China is Asia’s largest outbound source of tourism, yet the UK lags behind most of its European competitors in attracting Chinese visitors. Tom Otley reports
There’s no doubting the importance of tourism to national economies in tough times. It is the UK’s fifth-largest industry, directly contributing £52 billion to GDP (plus £62 billion in indirect benefits). It supports 200,000 businesses and nearly 5 per cent of jobs.
At present, Chinese people make up a tiny proportion of visitors to the UK, though it is growing from that small base quickly. Visit Britain says that over the past two years “there has been a significant increase in demand for visit visas from Chinese nationals”. It adds: “In 2010 we issued more than 150,000 visit visas in China, 42 per cent more than in 2009. In 2010 the number of Chinese visitors on group tours doubled and the number of general visit applications increased by 65 per cent – a similar rise [was] expected [in 2011].”
According to forecasts by market research company Tourism Economics, there is potential for a threefold increase in the number of visits from China to the UK by 2020. With 30 million people in China watching the royal wedding in April on TV, and London 2012 occurring four years after China’s own Beijing Olympics, it’s clear there are opportunities.
In 2010, Prime Minister David Cameron identified Chinese tourists as a target. “We’re their 22nd most popular destination. But Germany is forecast to break into their top ten. Why can’t we? Currently we only have 0.5 per cent of the market share of Chinese tourists. If we could increase that to just 2.5 per cent, this could add more than half a billion pounds of spending to our economy, and some sources suggest this could mean as many as 10,000 new jobs.”
Lots of opportunities, then, but also challenges. The UK is fourth among European destinations for Chinese visitors, after Germany, France and Italy, and a fairly distant fourth at that. Of an estimated three million Chinese visitor trips to Europe in 2010, only about 127,000 were to the UK, while the other three countries are attracting between 500,000 and 700,000 tourists each per year.
Last autumn, Hilton Hotels and Resorts released research outlining how the UK was missing out on tens of millions of pounds of spending from Chinese visitors. The report, from the University of London’s School of Oriental and African Studies (SOAS), identified actions the UK needed to take to attract a bigger share of this lucrative market in the future.
The next time you complain about having to obtain a visa for a trip, consider the situation for Chinese visitors. Not only do they need to supply biometric information for visas (including fingerprints and a photo), but until recently there was no online application process and explanatory notes were only in English (they are now provided in Mandarin too, though the form is still in English).
Nick Greenfield, head of relations at the European Tour Operators Association (ETOA), says: “There’s no reason why the forms can’t be done in Chinese as well, and any cost would easily cover itself with extra interest from visitors. The early part of the form is relatively easy to complete but later open-ended questions aren’t. My favourite question, in English, is: ‘Have you engaged in any other activities that might indicate that you may not be considered a person of good character?’ Imagine trying to understand and answer that.”
In addition, as the UK is not part of the Schengen agreement, Chinese visitors have to apply for a separate visa to enter the country, whereas a Schengen visa allows free entry to all 26 European treaty area countries. Kevin Latham, a senior lecturer at SOAS and author of the report, estimates that without the Schengen restriction, the UK would probably exceed the 500,000-700,000 visits of France, Germany and Italy.
Patricia Yates, director of strategy and communications at Visit Britain, says: “Most Chinese visitors to Europe are first timers so they want to visit as many places as possible. Clearly that’s easier if they have one visa and can choose among countries such as France, Germany and Italy.”
In many ways, the Chinese tourist is similar to the Japanese visitor of a few decades ago, relying on package tours and looking to visit four, five or even more European countries in one trip. In 2010, the Schengen countries simplified visa application procedures for Chinese visitors, a move that made Europe an even more appealing option for tourists. Last summer Spain announced additional plans to ease visa requirements, encourage more direct flights and open further tourist offices in China.
I spoke to Yates in Hong Kong as she was completing a tour of China (previous stops had been Beijing and Shanghai). The delegation consisted of 32 organisations, including national and regional tourist boards, city attractions, hotel groups, tour operators and six major retail groups – Selfridges, Harrods, Westfield London, Bicester Village, McArthur Glen and the Bloomsbury Group (owner of boutiques House of Hanover and House of Cashmere). Yates says the UK is lucky to have a “good and engaged” tourism minister in John Penrose and says progress is being made in simplifying the visa application process, including the possibility of offering online applications in Mandarin.
