There are some that suggest the surging Chinese outbound market is haltering due to the very recent economic indicators coming from China. Is this an accurate analysis of the financial situation’s impact on the Chinese outbound market? Will America’s Chinese inbound market go in to a free fall? What should our strategy be?
We should look beyond the immediate situation and take a broader perspective on the realities facing China, and more specifically, the traveling Chinese middle class.
China has two financial exchanges, one in Shanghai and the other in Shenzhen. What has taken other countries a century to create, took China about ten years. In very simple terms, the purchase of stocks was at fever pitch, fueled by many unsophisticated buyers; meanwhile the economy itself was in a cooling off phase. The perfect recipe for a “bubble”. And the bubble burst.
The market had been trading at a growth rates of up to 130%. When the bubble burst, share value dropped by about 30%. The Chinese government intervened and inserted strict financial controls and other support mechanisms and within 48 hours the market bounced back. Those that lost money were latecomers to the party, while others lost some of their earlier gains. A little later a further adjustment took 8% of the market value but has again stabilized. However, those investors still held on to major gains.
We need to put the stock market growth, bubble and immediate bounce-back into perspective. Small events in China appear big to the outside world. Within China small events remain small. It has a population of 1.35 billion (4 times that of the USA), of which about 50 million households invest in the stock market, with a typical investment portfolio representing about 12% of their total assets. Remember that China is big. (Okay, an overstatement). China will continue to have the disposable income to travel with a ferocious appetite.
Not only will the Chinese continue to travel in ever growing numbers but we will see the continual increase of younger independent travelers transitioning from the traditional groups. When we analyze who is traveling we see that travelers aged under 35 make up 62% of outbound travelers.
These independent younger Chinese travelers are very comfortable with the planning process. They are also very tech savvy. Since Google is blocked in China, the domestic search engine Baidu has a stronghold on the country’s online search process, maintaining an approximate 70% market share. If you travel to Hong Kong or Taiwan, or even further afield to Thailand you will see large numbers of individual (F.I.T) Chinese travelers, who have made their own arrangements through authorized Chinese travel agents and who are welcomed with open arms with many Chinese signs, menus, and other China Ready elements. There is no slow down in Chinese travelers visiting these easier to reach destinations.
And equally there is no slow down in sharing of travel experiences through the very popular Chinese social sites such as Weibo, (Facebook meets Twitter plus a search engine), Douban (“lifestyle and culture” social networking service targeting 20-35 year olds), WeChat (text and messaging with push message capabilities), YouKu (Similar to YouTube with User Generated Content and a growing number of glitzy professionally produced video material), – and most of this is accessed by mobile devices. The percentage is a staggering 80% of the 650 million that use the internet. Clearly, if your information is not mobile friendly you are not “China Ready”.
The sharing of travel experiences is growing fast and this organic growth will not slow down. This thirst for exploring the world will only gain momentum. Additional flights to the USA will not slow down. As an example a new Hainan Airlines’ Beijing to San Jose flight started operation mid June with 5 flights a week and almost immediately Carmel began seeing the impact. A new visa waiver program making it easier than ever to get an extended US visa will not slow down visitation.
The reality is that only 7% of the Chinese population has a passport. Certainly room for growth. Here in the USA just over 40% have a passport. The pent up desire to visit and experience America will not slow down, not even by occasional financial market adjustments. The curiosity of the younger Chinese will not abate. Merrill-Lynch projects that by 2019 the number of Chinese tourists will total 174 million and they will spend US$264 billion, up 60% from 2014. Everything connected with China seems to be a numbers game.
Let’s not forget the strong emotional aspiration to experience the world that cannot be ignored. The Chinese traveler’s desire to visit our wide open spaces, enjoy our fresh air, our national parks, experience our lifestyle, visit our historical places, visit our theme parks, and simply enjoy the freedom our country has to offer.
I tend to agree with Apple CEO Tim Cook and his prognosis on August 24th that the “growth of the (Chinese) middle class over the next several years will be huge”. For us in travel and tourism this is not a time to cut bait and run. This is a marathon not a sprint.
(Bob Gilbert is a Partner in Chinese Host Inc., the largest Chinese inbound operator in the Western USA)
This will be the headline within 5 years from now, according to the Department of Commerce/National Travel and Tourism Office.
