� South Africa’s natural beauty and wildlife seem very attractive


� Most of their friends and relatives who have been to South Africa returned with neutral to negative reviews

� South Africa’s personal safety and health issues are worrisome

� Most of their friends and relatives who have been to South Africa returned with neutral to negative reviews

� South Africa’s personal safety and health issues are worrisome

Activation StrategyUpcoming Wanderlusters: Drivers and Barriers


Activation StrategyUpcoming Wanderlusters: Critical Leverage Points in the Buying Process

� There is a need for relaxation on holiday. Promotions should target their desire to go on one international holiday trip eachyear, rewarding themselves for a hard year of work

� There is a need for relaxation on holiday. Promotions should target their desire to go on one international holiday trip eachyear, rewarding themselves for a hard year of work

� This is the critical point for Segment 3 as we are “losing” the most people here. Their high active interest and positivity dropsharply on desire and plans to go

� Through an informative website, emphasize how the natural beauty and wildlife of South Africa is one-of-a-kind. Turn their already positive perceptions of South Africa into action and distinguish South Africa from competitors with similar offerings

� Address their concerns of crime and AIDS with more positive media coverage (newspaper or TV) on any improvements South Africa has made in this area

� This is the critical point for Segment 3 as we are “losing” the most people here. Their high active interest and positivity dropsharply on desire and plans to go

� Through an informative website, emphasize how the natural beauty and wildlife of South Africa is one-of-a-kind. Turn their already positive perceptions of South Africa into action and distinguish South Africa from competitors with similar offerings

� Address their concerns of crime and AIDS with more positive media coverage (newspaper or TV) on any improvements South Africa has made in this area

The key stages for Upcoming Wanderlusters are Origination of Need, Destination and Trip Type Selection and Trip Booking




Trip Type Selection






� Offer packages of different length, some as short as 5 days, tomeet the wide range of desired trip duration

� Offer more packages fit for this segment which take place between July to October. This segment’s vacationing time is very concentrated during the months but constrained by their few number of vacation days

� Offer packages of different length, some as short as 5 days, tomeet the wide range of desired trip duration

� Offer more packages fit for this segment which take place between July to October. This segment’s vacationing time is very concentrated during the months but constrained by their few number of vacation days


Activation StrategyPurpose Travellers


Product� Would like an itinerary that allows one to

see all the unique sights of South Africa: combining stunning nature, mountains, and the beach with modern city icons and architecture

� Desires group package tours that are mix of active holiday and relaxing downtime

Product� Would like an itinerary that allows one to

see all the unique sights of South Africa: combining stunning nature, mountains, and the beach with modern city icons and architecture

� Desires group package tours that are mix of active holiday and relaxing downtime

Place / Channel� Target organizational buyers for

companies and government organizations:– Sponsored travellers do not have as

much direct interaction with travel agents

� As they are very involved, educate consumers on what South Africa has to offer through Internet websites, country tourism boards, and travel magazines

Place / Channel� Target organizational buyers for

companies and government organizations:– Sponsored travellers do not have as

much direct interaction with travel agents

� As they are very involved, educate consumers on what South Africa has to offer through Internet websites, country tourism boards, and travel magazines

Activation StrategyPurpose Travellers


Promotion� Building awareness by referencing other

familiar destinations: South Africa possesses the natural scenery and wildlife of Kenya as well as the modern infrastructure of Australia and the US

� Promote South Africa as a destination that recently gained ADS status and therefore, is a new “must-see”destination

Promotion� Building awareness by referencing other

familiar destinations: South Africa possesses the natural scenery and wildlife of Kenya as well as the modern infrastructure of Australia and the US

� Promote South Africa as a destination that recently gained ADS status and therefore, is a new “must-see”destination

Price� Two price ranges: 6–7 days packages

for 10,000–15,000 RMB per person or 15–21 day package for 20,000–30,000 RMB per person (all inclusive of flights, accommodation, etc.)

