Home from home: Luring the Chinese to the UAE

As Chinese tourists travel out of their home country in ever-increasing numbers, the UAE’s hotels are positioning themselves to welcome a new wave of big-spending visitors
By Courtney Trenwith
Sat 16 May 2015 01:12 AM

Have you noticed anything different about UAE hotels lately? Perhaps the noodle soups at breakfast or the regular availability of tea. Maybe you’ve seen more Chinese staff than usual or flicked through a Mandarin television channel in your room.

UAE hotels are becoming increasingly ‘Chinese ready’. That is, ready to welcome arguably the most important emerging travel market. Why? Because it makes sense to their bottom line.

The population itself is, of course, huge — 1.36 billion people. But more striking is the fact that China is already one of the largest travelling groups but still less than 5 percent of citizens have a passport; the growth potential is enormous — and that’s gradually being realised.

Last year, Chinese travellers made more than 67.5 million trips globally and that figure is forecast to grow at an average annual rate of 5.1 percent over the next ten years, to nearly 97 million by 2023.

They are also spending more, as a total and per trip, than other nationalities. Chinese travellers have overtaken the US as the biggest spenders in recent years, forking out $129bn in 2013, according to the United Nations World Tourism Organisation (UNWTO). The total value is expected to have risen at least another $20bn in 2014.

“China has become the golden ticket with its economic growth in the past decade, which created a new generation of visitors whose travel curiosity is now matched by their spending power,” the chief operating officer of Abu Dhabi-based hotels group Rotana, Gary Hutchinson, says.

In Dubai, the number of Chinese visitors soared 25 percent year-on-year in 2014, to 344,329, according to the Dubai Corporation for Tourism and Commerce Marketing (DTCM). China became the emirate’s seventh-largest source market, up from tenth, a significant rise in only 12 months.

The figure is likely to double to 540,000 by 2023, according to a report by InterContinental Hotels Group (IHG) and Oxford Economics, with the emirate remaining the most popular destination for Chinese tourists in the Middle East and North Africa for the foreseeable future.

Abu Dhabi also is expected to receive more than 177,000 Chinese visitors by 2023, an increase of 300 percent compared to 2013, the report says.

The growth in Dubai and Abu Dhabi is expected to beat other major cities globally, including London, Paris and Sydney, to an average stay of 3.2 nights during the decade to 2023.

Spending by Chinese tourists in the UAE also is forecast to rise sharply, by 60 percent in ten years to $781m annually, according to IHG-Oxford Economics.

An analysis of bookings on hotels.com found Chinese tourists were willing to pay more for accommodation in Dubai than any other city in the world. In 2013, they paid an average of nearly $300 per night, about 2.7 percent more than the next highest, Honolulu and New York.

“They stay longer than everybody else,” IHG chief operating officer for India, the Middle East and Africa, Pascal Gauvin says. “If a customer stays an average of 1.9 or 2 nights, [the Chinese] stay an average of 7.3 nights. That’s a huge difference.

“They stay longer than anybody else because they don’t only go to one place for one event, they like to go to a place to understand, to do sightseeing around it, take their time.

“The Chinese are not the type of people that just go on the beach and do nothing. They like activities, and Dubai is an active city, there’s always new things to do.”

The managing director and CEO of Thai-based Dusit International, which is expanding across the GCC, Chanin Donavanik, says the hospitality trend is turning towards Asia as a whole, where, other than Japan, citizens have rarely been able to afford to travel — until now.

Per capita disposable income is growing at about 10 percent annually, according to the Chinese National Bureau of Statistics. “There will be a lot more Asians coming here,” Donavanik says.

“In Europe you have 300-400 million people, in North America there’s 400 million, the Middle East [also has] 400 million. But we’re talking about 4.5 billion people in Asia who really haven’t started travelling. Dubai is central for flights between Europe and Asia; I think they will do very well.”