The forecast predicts 4.9 million Chinese visitors versus 4.4 million Brits. China generated 1.8 million arrivals in 2013, setting a new record for arrivals to the United States for the seventh consecutive year. China now ranks 7th in visitors to the United States. Spending by Chinese visitors to and within the United States was a record $21 billion in 2013, second only to Canada.
5 years is not a long time in global marketing. Are we ready? What lessons can we learn from the past?
Many years ago before the modern world existed (1992 pre-internet) I was Chairman of the International Marketing Committee with the American Hotel and Lodging Association.
Inbound tourism to the USA was in its infancy in general marketing terms. Many larger travel, tourism and hospitality companies had established international sales strategies that were simple in nature due to the (then) lack of electronic sophistication.
The US industry was familiar with marketing to the European countries and were embarking on South American initiatives. South America was regarded as an emerging market.
Making many headlines back in the early 1990’s was the super resilient Japanese market. They were known as high spenders and everybody wanted a piece of the Yen action. Back in 1990 3.2 million Japanese visited the USA. They spent on average $2,312 per person. Compare that to the $330 per person coming from Canada, but there were 17.3 million Canadians and were much easier to reach from a marketing perspective. Japan became the “Market du Jour” and we went all out to sell the USA to the Japanese.
The big “ah-ha” moment was quickly learnt, how do we not just attract but more importantly, how do we serve international travelers. Being smart and savvy marketers we began to gain insight into the Japanese traveler.
Food, as an example, was very American. Asian items simply didn’t exist in mainstream hotel menus. We weren’t too good in understanding other cultures, traditions and matters of protocol.
We can’t attract international visitors and forget that we have to serve them. This was the key driver behind my small team writing and publishing a book on International Marketing, called “The Hospitality Guide to Attracting and Serving International Travelers”. This was published by the American Hotel and Lodging Association.
It became so popular that we teamed up with the Department of Commerce, US Travel Association and many DMO’s and developed a road show providing a practical approach to the topic.
Today, China is the country getting all the attention. Our government has just announced the extension of the validity of tourist and business visas to ten years, Brand USA have compelling sales and marketing programs in place, many states have launched aggressive marketing plans with China as a stated top priority, NTA have a dedicated China program, many mega hotel brands have sales programs and regional Chinese offices in place – some for many years.
A few weeks ago, CITM (China International Travel Mart) took place in Shanghai with the largest contingent of American suppliers. The participants ranged from large to small suppliers, each wanting to grab a share of the rapidly expanding Chinese outbound market.
Many participants will not get Chinese visitors. That may sound harsh but it will be a matter of fact. If you build it they may not necessarily come. Do you have something that will appeal to a Chinese traveler? What will it take to woo these Chinese travelers? Are you prepared to make the long term investment required and have you built your ROI model?
China expert Chris Spring, president of New York based Spring O’Brien, represents the China National Tourist Office here in the USA. He suggests that a good first step is to develop relationships with the established Chinese inbound operators here in the USA. Chris noted “If you have the right product in the right place you will get immediate business. By developing product with the inbound operators you will learn the nuances of the Chinese traveler first hand. It will be an invaluable learning tool and a lot less expensive than a sales or marketing program in China.”
China has four times the population of the USA. How much do you invest in the easier to reach domestic market? Is your investment in China going to resonate?
Before you follow in the footsteps of Marco Polo and begin your Chinese adventure I would strongly suggest a deep understanding of what the road ahead looks like. In the words of a Chinese proverb “Dig the well before you are thirsty”. Be prepared. Here is a basic check list that may help you before you start seeing Chinese travelers at your front door.
- Are there any Chinese travelers already visiting my area?
- Do I have Chinese translations of any informational material?
- I have Chinese translations of any informational material?
- Do I have a Chinese speaker on staff or in my community?
- Are Chinese language menus available?
- Are menu items Chinese friendly?
- Rice option
- Asian veggies
- Chili sauce (Chinese not Heinz)
- Soy sauce
- Appropriate dining utensils
- Is there a smoking area
- Are there globally understood symbols in place
- Where can currency be exchanged
- Is there a local doctor who speaks Chinese
- Free WiFi connectivity
A pragmatic self assessment will help you define your real potential. Do you have a marketing plan? Does your location have appeal to the Chinese market? Are you accessible? Does your DMO have a plan in place that you can co-op with? Do you understand your defined target market? As with any market Chinese travelers do not all share the same demographic. Are you up to date with current affairs that may impact your plans? Can results be measured?