� Mid-point is 17,000 RMB for 11 day trip, 1,500 RMB per day

� Wide range suggests varying budgets for different types of organizations that pay for the sponsored travelling

Price� Two price ranges: 6–7 days packages

for 10,000–15,000 RMB per person or 15–21 day package for 20,000–30,000 RMB per person (all inclusive of flights, accommodation, etc.)

� Mid-point is 17,000 RMB for 11 day trip, 1,500 RMB per day

� Wide range suggests varying budgets for different types of organizations that pay for the sponsored travelling



� Like traveling because it is relaxing and a time to enjoy beautiful natural scenery

� Opportunity to explore different styles of architecture in the world

� Holidays are often sponsored and thus a opportunity to have fun for free or at a low cost

� Like traveling because it is relaxing and a time to enjoy beautiful natural scenery

� Opportunity to explore different styles of architecture in the world

� Holidays are often sponsored and thus a opportunity to have fun for free or at a low cost

� Do not have full control over destination choice

� Do not have full control over destination choice


� South Africa is one of the few countries they have not been to yet

� Believe South Africa offers stunning natural scenery has good weather and is an all-year-round destination

� Holidays in South Africa are good value for money

� South Africa is one of the few countries they have not been to yet

� Believe South Africa offers stunning natural scenery has good weather and is an all-year-round destination

� Holidays in South Africa are good value for money


� Concerned about personal safety and health in South Africa

� Some lack of knowledge about what to do there and what icons they can see

� Concerned about personal safety and health in South Africa

� Some lack of knowledge about what to do there and what icons they can see

Activation StrategyPurpose Travellers: Drivers and Barriers


Activation StrategyPurpose Travellers: Critical Leverage Points in the Buying Process

The key stages for Purpose Travellers are Trip Planning and Trip Booking

� Segment 8 prefers package tours that are a mix of active holiday and relaxing downtime

� Design packages which pack in a variety of activities, includingseeing nature, mountains, local icons and architecture and resting at the beach

� Offer two ranges of price points to cater to different budgets of organizations sponsoring the trip (lower price for a 6–7 day trip and a higher price for a 15–21 day trip)

� Segment 8 prefers package tours that are a mix of active holiday and relaxing downtime

� Design packages which pack in a variety of activities, includingseeing nature, mountains, local icons and architecture and resting at the beach

� Offer two ranges of price points to cater to different budgets of organizations sponsoring the trip (lower price for a 6–7 day trip and a higher price for a 15–21 day trip)

� Sponsored travellers do not interact much with travel agents� Target organizational buyers for companies and government

organization� Provide an informative Internet website, country tourism board

and travel magazine articles — Segment 8 includes many travellers who seek information from several sources when planning holidays

� Sponsored travellers do not interact much with travel agents� Target organizational buyers for companies and government

organization� Provide an informative Internet website, country tourism board

and travel magazine articles — Segment 8 includes many travellers who seek information from several sources when planning holidays




Trip Type Selection







Agenda

� Market Overview

� Travel Patterns

� Channel

� Consumers


– Target Segments


– Demographics




� Hong Kong


Hong KongMarket Overview

HK enjoys a high standard of living and has an affluent population by global standards

� Total Area: 1,092 square km

� Population: 6,940,432 (July 2006 est.)

� GDP: U.S. $253.1B (2006 est.)

� GDP per Capita: $33,479*

� GDP real growth rate: 5.9% (2006 est.)

� Total Area: 1,092 square km

� Population: 6,940,432 (July 2006 est.)

� GDP: U.S. $253.1B (2006 est.)

� GDP per Capita: $33,479*

� GDP real growth rate: 5.9% (2006 est.)

