Essay: Growth of Chinese visitors in Australia

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  • Subject area(s): Hospitality and tourism essays
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  • Published on: December 31, 2017
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There is no single definition to the word ‘tourism’. Some definitions are universal and some are for specific purposes.  Despite the differing interests in tourism, there are three key attributes to it which describe that tourism involves travel, requires a temporary stay away from home and the primary purpose is something other than earning money in the place/s visited (Richardson & Fluker, 2004, p.5). Tourism is important for the destination in terms of economic, environmental and socio-cultural phenomenon (Weaver & Lawton, 2006, p.3).
 
Tourism is a big business and when managed properly, it can benefit everyone. It can be important to every destination, especially at regional areas as it could expand employment market and diversify the area’s economic activity. In it widest definition, tourism industry is the businesses that provide good or services to facilitate business and leisure activities away from home environment. 

In general, Australia has a lot to offer from big city buzz of Sydney, wide open spaces, coastal, landscapes and heritage of NSW and food and wine trails, its Aboriginal culture not to mention all kinds of people. By looking at the international visitor graph (Appendix 1), it is clear that New Zealand holds the highest number of outbound travelers, followed by China, USA, UK, Singapore, Japan, Malaysia, South Korea, India, HK, Germany, Indonesia, Canada and France. In total, there were 8.4million international visitors as per March 2017 and an increase of 9% from the year 2016 (Tourism Australia, 2017).  In the data compiled by Tourism Australia “International Tourism Snapshot”, it is shown that a country with higher number of outbound travelers does not necessarily spend as much as a country who has less number of outbound travelers. For instance, take China and New Zealand, New Zealand’s total spend was $2.7bn with 1,353,700 outbound travelers. On the other hand, China’s total spend was $9.7bn with 1,227,900 outbound travelers.  

1.1 Purpose 

The aim of this report is to analyze what is fuelling the growth of Chinese visitors in Australia and the impacts for the tourism and hospitality sectors. At the end of the report 

1.2 Methodology

Information are gathered from wide range of secondary data, ranging from articles, journals, Australian tourism websites, industry documents and videos from both academic and non academic websites.  

1.3 Framework

This report will explain and demonstrate what causes the outbound growth of Chinese visitors, their wants and motivations to visit Australia as well as the strategies that tourism Australia has taken to attract more Chinese visitors. To make a contrast, this report will briefly explain the potential issues that may occur to the large number of Chinese visitors to Australia. 

1. Discussions

1.1 Chinese Visitors in Australia

The growth of outbound Chinese travelers is a relatively recent phenomenon as Chinese have become the fastest-growing travel market in the world in a very short period of time. According to CEO of Shangri-La Hotels in Hong-Kong, China is a ‘Sleeping giant’, meaning they are the biggest potential market in the hospitality and tourism industry (Angelini, 2012). The China National Tourism Administration (CNTA) has predicted that the number of Chinese outbound tourists increased from 117 million in 2015 to 122 million in 2016, showing a rise of 4.3%. Chinese travelers’ expenditure for oversea trips amounted to $109.8 billion. Thus, the hospitality and tourism industry cannot afford to overlook this lucrative market. In fact, Australia is one of the countries most affected by the Chinese outbound travelers. Even though Australia takes only a small portion of the total travelers, China is still the second largest visitor market for Australia. This market is valuable with annual spending of $5 billion a year, which is expected to reach more than $13 billion by end of the decade (Freed, 2015). Australia has expanded accommodation by nearly 50%, including hotels and motels from 4,100 to 6,100 since the Chinese visitors boom in Australia (Breakey, Ding & Lee, 2008). Chinese visitors who contribute to these increase mostly come from the three main cities of China: Shanghai, Beijing and Guangdong (Tourism Australia, 2017). Approximately 50% of Chinese tourists have travelled to Australia using Chinese airlines which are dominated in non-stop seat capacity by China Southern, which takes up over 40% of the market, and China Eastern and Air China with each take up roughly 20% in 2016 (CAPA, 2016).

1.2 What is fueling this extraordinary outbound tourism?

Chinese outbound tourism has grown rapidly since Chinese economy has developed, as well as the Chinese government easing outbound tourism restrictions. China has experienced an extraordinary economic growth over the past decade with GDP per capita that outperforming along with other potential emerging markets. This Chinese economy increase has resulted in an expanding upper middle class as average income has risen, and it has led to outbound travel becoming financially accessible to a larger portion of people. This development of the Chinese income in addition to time and a desire to experience the world outside has led to some Chinese citizens spending their money on cultural aspects of life, including outbound travel (Pan, 2003). Based on the research of the World Travel & Tourism Council (WTTC), Chinese income and consumption patterns have changed as the average household income has reached $20,000, meaning that Chinese households can afford leisure trips. Moreover, as the upper middle class has expanded, the education level of the Millennials, who are viewed as the key market, has increased (Xiaoying & Abbott, 2006). Not only did approximately 236,000 Chinese outbound students account for 29% of the total international students worldwide, but they also mainly enrolled in the higher education courses in Australia (Huybers & Gong, 2015). This contributed the most to Australia’s education export sector with 13% in 2016 which is a higher percentage of travelers than those who travel for business purposes.

