China’s GDP is estimated to grow at an annual rate of some 7.9 percent over the next ten years, compared with 2.8% in the United States and 1.7% in Germany.
Chinese growth maybe slowing down, but per capita disposable income of urban consumers will double between 2010 and 2020, at a promising pace that leaves companies and marketers hoping for the best.
But Chinese luxury consumers are not homogenous or to be grouped by region of origin: instead they should be segmented by their level of earnings, their online awareness and their desire to experience new brands, foods and cultures…
The average millionaire in China today is 39 years old, with the average super rich being 41 years old – and considering the significant development of a new middle class – this means that Chinese luxury travelers are up to 30 years younger than what marketers have been accustomed to in the past.
Before making a luxury travel purchase these consumers – who are often referred to as digital veterans – conduct extensive online research, and despite a high preference for Social Media channels, they also seek advice from friends, peer-to-peer platforms, private bank advisors, and trust printed publications.
When it comes to making a reservation though, a vast majority of Millionaires and Super rich move offline, preferring domestic travel agents (61%), local business partners (52%) and local Chinese embassies (17%) to support them with their booking. Only 22% choose the hotel’s official website or other online channels.
An explosion of touchpoints is at hand. Therefore it is fundamental for luxury travel brands to strike the balance between online and offline communications, while simultaneously ensuring the main desires of Chinese luxury travelers are fulfilled.
One of the fastest growing trends is the desire for experiences rather than products. Travelers seeking to leave a place with a sommelier certificate versus a wine bottle or with a surf diploma versus a fancy surfboard are on the rise. Good examples of these are the Four Seasons tour of the world by private jet, where travelers are accompanied by a renowned art historian, a cuisine historian and Harvard Professor, and the Ritz Carlton customized wine experiences programs across Europe.
Another very important expectation to meet when it comes to Chinese luxury travelers is sublime service. Chinese rich are used to having an average of 2.5 helpers per capita, so when traveling abroad anything less than a private butler could already be perceived as a downgrade. Take the royal attachés by Taj, “trained to figure out what the guests want before the guests themselves know”, or the personal concierge at the Waldorf Astoria as great examples.
A recent report by Future Polls highlights some of the rising expectations of luxury travelers. For example, price awareness: despite being extremely wealthy these travelers can change their mind over a very little price discrepancy – as small as 50 Euros – as deal hunting for them is almost a sport. Adventure seekers: more and more travelers look for safaris in Africa, trekking tours in the North Pole or ski adventures in the Swiss Alps, abandoning the usual ‘urban’ vacation.
Some of these travelers also expect to find home abroad, so they believe the staff should speak mandarin, restaurants should serve good Chinese food and services should have an Asian twist. A small portion of travelers is also looking into clean air vacations, as a portion of younger rich becomes more and more sensitive to local environmental issues.
Luxury travel brands need to take into account the current explosion of touchpoints and get to know their digital veteran travelers better and better, because these consumers are trading up and evolving, ready to move on to the next brand as we speak…