* International dollarsSource: CIA World Factbook; International Monetary Fund, World Economic Outlook Database, September 2006

Top 15 Wealthiest Countries, 2005

30,862 Netherlands15

30,897 Australia14

31,208 Finland13

31,244 Belgium12

31,397 Qatar11

32,571 Switzerland10

33,432 Austria9

33,479 Hong Kong8

34,273 Canada7

34,740 Denmark6

35,115Iceland5

40,610 Ireland4

41,399 United States3

42,364 Norway2

69,800Luxembourg1

GDP per capita ($*)CountryRank


Hong KongTravel Patterns

44.6%42.7%

33.0% 32.6%

25.5%23.3%

20.5%

6.4%4.4% 3.9%

0%

25%

50%

HongKong

Singapore Australia Malaysia Japan Taiwan SouthKorea

China Thialnd Philippines

Incidence of Leisure Travel

Source: CTC

Likely key drivers include:

� An affluent population– Among the highest per

capita GDP in Asia– Low tax rate– High disposable income

� Small state with limited domestic tourism possibilities

� Travel convenience as the regional passenger air hub

Expatriates unlikely to be a key driver

� . . . as non-Chinese nationals are only 7% of total HK population

Likely key drivers include:

� An affluent population– Among the highest per

capita GDP in Asia– Low tax rate– High disposable income

� Small state with limited domestic tourism possibilities

� Travel convenience as the regional passenger air hub

Expatriates unlikely to be a key driver

� . . . as non-Chinese nationals are only 7% of total HK population

% o

f tot

al a

dult

popu

latio

n

HK residents have the highest incidence of leisure travel among the Asian countries


Hong KongTravel Patterns: Breakdown of Outbound Travel by Destination

South and Southeast Asia, including destinations like Thailand, Singapore, the Philippines and Malaysia, are the major drawcards for Hong Kong travellers

66,513

5,787

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Thousands

416,908

2,163,346

811,968

348,384

254,229

0

1,000,000

2,000,000

3,000,000

4,000,000

72,300

Others

China and

Macao

Note: 1Excludes “Others”Source: U.S. Department of Commerce, Hong Kong Travel and Tourism 2006

Outbound HK Travellers, 2005Outbound HK Travellers,

20051

South and Southeast Asia

Americas

Europe and Middle East

North Asia

Australia and New Zealand


Hong KongChannel: Strategic Position of South Africa in Hong Kong Travel Market

High Maturity of Product

HighMaturity of

Hong Kong Travel Market

high

low

low high

High market share has been to SA

Variety of packages

has exhausted

market

High market penetration

Slowed growth rates

Price pressure of commodity products

High market transparency and

comparability

High consumer sophistication

and experience

Tendency of channel to specialize

Competitive pricing

Frequency of groups

appropriate

South Africa is an established destination within an experienced market

Standardised knowledge of sales staff re

product

Profitability driven by scale

SA as a SA as a Tourist Tourist

Product in Product in Hong KongHong Kong


Hong KongChannel: Hong Kong — A Problem of Shelf-Space

Dominant Market Logic

Market is defined by “off the shelf products”

Market is defined by “off the shelf products”

Successful products require “shelf space”

Successful products require “shelf space”

Successful marketing requires strong brand

Successful marketing requires strong brand

� Consumers have tiered destinations based on awareness and preference

� Consumers choose destinations in the same tier based on departure date and duration of trip

� Group tours, perceived as cheaper and more convenient, is the preferred way of travel particularly for far away unfamiliar destinations

� Consumers shop around in different retail stores for best value

� SA currently is a known but not preferred second tier destination for HK consumers

� SA travellers are mostly between 30–40 years old, upper middle class, travelling with 8 day 5 night group tours

� Almost none — existence of repeat travel

� Scale is king

– High volume concentration in top players

– Strong brand name, wide retail coverage, and low price leads to high market share

– Product standardization facilitates mass marketing and sales

� SA has passed the new product introduction / novelty stage and is a highly standardized product regularly available with all major wholesalers and integrated retailers

� SA is currently positioned as a mid-to-high end destination for good value accommodation and food

� SAA has strong presence in the trade, which can be better leveraged to promote SA

� SAT has minimum presence in the market and in the trade

Competitor Perspective

Consumer Perspective Channel Perspective


Hong KongChannel: South Africa Leisure Travel Channel Structure*

In Hong Kong, group package tours represent over 90% of total leisure travel to South Africa

Integrated travel agents, which are vertically and horizontally integrated, command 70% of the long-haul leisure travel market in Hong Kong