China will, without doubt, have a dramatic impact on inbound tourism. There are many who have been marketing to China for numerous years. It would be prudent to listen to those who have made this marketing journey before. Let’s learn from lessons of the past. I will end appropriately with another Chinese proverb…”Only he that has traveled the road knows where the holes are deep”.
Accor just announced they aim to regain power from the OTAs. They will spend $284 million between now and 2018 in digital initiatives that will reverse the 60/40 current OTA imbalance to a more reasonable 40/60 ratio and trend away from OTAs by focusing on “being outstanding players at every stage of the customer journey.” This, on the heels of Expedia Inc. third quarter results (10/30/14) of 50% year over year income growth of $257.1 M.
I applaud Accor’s action to win back the hearts and minds (and wallets) of their customer and I offer smaller organizations a digital strategy for a lot less than $284 million.
How do you become outstanding players at every stage of the customer journey? We start that journey with the first step; gaining actionable insight from relevant available data. Let’s also acknowledge that every single customer touch point is an opportunity to engage.
Relevant insight provided by available technology will allow you to engage more personally, more frequently and importantly – ahead of the competition and is a key step in regaining control from the OTAs.
Success today, in its simplest form, is all about successfully connecting with your audience. The key pillars of success have been built by delivering the right content at the right time in the right place for the right price to the right audience.
This concept has not changed but most certainly evolved as technology has allowed us to gain advanced actionable insights into the demographic, psychographic and other behavioral characteristics of the consumer. This allows a high degree of personalization and relevance. .
The travel consumer of today differs dramatically from the travel consumer of the past. Yesterday’s planning process was linear. There were less research options available. Today’s consumer is more non-linear in approach, almost a mind mapping process, with one thought leading to another, and then another.
Search engines are the reason for this non-linear travel planning approach. Review sites, OTA’s, DMO sites – a plethora of options. There are so many sites visited in the planning process and can be as many as thirty, according to Expedia. “Yesterday” we would visit our travel agent and ask planning questions for a visit to Paris. Today, typing in Paris in Google gets over 180 million results in about one half second. No lack of information! So, how do we as hoteliers, destinations, cruise lines, attractions and tour operators beat the OTA multi-million digital marketing spend, win the customer and yield award winning ROI, increase revenue and intent to purchase?
Increase and Enhance Lead Generation Success
Understand who your customer is. Better still, analyze your high valued customers. It’s this group you want to truly gain valuable decision making insights. Define their DNA. DNA may vary by strategy. Are you looking for a high spending “One and Done” traveler, or a traveler that is more predisposed to frequent visits? Perhaps you may want to identify travelers who have visited more recently, that have more top of mind awareness. Whoever your ideal customer is, understand their DNA. This DNA is what you will use to clone your high valued customers. This will be essential as you embark on getting higher converting guests, visitors, passengers and customers. Once you have your “cloned” group identified your objective is to figure out where this identified group shop. There are service providers who do a great job in this type of marketing and this effort is much more sophisticated that list rentals.
Let Technology Outsmart your Competition
I have always been intrigued by successful non-travel technology and adopting and adapting it for travel, tourism and hospitality. One such technology was developed in California by higher math PHDs and published Neural Scientists and mimics the way the human mind reasons content. This technology’s strongest value is the early intersection of travel planning before destination decisions are made. The kicker here is that your rich media banner ads will be dynamically displayed on over one million potential websites ONLY when the content and consumer is considered a match by the technology. You can also integrate RTB (Real Time Bidding) strategies. This higher degree of relevancy will lead to higher conversions. This is customer triggered and also incorporates “offsite” retargeting. Key data is provided enabling you to make strategy shifts “on the fly”. There are a number of service providers that can access many more websites than available through Google’s or OTA channels. For smaller organizations this lets you to punch above your weight. For larger organizations you can outperform OTA’s.
Get a Better Meta Platform
Until now, metasearch engines only allowed the consumer to book through an Online Travel Agency (OTA). Enter disruptive technology. Today, metasearch has met metadirect, allowing consumers to book directly with destinations, hotels, cruise lines, attractions, tour operators etc. You are getting closer to your customer and increasing your chances of enhanced personalized engagement. Embedding a meta direct booking tool within your dynamic display ad will not only increase intent to purchase but provide increased profitability by sending the customer directly to your site.