While the figures are already significant, the Middle East falls well behind on a global scale when it comes to enticing Chinese travellers. All other regions except the Caribbean and Central America reap more from Chinese travellers than the Middle East, which is forecast to receive less than $2.5bn in 2023, compared to about $42bn in South East Asia, $36bn in North America and more than $7bn in Africa, according to the IHG-Oxford Economics report.

DTCM has opened three offices in Beijing, Shanghai and Guangzhou, as well as launched a week-long exhibition showcasing Dubai’s progress over the past 40 years. The emirate, which hosts about 200,000 Chinese expatriates, also is making a concerted effort to increase bilateral trade with China, which recently overtook India as its largest trading partner, and to increase acceptance of the renminbi within the emirate. As economic ties improve, so too will tourism from both business and leisure travellers.

Dubai’s reputation for luxury shopping also puts it in a good position to lure Chinese travellers. The hotels.com Chinese International Traveller Report found more than half (56 percent) of all Chinese travellers shop while abroad, making it the third most popular activity after sightseeing and dining.

But the amount of money spent was much greater on shopping (52 percent) than sightseeing (18 percent) or dining (14 percent).

HSBC analyst Erwan Rambourg, in his recent book Bling Dynasty, says “no other nationality will influence luxury consumption as much as the Chinese in our lifetime”. He predicts the number of Chinese luxury consumers will double to 150 million over the next ten years, while their spending will triple.

Other research, including by Bain & Co, suggests a downturn in luxury sales growth in mainland China, while the country’s 2014 gross domestic product growth of 7.4 percent was its lowest since 2008. But the raw figures alone are enough to convince Dubai retailers and hoteliers the Chinese market cannot only not be ignored but must be actively seduced.

Many of the larger hotel brands have gone as far as implementing ‘Welcome Chinese’ programmes that include hiring Chinese-speaking staff, offering Chinese television channels and menus, ensuring all promotional material is available in Chinese and adding touches as small as offering tea at each meal.

Hutchison says six of Rotana’s hotels have received the ‘Welcome Chinese’ certification issued by the Chinese Tourism Academy, while the group also launched a website in Chinese and opened a global sales office in China in 2011.

“The Welcome Chinese certification opens many doors of opportunity for us to tailor sales campaigns with the Chinese travel industry,” Hutchison says. “We have dedicated Chinese-speaking colleagues across the group and are confident that this will give us a competitive advantage.

“China is a key feeder market for Rotana and it is important for us to grow the Rotana brand and stature in this market. The objective is to increase our market share whether business or leisure outbound travellers to all Rotana properties.”

IHG, which has created its own ‘China Ready’ programme globally, also has seven properties in the UAE accredited for Chinese visitors.

Gauvin says having appropriate food and language are critical.

“Some of the Chinese don’t speak English and definitely not Arabic, so we need to be able to both write and speak to them in Mandarin,” he says. “We can write for them in Mandarin when they take a taxi and the menus for room service and in the restaurants are in Mandarin.

“It’s not that they won’t explore some of the food but at the same time they need some comfort food, especially at breakfast. Tea is very important, they have tea at almost every occasion, and noodle soups.

“They want to stay connected with China, so [Chinese] TV channels are very, very important to them.

“[For payments], many of them are using payment cards which are unique in China, sometimes they don’t have international visa cards, so we need to make sure they have a system to allow them to use their domestic cards.”

With travelling is still a novelty in China, Gauvin says the process of checking into a hotel is seen as less of a hassle and more of an experience to be savoured.

“When they’re checking in, they love to be seen by others because it’s the prestige,” he says. “So when we do the check in we make sure they enjoy this moment, so it’s not just a process, it’s an experience. They also like to be escorted and to have slippers in their room.”

But while it may seem indulgent for the Chinese to be given such special attention, Gauvin says they’re not the only ones.

“We used to do it for the Japanese as well. They were also very unique in the way they ate and how we welcomed them,” he says.