Product Owners

Intermediaries Retailers Consumers

20%, 0%75%, 0%

5%, 0%

5%, 5%

0%, 95% 0%, 25%

0%, 5%

0%,5% 0%, 75%

15%, 15%

15%, 15%

5%, 5%

>5%, >5%

70%, 70%

>5%, >5%

SA Attractions

SA Hotels SA Inbound Tour Operators

SA Transportation

SubSub--agentsagentsSelf-

funded Travellers

Incentive Tours

HKWholesalers

Airlines TicketingConsolidators

Biz Travel Biz Travel SpecialistsSpecialists

Integrated Integrated RetailersRetailers

>5%, >5%

x%, y%: where x=% of total flight volume,

y=% of total tour product volume

* Only includes group package tour volume, which covers 90% of the total leisure travel market for South AfricaSource: Channel Interviews


Hong KongChannel: Hong Kong is an important hub for air travel in East Asia

Hong Kong is a regional air hub channelling traffic between East Asia and major long-haul destinations in North America, Europe, and Australia

� Hong Kong is the regional hub for SAA, and the home base of Cathay Pacific

� Over 50% of SAA’s passengers arriving in Hong Kong are in transit to other neighbouring countries, such as Japan, Korea, China, and Taiwan

� Hong Kong is the regional hub for SAA, and the home base of Cathay Pacific

� Over 50% of SAA’s passengers arriving in Hong Kong are in transit to other neighbouring countries, such as Japan, Korea, China, and TaiwanSouth

Africa

Hong KongTaipei

Tokyo

SeoulBeijing

Shanghai

North AmericaEurope

Australia / New Zealand

Hong Kong consumers enjoy direct flights to most of the major long-haul destinations around the world as well as cheaper air fares, leading to one of the highest travel incidence rates in the region


Hong KongChannel: Price and flight time to South Africa are comparable to competitors

EuropeEurope

U.S. and U.S. and Canada*Canada*

Australia and Australia and New ZealandNew Zealand

SASA

KenyaKenya

Eastern Eastern EuropeEurope

Destinations Price (HK$)Price (HK$)

10,000–12,000

8,000–13,000

6,000–7,000

8,000–12,500

7,000–9,000

7,000–9,500



8–10

8–10

5–7

8–10

8

5–7

Price per Day(HK$)

Price per Day(HK$)

1,200–1,500

1,000–1,500

1,000–1,400

1,000–1,500

1,000–1,100

1,000–1,400

Direct Flight Frequency

Direct Flight Frequency

3x per Week

Daily

Daily

Daily

None

Daily

Flight Time (Hours)

Flight Time (Hours)

10

12~13

12~16

13

16

7

* Post 9/11, most tours to U.S. and Canada are semi-group tours, designed particularly to accommodate VFR tripsSource: Channel Interview and Visits


Hong KongChannel: Product Diversity

* Product diversity is defined by days and itinerary. Variety by types of hotels / airlines are not accounted** Excluding Eastern EuropeSource: Channel Interview; Retail Survey; Monitor Analysis

Group Package Tours

Non-group Package Tours*

Number of Products

6~7

4~5

1–2

5~6

5~7

4–510+

5

0

0

0

1


�

�

�

—

�

—

Europe**Europe**

U.S. and U.S. and CanadaCanada

Australia and Australia and New ZealandNew Zealand

Eastern EuropeEastern Europe

Central / South Central / South AmericaAmerica

SASA

South Africa has relatively low product diversity* as compared with other major long-haul destinations


Hong KongChannel: South African Product in the Market

The standard 8 day 5 night product covers over 80% of the current SA leisure travel market in Hong Kong

DAY 1DAY 1 � Depart to Johannesburg, SA

DAY 2DAY 2 � Head to Cape Town and take cable car up Table Mountain. Shop in V&A shopping center and dine in Chinese Restaurant

DAY 3DAY 3� Start your route to Seal Island. Travel to Groot Constantia sampling

wines. Sightsee at the Cape of Good Hope. Visit penguin beach after a lobster lunch

