Online Travel Booking Grows in China, But Traditional Agents Still Dominate – Skift

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Chinese travelers still trust and use traditional travel agencies more than online booking sites in 2016. But the percentage of online travel agency penetration in China reached a record high level last year.

According to a Chinese outbound market report from the Chinese Outbound Tourism Research Institute (COTRI),20 percent of the 120 million Chinese outbound travelers booked travel using an online travel agency in 2015. That’s a seven percent increase over 2014 and the strongest indicator that booking sites continue to be more accepted throughout China.

Chinese consumers felt less pressure from pricing wars late last year when Ctrip took a stake in Qunar and began working together, a powerful alliance among two of China’s largest booking sites. That’s likely one factor swaying more consumers towards booking sites, COTRI said.

Still, 80 percent of Chinese travelers booked offline and used one of the more than 27,000 brick and mortar travel agents in China last year. The number of travel agencies in China has increased by 50 percent since 2006 and shows little signs of slowing, and COTRI projects Chinese outbound travelers will spend nearly $80 billion at travel agents this year.

Chinese consumers spent about $56 billion at travel agencies in 2015. They also booked $11 billion worth of travel through online travel agencies last year, a 70 percent increase over 2014.

While offline travel agents in China have closer relationships to consumers than their foreign counterparts have with markets elsewhere, they also have competition besides the growing popularity of Chinese booking sites like Ctrip and Qunar.

“In China, the line between retail travel agents and tour operators (also known as tourism wholesalers in other countries) is somewhat blurred. It is not uncommon for tourism wholesalers to not only create tour packages, but to also sell directly to customers through newspaper advertisements, websites and even their own retail shops,” the report states.

Chinese travel agencies can contact and work with inbound tour operators directly without wholesalers, “which can be attributed to the mind-set of disliking intermediaries. In cases when a travel agency does not have enough customers for a specific trip, for example, it will pass on its customers to a larger wholesaler and gain from the associated commission,” according to the report.

Many Chinese travel agencies operate illegally, which Wolfgang Arlt, director of COTRI, says is one of the greyest areas in the Chinese tourism industry. Around 10 percent of these travel agents have obtained outbound tour operation licenses in their own names, which allow them to sell various kinds of travel, and the rest use a license or sub-license from another company.

Online travel agencies in China face barriers that offline travel agents don’t worry about. More than half of Chinese citizens (668 million people) don’t use the Internet. China’s Communist Party also exerts a lot of control over the web which leads most consumers to feel they can trust a brick and mortar travel agent more than an online one.

And when traveling internationally for the first time–which describes a large swath of world’s largest outbound market–Chinese consumers often prefer to speak with a travel agent in person, the report points out.

“In Chinese travel media, the exposure and discussion of online travel agencies can be compared to that of Hollywood stars. Almost every day, the industry’s e-newsletters and reports provide news on Chinese online travel agencies’ volatile relationships (price wars and partnerships), weight gains and losses (share sales and acquirements) and red carpet highlights (obtaining capital investment),” the report states.

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Source: Chinese Outbound Tourism Research Institute

Online Travel Booking Grows in China, But Traditional Agents Still Dominate – Skift