“We do the same for people from the UAE or Saudi Arabia going abroad; we respect their traditions, we respect their needs. [For example] in spas we have separate facilities for ladies and men.”

According to Donavanik, hotels in the UAE will already do well by virtue of their luxury nature. While Chinese tourists presently are more inclined to travel in a large group and stay in a mid-priced hotel, the trend is changing.

“The Japanese were like that 20 years back,” Donavanik says. “This will all change; we’re going to see a lot more Asian people travelling individually, who are going to be staying in top hotels and willing to pay for high room rates. They’ll like it and will want to continue.”

As more Chinese enter the middle and upper classes, they are also seeking out permanent holiday homes, says Damac Properties managing director Ziad El Chaar.

The Dubai-based developer is targeting the Chinese for both its hotels and real estate projects. El Chaar says he is focusing on the three largest cities, Beijing, Shanghai and Guangzhou, as well as the northern city of Urumqi, home to China’s largest Muslim population.

“[The Chinese Muslims] on their way to Makkah, pass through Dubai, so they’re a growing, important part of the tourism in Dubai,” El Chaar says.

Chinese Muslims also are expected to travel more as their population increases. There are already 22 million Muslims in China, far more than all of the GCC countries except Saudi Arabia. Their population has grown by more than one third in the past 20 years and is expected to grow at an even faster rate in the coming decades.

IHG and Oxford Economics say Chinese visitors to Islam’s two holiest cities are expected to rise by 50 percent in total by 2023, with 61 percent more in Medina and 40 percent more in Makkah. The hotel group is opening another nine properties in Saudi Arabia, including the world’s largest Holiday Inn in Makkah, over the next three to five years to cater to the religious tourism growth.

Flights between China and the GCC also are gradually increasing.

Abu Dhabi-based Etihad Airways, which started Chinese services in 2008, now has 21 flights to three cities and was this month named ‘Airline of the Year’ at the annual China Travel & Meeting Industry Awards.

Dubai’s Emirates Airline flies twice daily to Beijing and Shanghai and daily to Guangzhou. Meanwhile, Chinese airlines are dramatically growing, including sixth-freedom traffic, indicating potential to see more flights through Dubai carrying not only Chinese but other Asians and even Americans.

China Southern and China Eastern are two of the world’s largest airlines, although their long-haul international flights are still limited, leaving room for significant growth potential. Boeing supplied a record 143 aircraft to Chinese carriers in 2013 and Airbus delivered 133, accounting for one fifth of its total business.

The Chinese government also has invested heavily in airport infrastructure, building 55 new airports since 2010.

“Chinese carriers are closing in and within seven years China will have replaced the US as the world’s largest aviation market,” John Grant, executive vice president at aviation intelligence specialist OAG, said last month.

“Whilst it is perhaps impossible to predict the future of the airline industry, the evidence suggests that China, Indonesia and Turkey might be the places where three globally dominant airlines are based in ten years’ time, benefiting as they do from large domestic markets, growing economies and an advantageous geographic position.”

El Chaar says the industry needs far more flights between the UAE and China.

“One of the main things that has to happen so we can get more Chinese tourists to Dubai is we need more flights from China because the demand for hospitality is always related to the number of seats you have on planes coming from that country,” he says.

The growing movement of Chinese also will stir governments to ease visa requirements. Presently, Chinese citizens are granted visa-free access or are able to get a visa on arrival in 74 countries (none of which are in the GCC), making it one of the least powerful passports, according to passportindex.org, which produces an annual report.

Earlier this year, DTCM announced it would start granting Chinese cruise travellers multiple visas in a bid to make it easier for them to move in and out of the UAE using Dubai ports. It also was expected to increase their length of stay.

Such measures are only likely to become more common as the world’s largest population continues to become more and more dominant internationally. Maybe it’s time to try the noodle soup next time you’re at the breakfast buffet.

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Last Updated: Thu 26 Jan 2017 01:27 PM GST

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