DAY 4DAY 4 � Start the Garden Route, and continue through to Oudtshoorn. Stop at an ostrich farm after an ostrich lunch

DAY 5DAY 5� Breakfast in Oudtshoorn. Arrive at Cheetah Land and Crocodile

Farm. Play with the wildlife. Take a steamboat to Knysna and stare in awe at the splendid sunset

DAY 6DAY 6� Depart from George Town. Arrive at Johannesburg at noon. Spend

the rest of day visiting the diamond center. Dinner at CarnivoreRestaurant

DAY 7DAY 7 � Breakfast in Johannesburg. Then depart to see gold pouring and mine dancing in Gold Reef City. Shuttle to the airport after lunch

DAY 8DAY 8 � Arrive in HK the next day













Product Momentum

Product Momentum

PreferencePreference

AwarenessAwareness

China Market Dynamics

Consolidated and stable, high switchabilityamong TAs

Market currently maintains sustainable scale

Shelf space and promotion at retail

level enhances awareness

11

22

Key HK Intervention Point

Market Saturation — SA as a one-off

destination

Word of mouthas a major informationsource for consumers

Reasonable Levels ofReasonable Levels ofAwarenessAwareness

Low preference and target market saturation, rather than scale, are the key barriers to further increasing demand for SA leisure travel

Variables Added to Explain HK Market

Number of people already

been to SA

Number of people already

been to SA

Build strong brand

Introduce new products

Unlike China, where scale is a major issue, SA products are widely accessible in the Hong Kong market but suffer from market fatigue

Hong KongChannel: South African Product in the Market


For SAFor SAFor SA

� Scale has been achieved

� Awareness does not necessarily translate into preference

� Low product variety leads to market saturation and low repeat travel

� Scale has been achieved

� Awareness does not necessarily translate into preference

� Low product variety leads to market saturation and low repeat travel

Hong KongChannel: Several Core Themes Emerge

Market DynamicsMarket DynamicsMarket Dynamics

� As a mature market, the Hong Kong outbound travel channel is highly consolidated and developed

� Competition is fierce as it is easy for consumers to compare and switch among different retailers and wholesale products

� Product availability and front-line staff ability to sell at the retail level are key to generating sales

� Product variety helps attract new consumer segments and create repeat travel

� As a mature market, the Hong Kong outbound travel channel is highly consolidated and developed

� Competition is fierce as it is easy for consumers to compare and switch among different retailers and wholesale products

� Product availability and front-line staff ability to sell at the retail level are key to generating sales

� Product variety helps attract new consumer segments and create repeat travel


Hong KongTarget Market: The relevant market is just under one million people

54,290 56,297 59,831 56,50863,899 66,513

4,6114,799

4,7094,428

5,0045,787

0

20,000

40,000

60,000

80,000

2000 2001 2002 2003 2004 2005

Other

ChinaandMacau

Hong Kong Resident Departures, 2000–2005

Thou

sand

s

Total PopulationHong Kong

Total Adult Population

Total Leisure Traveller

Total Out of Asia Traveller

X44.6%*

X35.2%*

* Of total adult population Source: Tourism Australia, Hong Kong Market Share 2005, 2006; U.S. Department of Commerce, Hong Kong Travel and Tourism 2001; Monitor Analysis

Based on the HK departure record, annual outbound travel outside of China and Macau reached 5.8M in 2005

6,865,600

5,422,300

2,418,300

851,000

72,300

58,90161,096

64,54060,936

68,903


Hong KongTarget Market: Travel Behaviour

* High UFR and less group package available after 9/11 Source: Monitor Trade Interviews; Monitor Analysis