In the early stage of Chinese outbound tourism advances, independent trips abroad for leisure purpose were tightly controlled whereas government officials and professionals were encouraged to travel overseas, to develop their ability and knowledge by participating in more cultural and economic activities (Wang & Davidson, 2009). However, there has been a phenomenal growth of Chinese tourists visiting Australia over 40 years, from just 500 Chinese visitors in 1976 to 1.2 million in 2016 (China daily, 2017). This increase has been constantly improved since 1999 when Australia was granted Approved Destination Status (ADS) which determines which destinations Chinese citizen are able to travel to for leisure purposes. The ADS provided Australia with tourists from the three main cities of China which were Beijing, Shanghai and Guangdong, followed by the entirety of China’s provinces in (Wang & Davidson, 2009). In addition, Chinese outbound tourists can also exchange foreign currency independently without using travel agencies, making is easier for them to travel.

In addition, Tourism Australia demonstrated a global marketing campaign with the phrase ‘There’s nothing like Australia’ which spread throughout the world in 2016 to attract global market but it focused on Chinese (Marketing, 2012). Tourism Australia has invested $250 million for this campaign and it was revealed through social media which drove three million fans to Tourism Australia’s Facebook page (Australasian Leisure, 2012). It was not only rolled out through international television advertisements, but also broadcast domestically to show popular Australia attractions such as Uluru, Freycinet in Tasmania and Kangaroo Island in South Australia. The campaign had a particular focus on the Chinese market, with the advertisements being translated into Chinese languages so as to appeal directly to the target audience. An iPad application was designed so that users were enabled to book in destinations’ websites directly after exploring the attractions in the ‘There’s nothing like Australia’ advertisement (Australian Leisure, 2012).

Moreover, aviation plays a significant role in connecting Australia and China. McEvoy said (2012) that “Australia will focus on expanding the Chinese tourism market in close cooperation with the two countries airlines in accordance with increasing preference of Chinese tourists to Australia” (Marketing, 2012). According to ATC (1998), Australia was successfully able to negotiate with China for ADS as sufficient air service capacity on Australia and China route was ensured. The direct Australia and China seat capacity has expanded progressively by over 700 percent (Tourism Australia, 2006 June 19). Its development encouraged more travel for business purpose between the two countries, as well as having created additional holiday travel (Wang & Davidson, 2009). In 1995, business visitors occupied more than 40 percent of the total market whereas leisure purpose tourists accounted for less than a quarter of all arrivals from China. However, the rate of business travelers gradually decreased to 7 percent in 2016 while the leisure travelers portion expanded to 55 percent.

1.3 Potential Negative Impact of Chinese Travelers coming to Australia

Australia has all the products that appeal to the Chinese such as nature and wildlife, beaches, entertainment and not to mention it’s Aboriginal culture. The data from Tourism Australia ‘China Market Profile’ (2017) as shown on Appendix 5.1 and 5.2 shows that China holds the highest number of outbound visitors coming to Australia of 1,227,900 in May 2017 and in 2016 it had 1,199,000 arrivals. With the ever growing number of Chinese outbound visitors, there could be potential negative impacts such as social, environmental and economic impacts to Australia.

SOCIO-CULTURE

As the age group of travellers to Australia is mostly 45-59years (Tourism Australia, ‘China Consumer Profile’, 2017), there might be a language barrier while travelling to Australia compared to the millennials. Breakey, Ding, & Lee (2008) mention that the potential issue could be the high level of knowledge about Australia required from the guides or the different meaning of ‘authenticity’ or understanding what the Chinese really wants for their travelling experience. As the Chinese do not think in the same way as others, the output of what they expect will be different. Perhaps to lessen these issues, there could be a specialized Chinese team to accommodate the Chinese travelers in order to really understand what they want. From Tovar and Lockwood (2008) survey, it is reported that the highest negative impact of the high number of travelers from China is overcrowding, especially in public facilities such as parks.

ENVIRONMENT

The Chinese have different knowledge than other travelers in which it may impact their behavior and attitudes to wildlife experiences. Packer, Ballantyne, & Hughes (2014) discover that Chinese visitors are less likely to express their concern about right or wrong treatment to the animals and less likely to find beauty in wildlife and nature. Due to this, there might be potential issues of them treating the animals wrongly or even abusing them. In this regards, tourism operators need to take their behavior into consideration, especially when there are activities involving animals in the wild. Tovar & Lockwood (2008) also mention that tourism leads to the excessive litter or pollution or damage to natural areas.

