An Alibaba Group executive shared why U.S. hoteliers should pay attention to Chinese shopping habits and what they could mean for global travel.
WASHINGTON—How Chinese travelers will have an impact on the global hotel industry is a hot topic of conversation, as China’s middle class grows in its spending and traveling habits. Lee McCabe, VP, North America for China-based e-commerce platform Alibaba Group, talked about Chinese travel and spending behavior, and how U.S. hoteliers can take advantage of those trends in a talk at the recent Revenue Strategy Summit.
“Companies are better understanding China and it’s getting much easier to work with China,” McCabe said. “If you’re doing business in the U.S., you have to be thinking about doing business in China because the opportunities are there now.”
Here are four takeaways from McCabe on why U.S. hoteliers should pay attention to Chinese travelers and how to better understand their shopping habits, which includes shopping for travel:
1. Retail in China is driven by e-commerce, not bricks-and-mortar stores
China historically had a weak retail environment because of the lack of space, McCabe pointed out.
“In China, there’s about 6 inches of retail space per person,” he said. “In the U.S. it’s 24 square feet per person. That’s ripe for e-commerce.”
Because so much shopping is done online, China has developed not only a robust logistics network, McCabe said, but also a strong and secure online payments network as well, which enables fast and secure online transactions—vital when booking travel.
McCabe cited eMarketer data showing that by 2019, Chinese online shoppers will account for nearly a third of global shoppers, and 55% of all global e-commerce sales will originate from China.
2. Mobile is the internet
“In the U.S., we went from bricks and mortar to desktop to laptop to mobile,” McCabe said. “In China, they went from undeveloped bricks-and-mortar landscape straight to mobile.”
What does that mean for the Chinese consumer? “For most Chinese consumers, mobile is the internet, and the internet is mobile to them,” he said. There are 700 million internet users in China alone, he said, the majority of who access it through mobile devices. “That’s twice the population of the U.S., online and buying, in China,” McCabe said.
To add to that statistic, he pointed out that the 700 million number represents only half of China’s population. “Industries are changing in China, but certainly not slowing down,” he said. “Only half the country is online, so for e-commerce in China, there’s only one place to go and that’s up.”
He said about 80% of Alibaba’s transactions are done on a mobile device.
3. Cross-border connectivity includes travel
China’s reliance on mobile and digital transactions facilitates its growth as a travel-hungry nation, McCabe said.
“We’re all communicating and connecting cross-border, he said. “Digital has enabled this, and it’s enabling travel too.”
He characterized China’s vast outbound tourist contingent (of about 3 million in 2016) as “visiting in droves and spending more than the average traveler.”
“The burgeoning middle class in China is hungry for U.S. consumer goods and certainly for U.S. travel and U.S. travel products,” he said.
4. Customer service is important before the transaction, not after
When exploring the best ways to reach Chinese travel consumers, McCabe advised taking “everything you think you know about marketing and advertising, and throw it out the door.”
He said Chinese consumers are used to a certain level of detail when it comes to customer service, and it’s a model U.S. companies must learn to leverage if they want success with Chinese consumers.
“In the West, about 85% of customer service occurs post-transaction,” he said. “In China, it’s pre-transaction, because they have a lot of questions about every product when it comes to commerce and travel. This is the opportunity China offers.”