That said, the UK visa requires biometric information, which means potential visitors have to attend one of 12 application centres in China (the Schengen visa does not currently require biometric data, though visitors from Africa will be the first to be required to supply it, sometime this year). This creates further costs, as Greenfield at the ETOA points out: “It’s something we hear from China, that travellers have to stay overnight if they visit one of these centres if it’s [far] away.”
But, clearly, this isn’t something that’s going to be changed simply because it presents a challenge to tourism. As Yates says: “The conversation is less about the price and more about the process.”
The SOAS report estimated that Chinese travellers would spend £34.8 billion in Europe in 2011, a rise of 14.6 per cent on the previous year and on track to reach more than £60 billion by 2015. If you want visitors to spend money in your country, you have to make it as easy as possible, and the UK has not embraced China Union Pay, the most popular Chinese debit card (only Harrods and Selfridges have terminals).
Does it make any difference? A Harrods spokesperson says: “The introduction of more than 100 Union Pay terminals [in 2011] has been a key factor behind the growth of sales to Chinese customers. Harrods also has more than 70 Mandarin-speaking sales staff, as well as store guide leaflets in Mandarin. Chinese shoppers represent a significant and growing proportion of our top-tier customer base. They seek out the latest limited edition and exclusive products, [with] fine jewellery and watches, fashion, accessories, beauty and wine of key interest.”
The report was released to highlight Hilton Huanying, a programme taking its name from the Chinese word for “welcome” and tailored to the needs of Chinese travellers. Any hotel from Hilton Worldwide’s ten brands can participate in the scheme, which includes front-desk team members fluent in Mandarin, a Chinese breakfast, and in-room items such as a welcome letter in Chinese, slippers, Chinese teas and TV programming. Hilton also recently launched a Chinese version of its Hilton Global Media Centre online press room.
Regular readers know what we think about this one. Restrictions on aviation in the south-east look set to continue for decades, with any proposed new super-airport a long way off. Put bluntly, Chinese airlines looking to fly into the UK won’t wait – they will simply fly to our European neighbours. One exception is Air China – having wanted to expand its flights to London but finding Heathrow had no slots available, it has now announced it will also fly into Gatwick. This is good news for Gatwick, but for Air China it means increased costs and a duplication of many operations.
The lack of direct flights to the UK from Asia means existing ones are likely to be expensive, and so traffic goes to Europe instead. Travelling by Eurostar to the UK at the end of a trip is a possibility, but it will leave us with the last scraps. There’s also the matter of 20 per cent VAT on hotel stays, something that affects business and leisure travel.
One hotel participating in the Huanying programme is the London Hilton on Park Lane. General manager Michael Shepherd says his property has lost hundreds of thousands of pounds in potential business owing to time taken to issue visas and price competitiveness being eroded by high VAT.
Sandie Dawe, chief executive of Visit Britain, is in no doubt about the value Chinese visitors can bring to the UK high street at a time when it is struggling. “Visitor numbers have been steadily rising over the past few years but we can do more to attract an even greater number,” she says. “China has a rich cultural heritage of its own and according to the latest Nations Brand Index, now has a far better understanding of British culture, our people and what they can experience when they are here. We need to build on this and ensure the industry develops products that meet their needs, tastes and desires.”
Hilton’s report estimates that Chinese visitors to Europe spend an average total of £202 per night, and can spend more than £600 in one shopping trip in London. On average, this is more than Russian or Arab travellers. British fashion house Burberry reported that 30 per cent of sales in its UK stores in 2010 were to Chinese customers. Dawe says: “If we could increase the appeal of Britain in line with our European competitors, this would help to generate nearly £1 billion from Chinese visitors every year.”
Increased contact can only be a good thing, not only on a personal level but also through delegations such as the recent one. Yates points out the increased recognition of the needs of the Chinese visitor as all-important: “We had feedback from Chinese tour operators about their difficulty in finding good quality Mandarin-speaking guides for their groups, and that’s something we can work to remedy as a matter of priority.”
So if there are any positives to take from the economic gloom, it is the likelihood of a renewed focus on making the UK a more attractive and easier place to visit.
Download “How the Rise in Chinese Tourism Will Change the Face of the European Travel Industry”at hiltonglobalmediacenter.com
