China is becoming the main event in travel tech

Sponsored by ITB.

Technology has underpinned China’s emergence as not only an important outbound travel market but also as the breeding ground for many of the digital and mobile innovations shaping the global travel industry.

Distilling the current state of the Chinese travel market through the lens of technology is a challenge. Well-known Nasdaq-listed world leaders, mobile payments providers and home-sharing platforms all contribute to an ecosystem which is worth hundreds of billions of dollars but still has room to grow.

Ctrip leads the way

To describe Ctrip as a Chinese OTA does it a disservice – the business has a portfolio across the travel sector and, increasingly, around the globe. Interests range from minority investments in airlines, its own in-house startup incubator programme and even a licence allowing it to operate an online ride hailing service in China.

Its biggest move in a global context was the purchase some eighteen months  ago of Skyscanner, the  Edinburgh-based metasearch site. More recently it bought and is using the URL as its point of sale to markets outside China. Its strong technology and mobile culture built in China complements the many and various strategic investments and business co-operations in place outside China.

The shift into taxi apps shows that Ctrip is as close as any one brand to delivering on the full-service promise. Ctrip will runs its own network of cabs and use them as a way to get its travellers from the airport to the hotel, from their home to the airport, from their business meeting to the restaurant.

And while this initiative is only in its early days in China, it will be interesting to see the extent to which this develops in synch with Ctrip’s global expansion plans.

Didi drives into the US

Taxi app businesses such as Uber are now more often referred to as mobility providers, reflecting the segment’s evolution into new products such as chauffeurs, food delivery, car pooling, autonomous vehicles and smart city intelligence.

Didi is an interesting business in that it has used China as the springboard for a truly global approach to mobility. In March 2017 it opened a new research and development facility, Didi Labs, in Silicon Valley.

It is relatively under the radar outside China, despite the fact that its strategic investments and technology partnerships with Grab, Lyft, Ola, Uber, 99, Taxify, and Careem give it access to 80% of the world’s population.

As Ctrip’s move into this sector confirms, mobility providers are increasingly becoming a critical component within the travel experience, with China at the heart of many of the current and future developments. Didi recently launched what it calls an “intermodal transportation recommendation function” which allows users to search and book public transportation, online car-hailing and bike-sharing services in a single smartphone screen.

Airbnb finds a home in China

In the same way as Uber has become the shorthand for “taxi apps”, so too does Airbnb represent “home-sharing”. However as with Uber, the reality and the competitive landscape is more sophisticated, particularly in China.

Airbnb created an independent business unit, Airbnb China, in November 2016 to help it get closer to hosts, guests and the authorities. A few weeks ago it hosted an event in Shanghai in which Airbnb China chairman Nathan Blecharczyk told attendees that China would be Airbnb’s biggest source market by 2020.

Initiatives launched at the Shanghai event included an expansion of its online and offline “academy” which educates existing and potential hosts about how best to maximise their presence on the platform.

Also of note at the event was the growth in China of its tours and activities play, Airbnb Trips.

Embrace mobile or pay the price

Ctrip, Didi and Airbnb China are examples of tech-enabled travel firms which are not that much different from their peers outside China. But there is one area where there is a clear difference between China and the rest of the world, and that is how Chinese outbound travellers like to pay when they are in-destination.

Understanding the specific payment providers, digital wallets and financial products is a prerequisite for any hotel, restaurant, attraction or transport provider hoping to serve the Chinese traveller on their business or leisure trip.

Dragon Trail Interactive recently summarised the payments state of play in a guide to Chinese mobile payments outside China.

Its top takeaway is the importance for in-destination providers to accept the two biggest Chinese mobile wallets – Alipay and WeChat Pay, both of whom had more than half a billion registered users at the end of 2017. But it also noted that China UnionPay, better known as the credit card of choice for most Chinese international travellers, was also working on adding a digital wallet product for use overseas.

And perhaps the most resonant statistic in the report was the finding that 91% of Chinese travellers said they would be willing to spend more if Chinese payment methods were accepted.

Meeting the Millennials

The UNWTO found that in 2016 more than 136 million cross-border trips were taken by the Chinese. Removing the 60 million or so local international trips to Macau, Hong Kong and Taiwan still leaves more than 70 million truly international visits, which was more than 10% up on 2015.

The ITB World Travel Trends Report, produced by IPK International and ITB Berlin, quoted Roy Graff from Dragon Trail, who said that the growth of Chinese outbound was being driven by the Millennial generation, who now comprise some 60% of all Chinese international travellers. He explained:

This generation wants more individual experiences, they have access to more online information, and more destinations are now visa-free for Chinese travellers.

The interest in travel coming from cities outside the major metropolitan areas is also boosting China’s outbound growth. First-time travellers are more likely to want to see the world as part of a tour group, visiting the established mainstream attractions.

But more than half of China’s outbound travellers are “independent” which represents a major in-destination opportunity for suppliers who have the right marketing approach and payment options in place.

ITB China becomes bigger and better

Now in its second year, ITB China 2018 is anticipating 15,000 attendees, a big increase on the 10,000 who turned up to the inaugural event in 2017.

The second ITB China takes place next month. The event focuses exclusively on the Chinese industry. The event in China precedes the more established ITB Asia, taking place in Singapore in October and now in its 11th  year. Here, Chinese companies will exhibit alongside businesses from across Asia, with buyers and visitors from the region joining friends, colleagues and competitors from around the world.

Visitors to ITB China will have the chance to meet 700 exhibitors, all of whom are Chinese businesses looking to connect with prospects from around the globe. Some 800 buyers  will also be in attendance, while all visitors will have access to the ITB China Conference, co-hosted by TravelDaily.

Key partnerships confirmed as part of ITB China include Finland as the partner destination, a strategic partnership with the EU-China Tourism Year and Wyndham Hotel Group as the official hotel partner.

This article from ITB appears as part of the tnooz sponsored content initiative..

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