Working in Market:
The travel distribution system in China is highly regulated, with more than 2,000 travel agencies authorised to operate outbound travel business to overseas destinations, some of which can operate under the Approved Destination Status (ADS) Scheme and some under streamline visa application for Tourism Australia’s Key Distribution Partner program. In general, group travel still plays relatively large part of the Chinese outbound travel industry, however Free Independent Travel (FIT) and tailor-made traffic is growing at a faster rate.
Commission Level: 15% - 20%
- Wholesale travel agencies cater mainly for ADS group business. Many of them are expanding their distribution networks by setting up branch offices or designating sales representatives in secondary and other third-tier cities and by operating online shops on well-known digital platforms.
- There are growing trend that some wholesalers also penetrate to retail operations within the same business and are recognised as both wholesalers and retailers.
Commission Level: 15% - 25%
- Many retail travel agencies have been expanding their outlets or stores within China and are beginning to focus on FIT and tailor-made products.
- The Aussie Specialist Program (ASP) is the primary platform for Tourism Australia to train and develop retail agents to sell Australia. Each State and Territory has a module on the ASP website.
- As at December 2017, there were over 10,926 qualified Aussie Specialists in mainland China.
- Online bookings are increasing at a greater rate than traditional channels.
- Some online travel portals such as Ctrip.com, Qunar.com, Tongcheng.com and Tuniu.com have been successful in the market, particularly with air tickets sales and hotel accommodation bookings.
- Traditional travel agencies, either wholesale or retail, are making use of third-party portals to promote their products, such as Ctrip.com, Alitrip.com, fliggy.com and Tuniu.com.
Inbound Tour Operators
Commission Level: 15% - 30%
- Inbound Tour Operators (ITOs) are a vital link in the travel distribution chain in China and must be approved under the Approved Destination Scheme (ADS) to handle ADS group business. Tourism Australia recommends that Australian suppliers only deal with approved travel agents and ITOs for all ADS inbound business from China.
Approved Destination Status (ADS) Scheme
- Chinese consumers travelling in a group under an ADS visa for Australia must book through an approved ADS travel seller. Australia was one of the first Western countries to gain Approved Destination Status in 1999. There are now 140 countries and regions approved under the scheme.
- There are currently 80 Australian Inbound Tour Operators (ITO) and more than 80 Chinese outbound travel agencies in the ADS network. These agents and operators are required to comply with the ADS Code of Business Standards and Ethics.
- Austrade manages the scheme in Australia with the support of Tourism Australia and the Department of Immigration and Border Protection. For further details please visit: www.austrade.gov.au/Australian/Tourism/Working-with-China/ADS
Key Distribution Partner Program (KDP)
Tourism Australia launched its KDP program in late 2014. The objectives of the KDP program are:
- To select and appoint key outbound travel agencies in China who represent a benchmark of quality in the China travel industry.
- To demonstrate a model for the China travel industry on how to promote Australia as a destination through sustainable business practices and quality product development targeting the FIT and premium segments in particular.
- To leverage KDPs’ strong advocacy, influence and distribution networks to better serve TA’s China 2020 strategy.
- KDP agencies are given access to E-lodgement of Australian Visa by DIBP, which makes possible for them to apply Australian Visa online for their customers, who can travel individually to Australia on multiple times within validity of their visa.
- In 2017/18 there were 36 travel agencies/wholesalers partners appointed as Tourism Australia’s KDPs. These agencies are located in eight Key cities: Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Qingdao, Chongqing and Chengdu. The term of current 36 KDPs is 2 years and it will end on 30 June 2019. By then, Tourism Australia will recruit new KDPs under revised criteria of KDP9.
- Requests for tailor-made tour products are providing an opportunity to online travel agencies to expand market share in China.
- Some wholesalers are shifting their business to the retail sector to enhance their competiveness.
- Social media, media advocacy and word-of-mouth are becoming more powerful sources of information to assist Chinese travellers with planning and purchasing travel.
- The use of online sources by the Chinese market was well above the average across all markets. After online sources, respondents would talk to family and friends who have previously visited Australia.
- Travellers from Eastern, Southern and some parts of Northern China are more experienced travellers and are more mature in their product selection. While travellers from cities in Northern and Western parts of China tend to be more price driven.
- The average lead time for travel bookings is 30 to 60 days.
- Southern China is a relatively mature market in terms of product development and consumer travel behaviour. Experiences such as self-drive and golf have become popular niche segments in recent years, however these segments remain relatively small compared to the traditional leisure market.
- Premium travel is a new niche trend with big potential.
- There are many education agencies that focus on the student market, and offer short or long term study options in Australia with included leisure components. These agencies do not fall within the tourism distribution network.
PLANNING A VISIT TO MARKET
TOP TIPS FOR SALES CALLS
- Liaise closely with local representatives from your State and Territory Tourism Organisations.
- Ensure you have relevant product information and business cards produced in simplified Chinese.
- Both travel agents and consumers use brochures to obtain further information about products.
- Wechat, a social media tool, is fast becoming the most popular messaging App by the number of active users in China. Suggest set up your own WeChat account and link to Chinese travel agents for better engagement.
- Pre-arrange your appointments at least two weeks prior to your arrival by email and phone.
- Reconfirm your appointment on arrival into China and take into account traffic conditions and travel times to your destination.
- Highlight your product or service in simple English and ensure sales calls are no longer than 30 minutes. Bring a gift to exchange.
- Hiring an interpreter is helpful as taxi drivers generally do not speak English.
- A casual meeting approach is preferred, such as inviting key agents for a meal or drinks.
- The majority of agents work through ITOs and no direct rates are expected.
- The best time for sales calls is March to May and September to November.
- The key market centres to visit are Beijing, Qingdao, Shanghai, Hangzhou, Nanjing, Guangzhou, Shenzhen and Chengdu and Chongqing.
- For more general information on sales calls and planning a visit to market, please see Tourism Australia’s 'Tourism Export Toolkit'.
Key Distribution Partners
Tourism Australia is a partnership marketing organisation and works closely with airlines and travel companies on cooperative marketing to drive conversion in all priority markets.
These targeted travel companies, including wholesalers, retail and online travel agencies, form Tourism Australia’s Key Distribution Partner (KDP) program with the intention to increase total booking value of visitors to Australia.
Each KDP is selected based on the fit with Tourism Australia’s market strategy, a shared target customer profile, shared funding of marketing activity, a commitment to training their frontline sales team through the Aussie Specialist Program and a commitment to selling quality Australian product and experiences.
Download a list of Key Distribution Partners that Tourism Australia is partnering with from China for the 2017/2018 financial year.
WHERE TO FIND MORE INFORMATION
Tourism Australia’s activities in China are managed from its offices in Shanghai, Beijing, Guangzhou and Chengdu. For more information, visit Tourism Australia’s corporate website at www.tourism.australia.com.
Australia State and Territory Organisations operating in China include: Destination NSW, South Australian Tourism Commission, Tourism and Events Queensland, Tourism NT, Tourism Tasmania, Tourism Victoria and Tourism Western Australia.
- An overview on the travel distribution system
- A quick reference on key booking and travel periods for markets
- China Country Brief published by the Department of Foreign Affairs and Trade at: www.dfat.gov.au/geo
- For additional statistical reports refer to the ABS and TRA websites, www.abs.gov.au and www.tra.gov.au