Around the world in 80 ways

By Yan Yiqi | China Daily | Updated: 2012-07-27 12:15

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Customized travel companies can arrange for tourists to stay in a beach resort hotel such as this one in Okinawa, Japan. [Photo / Provided to China Daily]

Tour operators rush to capitalize on rich demand for customized travel

People can always find business opportunities in the blossoming desires of China's rich set. Sellers of overseas properties, fine wines, private jets and yachts have already turned their focus to the Chinese market. Now some companies are aiming to provide services of a less materialistic nature, ones that can perhaps bring more spiritual satisfaction to people who have no hesitation when it comes to spending money.

High-end customized travel is one such service.

According to Dai Bin, president of China Tourism Academy, there is no clear definition yet of customized travel.

"It differs from a travel service that provides the same routes, accommodation and catering to every client," he says. "Customized travel service is tailored according to each client's personal demands."

A survey conducted by the academy found that 98 percent of China's travel companies are considering entering the high-end customized travel market, and 18 percent of them claim to have already started.

"The Chinese high-end travel market is flourishing and shows promising signs of stable growth, with the number of Chinese outbound tourists set to reach 78 million, a staggering increase of 12 percent year-on-year," says Rupert Hoogwerf, chairman and chief researcher of Hurun Report, which compiles list of the country's biggest earners and spenders.

The National Tourism Administration estimates that 78.4 million Chinese people will travel overseas this year, spending $80 billion (65 billion euros) during their trips. Among them, 400,000 will choose high-end customized travel services and will spend $4 billion.

Wang Tingting, an analyst with iResearch Consulting Group in Shanghai, says the customized travel market in China has great potential with the growing number of rich people in the country.

China has 2.7 million people who have personal wealth of more than 6 million yuan ($941,000, 768,000 euros), according to the Chinese Luxury Consumer White Paper 2012, published by the Industrial Bank and Hurun Report.

A survey by the credit card company Visa last year showed that China's wealthy tourists on average spend $4,448 each on a trip, the highest among Asian countries and regions.

Some foreigners join WildChina's tour to a Tibetan temple in Yunnan province. [Photo / Provided to China Daily]

"Say China's outbound travel headcount reaches 100 million next year, which is very possible, and we assume 5 percent of them choose customized services, that number of clients is more than enough for players in this market," Wang says.

The market has only been noticed recently by travel operators, and has no stable structure or leading provider yet, he says.

Dai from the tourism academy says the profit margins for companies in the general travel market range from 10 percent to 15 percent, but for high-end travel providers they can reach 20 to 30 percent. "That is why everyone is staring at this large piece of cake."

Another reason for China's tour operators rushing into the market, Wang says, is the gradually expanding domestic tourism market.

"China is opening its tourism services market to foreign players step by step," he says. "It is expected that foreign operators will be allowed to run China's outbound travel programs in the near future, so Chinese operators have to occupy the market before they come in."

Jiang Haizhong, general manager of Compass Travel Club, admits that foreign competition will have a major impact on local players.

"Customized travel service is new in China but has a long history in Western countries, and foreign operators have much more experience and standard services than us."

However, the cake is not as accessible as it seems.

"There are no more than 10 such operators in China that can be said to be well-known in the market, and each of them targets a different type of client," Jiang says. "One common feature is that they all have a certain client base and have a great knowledge of destinations."

Jiang worked in Chinese travel agencies for more than 16 years before he decided in 2010 that it was time to start his own business.

"When you have been in the market for such a long time, you know everything about it and, of course, you know there needs to be a change," he says.

Jiang says the main problem with China's general outbound travel service is that the products are almost the same.

"It is more a price-oriented market, not a service one," he says. "There are Chinese people who are no longer satisfied with those kind of travel experiences, but they cannot find operators that can provide upgraded services."

Jiang started Compass Travel Club offering walking, hiking and driving tours in Europe, Southeast Asia and Africa.

"People who dare to explore the wild world and want to have fun during the trips are my target clients. Sometimes my clients know how to have fun better than we do."