ECONOMY

Tovar & Lockwood (2008) survey shows that tourism leads to the increase of local prices of some goods and services as well as increase property values that made it difficult for the locals to live in the area. As business or investment holds 7% from the total Chinese visitors coming to Australia, they could be the highest drive of the increase in prices for the destination.

1.4 Wants & Motivation of Chinese Travelers

The most important part of the tourism industry is the consumer. It is because they are the reason tourism products and services exist. It must be ensured that all the consumer is taken into consideration first and foremost in all business and planning decisions.

According to Maslow’s Hierarchy Pyramid, there are five types of human needs (Poston, 2009). Noting it down from the bottom to the top of pyramid, there are physiological needs, safety needs, belongingness and love needs, esteem needs and self actualization. It can not be justified which type of needs tourism falls under as it is not ‘needs’ but ‘wants’. However, one of the human needs, safety, is an important aspect of the Chinese travelers. To put it simply, needs are goods or services that are required for everyday life, whereas wants are goods or services that are not necessary but are desired and wish for. In conjunction to that, Osmond, Chen, & Pearce (2014) mentioned that Chinese travelers expect the host destination to have a cultural understanding of their wants and needs. Moreover, because of the lack of previous travel experience, Chinese may be slightly reserved too and prefer group tours rather than independent, which makes safety an important destination attribute (Osmond et al., 2014).

Motivation, on the other hand, is the ultimate driving force (both extrinsic and intrinsic) that explains individual’s actions (Chen, Bao, & Huang, 2014). Ryan & Deci (2000) define intrinsic as a driving factor that comes within individuals. For example, in the tourism industry context, people travel because they feel the need to relax and get away from their everyday life. The authors define extrinsic motivation as an activity done in order to attain some separable outcome. For example, people want to travel to show their social status to others. Other motivations to visit include nature and wildlife, climate, beaches and iconic attractions (Osmond et al., 2014).

It is known that the growth of China’s economy, rising disposable incomes and urbanization has lead to a rapid increase in China’s outbound tourism (Sparks & Pan, 2009; Osmond, Chen, & Pearce, 2014; King & Gardiner 2013). Not surprisingly, Australia has marked Chinese travelers as an important emerging market in the tourism industry. The data of China Market Profile from Tourism Australia (2017) shows that the five key factors for travelling to Australia are safety and security (40%), world class nature (40%), good food and wine (35%), aquatic and coastal(35%) and lastly value for money(27%). Data from Tourism Australia (2017) shows that top three regions visited by the Chinese are Sydney (63%), Melbourne (51%), and Gold Coast 33%. In addition, Li & Carr (2004) states that as of now, Gold Coast is the most visited area in Australia. Its clean and beautiful beaches, safe location, amusement parks, shopping and nightlife drive the Chinese to travel to Gold Coast (Li & Carr, 2004). Holiday, education, business, and visiting friends and relatives are the motivations that drive Chinese travelers to Australia.

As consumption of experiences is important to a large numbers of Chinese, Australia has the potential to cater to this as it has a lot of unique and memorable experience in terms of wildlife and coastal. Being one of the closest country for the Chinese to experience Western culture adds up to their motivation to visit Australia. The mode of travel affects the type of consumer experience, for example, flying to a destination compared to driving (Destination NSW, n.a.).

The experience that Australia has to offer to the Chinese market is well justified. Cognitive, sensory, affective, social identity and aesthetic are the types of experience that Osmond et al. (2014) mentioned in their article. Firstly, cognitive experiences, where Chinese travelers wants to acquire new knowledge from the West and foreign destinations. Secondly, sensory experience where they want food to be a part of their experience, for example, trying local food. Getting close to nature and a good climate also falls under this type of experience. Thirdly, affective experience which simply means experiences that appeal to individual’s inner feelings, or as mentioned above, intrinsic motivation. Fourth, social identity which can refer to extrinsic motivation. The authors mentioned that Chinese travellers want to increase their prestige and self-image. In conjunction to this, Kwek and Lee (2013) mentioned that to impress others with their economic wealth, they prefer to purchase more expensive and exclusive product to bring back home for their relatives or friends rather than local products. The chief executive officer of Destination Melbourne, Chris Buckingham mentioned that Chinese visitors spend big on leisure activities and shopping at places such as the Collins Street fashion boutiques (Traveller, 2017, para. 8). However, Pan and Laws (2003) mentioned that shopping in Australia is a disappointing experience for them because tour operators will bring them to duty free shopping in every city they visited in Australia. The results from Jago et al. (2015) also shows that shopping is one of the key drivers of negative visitor experience in Australia. Lastly, aesthetic experience which involve viewing landscapes, sightseeing and visiting museums. Other experiences that they seek are physical experience and educational experiences.

For corporate travelers, they have less significant economic influence to Australia as their main purpose to travel is for work (Kwek & Lee, 2013). However, the author explains that it does not mean that they purely travel for business because once the work is completed, they might get involved in leisure activities.

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