50%60%

70%

90%95%

50%40%

30%

10%5%

0%

50%

100%

Asia U.S. andCanada*

Europe,Australia /

New Zealand

SA NewDestinations

FIT and Non-groupPackageTour

GroupPackageTour

Group Package vs. FIT andNon-group Package Tours

� Like group package tour because they are more convenient and cheaper

� Particularly for further, less familiar destinations

� For SA, group tour remains the predominant form of leisure travel because . . .– With limited repeat travel,

most travellers travel to SA for the first time

– Many HK people perceive SA to be relatively unsafe, particularly Johannesburg

� Like group package tour because they are more convenient and cheaper

� Particularly for further, less familiar destinations

� For SA, group tour remains the predominant form of leisure travel because . . .– With limited repeat travel,

most travellers travel to SA for the first time

– Many HK people perceive SA to be relatively unsafe, particularly Johannesburg

Percent of Leisure

PAX

HK travellers prefer group package tours, particularly for further, less familiar destinations


Hong KongTarget Market: Destinations Visited

1 Excluding China, Macau and “Other”Source: U.S. Department of Commerce, Hong Kong Travel and Tourism 2006

Destinations1 Visited, 2005

Japan Singapore Philippines Indonesia Pakistan / India / Sri

Lanka

USA New Zealand UK Other Europe

Middle East Italy

578555

367

234 229197

9163

46

224205

142

301

238

45 45 35 28 13 13

615

0

100

200

300

400

500

600

700

Thailand Taiwan SouthKorea

Malaysia OtherSoutheast

Asia

Australia Canada South &Central

America

France Germany Switzerland

Asia Europe and Middle EastAmericas, Australia and New Zealand


Hong KongTarget Market: Travel Spend

International Tourism Expenditure, 2004 (U.S.$Bn) Tourism Expenditure per Capita, 2004 (U.S. $)

USA Japan Italy Nether-lands

Russian Federation

Source: WTO, World’s Top Tourism Spenders, 2005

Hong Kong

Hong Kong Austria Denmark Switzerland Netherlands

66

57

38

29

21 1916 16 16 14 13

71

0

10

20

30

40

50

60

70

80

Germany UK France China Canada Belgium

1,9361,842

1,4591,355 1,352 1,310

1,181 1,1311,007

2,197

0

500

1,000

1,500

2,000

2,500

Singapore Norway Belgium Ireland Sweden

Hong Kong travellers are high spenders


Total number of people in our marketTotal number of people in our market

Hong KongTarget Segment: The relevant market is just under one million people

Based on the HK departure record, annual outbound travel outside China and Macau reached 5.8MM in 2005

Source: HK Consumer Research 2001, Canadian Tourism Commission; Monitor Analysis

The population of Hong Kong is our starting point

Total Adult Population

Total Leisure Traveller

Total out of Asia Traveller

2.4M

0.9M

5.4M

6.9M


Hong KongTarget Segment: SA Traveller Profile — Demographics

� Relatively Young: 78% between 25–44 years old*

� Upper middle to high income*

� Professionals: 58% are professionals*

� More female than male**

� More likely to be married

� Frequent traveller

� Relatively Young: 78% between 25–44 years old*

� Upper middle to high income*

� Professionals: 58% are professionals*

� More female than male**

� More likely to be married

� Frequent traveller

* SA Exit Survey Results, Monitor Analysis** Channel Interview, Focus Group


Hong KongTarget Segment: Overview

General Characteristics� Avg. Age

– 18–34 30%– 35–54 35%– >55 19%

Social Characteristics� Monthly HH Income

(‘000s HK$)– <15 11%– 15–40 36%– 40–75 35%– >75 18%

Purchase Channels (Airfare)� TA 79%� Tour operator 9%� Airline 9%� Company 3%

DemographicsDemographics Purchasing BehaviourPurchasing Behaviour

Likelihood of Likelihood of Recommending SARecommending SA

Top 5 Sources (General)� Friends / Family / TA 78%� Newspaper Adverts 20%� Internet / Website 10%� TV Adverts 10%� Travel Magazines 7%

