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Chinese travelers boost spending across Canada

Article from The Globe & Mail:

Spending by Chinese travelers to Canada is up sharply, as China closes in on second place among our largest sources of foreign tourists.

The most recent report on debit- and credit-card spending in Canada, released Thursday by payment processor Moneris Solutions Corp., shows that Chinese visitors increased their use of credit cards by 30.2 per cent in the third quarter of 2015 compared with the year-earlier period. That’s dramatically higher than the 12.5-per-cent overall increase in spending on all foreign cards.

“China has become one of Canada’s largest sources of foreign tourists in recent years,” said Angela Brown, president of Moneris. Indeed, the organization said that by the third quarter of this year, Chinese visitors had overtaken those from Britain as the second-highest credit-card spenders in Canada – after visitors from the United States.

The most spending on Chinese credit cards in Canada takes place in apparel stores, Moneris said, while the biggest category of U.S. visitor spending is at restaurants.

When it comes to the overall number of visits to Canada, China still falls behind the United States and Britain, but that is expected to change within the next year with China moving into second place.

In the eight months to the end of August, the number of travellers from China rose 7.7 per cent, year-over-year, to 359,000, according to Statistics Canada.

About 512,000 visitors came from Britain. (The United States is far out in front, at 8.85 million overnight visitors.)

Destination Canada, the Crown agency responsible for selling Canada as a travel choice, has said China will overtake Britain by the end of 2016.

While visitor growth from China slowed a bit in the late summer – as it did from other countries – double-digit percentage increases should resume by the end of the year, Destination Canada president David Goldstein said.

China is no longer an emerging market, he said, but is becoming a “very high-yield traditional market.” People are now coming to Canada from secondary markets in China, not just the big cities, he said.

The growing middle class in China is one factor increasing Chinese tourism to Canada.

Another key factor was an agreement between the two governments signed five years ago, which gave Canada “approved destination status.” This allowed direct-to-consumer tourism advertising in China and permitted Chinese group visits. Quicker visa processing has also helped.

Mr. Goldstein said Chinese tourists are now travelling all across Canada and not just to the traditional sites in Western Canada, or Niagara Falls. A new direct flight from Beijing to Montreal “is opening up a whole new part of the Canadian market,” he said.

The move of China toward second place in the Canadian travel market is not a reflection of a decline in British tourism, but merely a reflection of the robustness of Chinese tourism, Mr. Goldstein said. In fact, the number of travellers from Britain rose 6 per cent in the first nine months of the year.

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China is positioned to surpass the U.S. in business travel spending by 2016 even as it faces the slowest growth in nearly 25 years.

Bloomberg Business writes……………………China is positioned to surpass the U.S. in business travel spending by 2016 even as it faces the slowest growth in nearly 25 years and the repercussions of a stock market rout and a currency devaluation.

Corporate expenditure in China on international and domestic travel will increase 11 percent to $322 billion in 2016, exceeding U.S. travel spending of $303 billion, according to estimates from the Global Business Travel Association Foundation. Chinese business travel spending will increase 61 percent to $420 billion in 2019, an indicator of economic resilience as policy makers are expected to lower their growth targets when they present the first five-year plan under President Xi Jinping next week.

Increased consumption among China’s middle class and the spread of regional domestic flights have pushed the country’s business travel market to encompass a fifth of all global corporate travel spending. Domestic travel contributes more than 95 percent to China’s total business travel spending. In the U.S., expenditures for corporate trips will increase 3.7 percent in 2016 as companies become more selective in authorizing business travel abroad, data from the Global Business Travel Association Foundation show.

“Ultimately, long-term growth possibilities for China in the business travel market are really almost underdeveloped, especially when you look at the international and domestic split,” Michael W. McCormick, executive director of the Global Business Travel Association, said by phone Wednesday. “As a country, the United States is so used to being number one in volume in every way. This is a significant milestone, and certainly a reflection of the changing global economic landscape.”

After ten years of nearly even growth across the so-called BRIC nations, China and India have pulled ahead, with business travel projected to grow at double-digit rates over the next two years, while Russia and Brazil will both face negative growth.

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Creating the veritable 800 pound Chinese OTA gorilla. Ctrip, Qunar share swap creates dominant player in China.

China’s big two players in online travel have effectively merged operations with a share swap deal.

Ctrip and Qunar will combine travel products and services which will give the companies a market share of up to 70-80% according to analysts.

“After this deal, these two companies will own the majority of the market share in China. They can coordinate a strategy in such a way that they can continue to grow market share, but meanwhile profitability and the bottom line should remain in good shape, which meets investors’ expectations and is good for both companies,” Summit Research analyst Henry Guo told Bloomberg.

Qunar majority shareholder Baidu Inc will own 25% of Ctrip, while Ctrip will gain a 45% share of Qunar.

“It demonstrates Baidu’s continuing commitment to online travel, an industry with tremendous potential ahead,” said Baidu chairman Robin Li. Qunar processed 32% of online air bookings last year while Ctrip had a 39% share of hotels in the China market according to latest independent data.

The move comes after an unsuccessful bid by Ctrip to buy out Qunar earlier this year.The online travel market will surge to more than $200 billion within five years, according to research at Goldman Sachs.

Source: Bloomberg News
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