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Have money, will travel - catering to Chinese tourists

September 26, 2011 | Online Travel

They are in Paris, buying Chanel shoes. They are in London, scouting Mayfair property. They are in Rome, ordering dim sum instead of pasta. Chinese tourists seem to be everywhere, yet the Chinese tourist boom is only just beginning.

The country’s $232 billion travel market is mainly domestic and hugely under-developed. A few short decades ago, Chinese citizens could not go anywhere without permission. Now members of the new middle class are eager to explore the far corners of their great nation.

Many firms are jostling to help them. On September 15th Baidu, China’s largest search engine, announced plans to list the shares of Qunar, a popular Chinese travel search aggregator, in which it purchased a controlling stake in June. In May Tencent, another online giant, snapped up 16% of eLong, a Chinese online travel company that is part-owned by Expedia. Together, Baidu and Tencent threaten Ctrip, China’s biggest travel firm. Ctrip also hawks tickets online, but its main focus is on service.

Chinese people often spend as much as 8% of their annual discretionary income on a single trip, far more than people in other emerging markets, according to the Boston Consulting Group (BCG). And the market is growing fast. BCG expects the number of Chinese who have ever rented a hotel room to triple in the next decade. Home Inns, a budget hotel chain which caters to the new army of travelling businessmen as well as to domestic tourists, has grown from one hotel in 2004 to nearly 1,000 today. It plans thousands more.

Get the full story at The Economist (free content)

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