China’s travel apps on a growth path

Already more than 60% of Chinese consumers primarily use their smartphone to research their vacation and the only way is up for smartphone and app usage says EyeforTravel’s new Chinese Travel Consumer Report 2017-2018

Chinese consumers are far more smartphone and app-focused as they research and book their travel than their Western counterparts, with 60.3% using their smartphone as their main research device, versus 30.4% who mainly use a desktop or laptop finds the research.

As Chinese travellers move on to the booking phase, smartphones become less dominant than in the research phase but still leads desktop. When making a flight booking, 41.3% choose to use their smartphone, compared to 35.2% who prefer to use a desktop/laptop. Only 8.3% book using a tablet and 6.2% buy their flight face-to-face with a travel agent. Similarly, with accommodation 41.8% of respondents prefer a smartphone, 34.2% a desktop/laptop, and 8.7% of consumers use a tablet.

Within this, apps are comprehensively beating browsers for Chinese users’ time and spending. Across all flight bookings in EyeforTravel’s survey 34.4% used a smartphone app versus 6.9% who made their booking using a web browser. Once again, there is a similar pattern for accommodation bookings, underlining the unique dynamic of the market.

Furthermore, smartphone usage for travel planning is set to grow as younger generations are more smartphone-focused. Among 18-35 year olds 65.5% primarily use their smartphone to research travel but just 22.9% use desktops or laptops. For those aged above 56 47.7% prefer a smartphone and a substantially higher 43.7% go through a desktop/laptop.

Not only this but younger generations put more emphasis on travel, spending proportionally more of their annual income on tourism. They are also benefiting from improving education standards and economic conditions in China, further increasing their discretionary spending power. These conditions will make the smartphone the dominant device of the future when trying to reach the Chinese travel consumer. 

Become a member of EyeforTravel On Demand now and access the full report, which includes:

• A survey of more than 2,000 Chinese travel consumers.
• Economic analysis and projections for the Chinese economy.
• Summaries and outlooks for Chinese domestic and outbound travel.
• Consumer booking, research, and trip spending behaviours.
• Lead times for flight, accommodation and tours and activities.
• Geographic and demographic breakdowns.
• More than 50 figures, tables and charts profiling the Chinese travel consumer. 

OTAs dominate the Chinese travel market

Book direct looks to be on life support in the Chinese market as more than 70% of Chinese digital bookings are made through OTAs according to EyeforTravel’s new Chinese Travel Consumer Report 2017-2018.

Although the Chinese government has put pressure on China’s big airlines to drive more direct bookings, pushing back against the tide will be a mammoth task as EyeforTravel’s research finds that the sector has an Online Travel Agency (OTA) penetration of 77.5% for website bookings and 81.2% for bookings made through an app. In contrast, 17.6% of website users reported to EyeforTravel that they booked direct and a slightly lower 12.9% also went direct through an airline app.

This is a marked contrast between Chinese and Western markets, where airlines have been able to hold their market share or in some cases grow it and illustrates the unique dynamics of this market, where smartphones and apps play a much larger role in the travel booking process than in the West.

The report found a similar pattern for accommodation bookings, with seven out of 10 Chinese travel consumers booking through OTAs, compared to around one in 10 using a hotel’s website or apps.

The struggle to take back market share will be made more complex by the concentration of the OTA market in China, with only a handful of players, and price sensitivity key for Chinese travellers says the report. Among China’s OTAs, Ctrip, Qunar and Meituan-Dianping are the dominant forces, with the first two particularly strong in app usage, which will continue grow as China’s younger travel consumers, who favour smartphone and app booking, become a larger segment of the market. With more than nine in ten Chinese consumers visiting price comparison sites during research, they have also been able to strengthen their market proposition by becoming integral players in metasearch, further entrenching their competitive advantage.

The report also notes that Tujia is primed for growth as the biggest player in the Chinese home rental market, with around 450,000 properties nationwide. It has been strengthened by its acquisition of the home sharing businesses of both Qunar and Ctrip and agreements with HomeAway and Japan’s homeshare portal Rakuten Lifull Stay to offer more overseas listings.

Become a member of EyeforTravel On Demand now and access the full report, which includes:

• A survey of more than 2,000 Chinese travel consumers.
• Economic analysis and projections for the Chinese economy.
• Summaries and outlooks for Chinese domestic and outbound travel.
• Consumer booking, research, and trip spending behaviours.
• Lead times for flight, accommodation and tours and activities.
• Geographic and demographic breakdowns.
• More than 50 figures, tables and charts profiling the Chinese travel consumer. 

EyeforTravel's Chinese Travel Consumer Report 2017-2018

The following is the introduction EyeforTravel's Chinese Travel Consumer Report 2017-2018, which is available for EyeforTravel On Demand users now ...

In 2016, the Chinese international travel consumer finally looked vulnerable. In line with expectations from the start of that year outbound growth fell, with the rate of growth plunging from 13.8% Year-on-Year (YoY) from 2014 to 2015, down to an estimated 2.7%. A jumpy stock market, diminishing growth, a falling yuan, and a government focus on corruption all helped to dampen the market. However, 2017 is seeing the travel consumer return with a roar. Destinations from Europe to Japan to Vietnam to the polar regions are reporting big jumps in the number of arrivals and the desire to spend has returned as consumer confidence bounces back from falls in 2015 and the first half of 2016.

The story of prolific spending is changing, however. No longer is the Chinese outbound traveler primarily a shopping machine. Traditional shopping destination South Korea plunged in 2017 and across 2016 and 2017 the emphasis has shifted towards the experience. Tours and activities, accommodation and new, more adventurous destinations are benefitting from this trend.

The story isn’t just outside China as well, domestically the travel market continues to thrive and be just as mind-blowingly vast as the rest of China’s statistical repertoire. Our survey found that more than two thirds of respondents reported their last trip was made in China and the China National Tourism Administration that 4.44 billion domestic tourism trips were taken in China during 2016 (China Travel News, 2017a). Spending estimates for 2017 Chinese domestic travel run from around RMB4 trillion up to RMB 6 trillion. In just the Spring Festival holiday alone, 344 million domestic trips occurred.

Capturing this consumer’s booking can be challenging, however, particularly from the perspective of travel suppliers and Western companies.

We found the Chinese consumer is smartphone driven and app-happy, as opposed to the still desktop-driven West. The smartphone comfortably beats out desktop and laptops for research, with 60.3% using it as their primary research device, rising to 65.5% of 18-35s. Although smartphones are slightly less important for booking, they still beat out desktops and laptops, with apps the number one channel. At its most extreme, for the vacation rentals market we found that a 100% of our sample used an app. Part of this is down to the WeChat phenomenon, with the Tencent’s juggernaut beating even Facebook for time spent and monetization.

Whatever the device though, Online Travel Agencies (OTAs) are winning out. Both on the web and in apps and for accommodation and flights, they take more than 70% of digital bookings. At the forefront with popular apps are Qunar and Ctrip. This trend has even pushed the Chinese government to pressure the big airlines to try and capture more direct bookings.

For travel brands looking to attract the international Chinse consumer they need to move with this digital ecosystem, creating localized apps, tapping into Chinese social media, and building payment methods that can work with Alipay and WeChat Pay.

It is a unique market, reversing many of the norms and changing our entire industry. So, please read on and I hope that this report helps you to navigate this already formidable and rapidly expanding market.

Alex Hadwick

Head of Research, EyeforTravel Ltd