Information SourcesInformation Sources

Seasonality� Travel July 11%� Travel Aug 11%� Travel Feb 10%

Travel Partner� Significant other 44% � Friends 27%� Children 25%

Group Travel to SA� Open to 90%

Preference of Accommodation in SA� 5 star but can do 4 star 44%� At least 5 star

accommodation 19%� Friends / family 13%

Trip BehaviourTrip Behaviour

ActivitiesActivitiesPast / Future LH TravelPast / Future LH Travel

Information in red comes from Brand Tracking data

Hong Kong: Hong Kong: Market Market

OverviewOverview

Market Size

# of People 851k

PP Travel Spend per trip HK $15,900


Awareness of SA 49%


Consideration 17%

Plans to go next18 months 5%

(Annualized: 3.33%)

Importance of Importance of Associations*****Associations*****

Main Trip Type (Top 5)� Tour no. of destinations 35%� Visit friends / relatives 20%� Trip to big city 12%� Enjoy nature / outdoors 8%� Culture / history trip 7%

Main Activities in SA (Top 5)� Restaurant, Theatre, Bar,

Nightclub 88%� Shopping 75%� Beach 40%� Visit natural attractions 39% � Wildlife / game viewing 38%

Would Recommend SA� Yes, definitely 87%� Yes, probably 8%� Possibly 2%� No, probably not 2%� No, definitely not 1%

Frequency of LH Vacations� Avg. # of LH vacations:

– 1 33%– 2–5 53%– >5 11%

Most Recent LH travel� U.S. 7%� Australia 6%� Canada 6%� UK 4%� Other Europe 3%

Future LH Travel Next 2 Years� Mainland U.S. 21%� Canada 15%� Australia 13%� Europe Tour 7%� UK 6%


environment 6.05� Rest and relaxation 5.84� Easy to get around 5.81� Value for money 5.80� Authentic travel

experience 5.73� Offers wide variety of

experiences 5.72� All year round travel 5.63� Welcoming People 5.61� Offers historical and

cultural experience 5.30� Offers natural wildlife

experience 4.98� Offers beach experience 4.93


Hong KongCurrent HK SA Traveller — Travel Behaviour*

� Experienced Traveller: 70% travelled long-haulone to three times in the past three years

� Travel with Group Package Tours: 70%travel with all inclusive packages

� Short Stay: 70% stay less than 7 nights

� Book within the last month before departure

– However, might not confirm by the tradeuntil 9–14 days prior to scheduled departuredate

� Highly price sensitive

� 76% travel to SA for the first time

� Experienced Traveller: 70% travelled long-haulone to three times in the past three years

� Travel with Group Package Tours: 70%travel with all inclusive packages

� Short Stay: 70% stay less than 7 nights

� Book within the last month before departure

– However, might not confirm by the tradeuntil 9–14 days prior to scheduled departuredate

� Highly price sensitive

� 76% travel to SA for the first time

Source: SA Exit Survey Results; Channel Interview; Focus Group; Monitor Analysis

We can identify certain behavioural attributes . . .


Hong KongCurrent HK SA Traveller — Seasonality of Travel

9%

7%

9%7%

8%8%

10%

8%

9%8%

9%9%

4%

8%

7%

9%

8%

10%

10%

8%

7%

6%

16%

6%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

All Visitors Hong Kong

Percent of Travellers

Monthly


Seasonality, 2005

SA benefits somewhat from the

summer peak season, which

coincides with the low season in SA

SA benefits somewhat from the

summer peak season, which

coincides with the low season in SA

The peak seasons for leisure travel are during Chinese New Year in February and the summer vacation


Hong KongCurrent HK SA Traveller — Accommodation Preference in South Africa

19%

44%

8%

2%

13% 13%15%

17%

7%10%

19%

31%

0%

25%

50%


Accommodation

Prefer 5 Star but Can Also Do 4 Star

Combination of 5, 4, and 3 Star Accommodation

(Save Money)


Accommodation

Prefer Staying with Friends and /

or Family

Other

Hong Kong

All Visitors

Preference of Accommodation in SA

Sha

re o

f R

espo

nden

ts

Note: “HK” are visitors who live in HK with Chinese or HK nationalitySource: South African Tourism Exit Survey 2002 and 2003Q1–2

HK travellers have a strong preference to stay at high end hotels when in SA

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