Tapping in to these newer technologies will not only give you an edge on your competition but also against OTAs. You will not only be developing your own web of relevance, but you will be able to test, measure and refine. You can now tag along with the travel consumer on their journey as they undergo travel metamorphosis from ideation → researcher → planner → shopper → purchaser. . Your own messaging can also change based upon the point of the travel planning cycle.
Ultimately there is a question of price. Price is relative. Accor have announced their budget of $284 million. What are the projected costs in the strategies I have outlined above? These services can be developed individually or bundled. In my experience, a refined lead generation program can start as low as $10,000. Effective integration of all three strategies discussed in this article can cost about $60,000. Many decimal points to the left of the Accor budget. This can deliver a stunning ROI.
Depending on the size of your business, this represents a compelling investment for customer acquisition and creates a positive environment to level the playing field with OTAs’
In our efforts to captivate the traveling public, it isn’t only the Big Boys that have all the “toys” to deliver the right content at the right time in the right place for the right price to the right audience. Today, we are blessed with incredible resources and leading edge technology that will transform insight into action, leading to increased relevance, engagement and conversion.
Who remembers Sidestep? This was probably the first metasearch tool I used and a few years before Kayak emerged in 2006 (Kayak acquired Sidestep in 2007). Since then, the ongoing love/hate relationship between hotels and OTA’s has ratcheted up a few notches.
Over the past 30 years I have been trying to win the loyalty of my customer. Probably 20 of those years I spent at the sharp end directly managing the relationship with my guest. Since the early 2000’s the landscape has continually changed. My competition, which was fairly straight forward (my comp set), now includes OTA’s and a plethora of additional intermediaries designed to squeeze my margin and attempting to steal my guest. The big difference is that they don’t have a bed or a hotel or room service or spa’s or restaurants.
As a result of intense OTA marketing and PR, many hoteliers simply gave up and sold their souls together with a chunk of their profit to the OTA genie behind the curtain. They also threw in the towel and resigned themselves to the fact that they were no longer in control of their customer. Worse than that, they were helping build a third party brand while devaluing their own.
Don’t misunderstand me. I am not a jealous hater. OTA’s are not bad guys, however, over-dependence on any third party channel is simply poor revenue management at best or perhaps lazy revenue management at worst. I would rather pay a travel agent 10% commission on consumed business than 20% to 50% (or more) to an OTA, TravelZoo, Groupon or Living Social.
But ask yourself…..is this business you would not attract yourself? Does it really drive incremental guests? In addition, do you have a channel strategy? Do you have a Revenue Management system and a capable Revenue Manager? Do you really know how much you are driving the bottom line? Have you identified and measured the long-term value of your direct customer specific to ancillary revenue and repeat stays versus bookings coming through the OTA channels?
Based on STR research for the American Hotel & Lodging Association, direct bookings outperform OTA’s nearly two-fold in ADR, nearly twice the length of stay, and three times the room revenue – not to mention ancillary spend.
TripAdvisor has been able to build a sensational business model based on user generated content, guest reviews and interactive forums. It plays on the concerns that consumers do not want surprises when they travel for business or leisure. Consider this; according to TripAdvisor, nearly 2,800 new topics are posted every day and over 90% of questions are responded to by other travelers within 24 hours.
Meanwhile search engine giants have been patiently waiting on the sidelines observing the gains that OTA’s have been making and weighing up their options in the hotel booking arena and will certainly make their moves to further encroach on dwindling hotel margins. The big are getting bigger and getting better at what they do.
In addition, according to hospitality industry expert Cindy Estis Green, CEO Kalibri Labs, research shows that customer acquisition costs are rising at twice the rate of revenue growth. This is clearly unsustainable.
After all the due diligence, consumers like to book direct with the service provider. They seek out the authority, the source of the information. Consumers want to engage and ask questions and get answers directly from the source not a third party. How does a hotel compete against the juggernaut OTA’s .
One answer is a MetaSearch booking tool. This enhances the consumer booking experience and places them face to face with the hotel and the best rates and specials. Some nifty service providers in this space allow rates pulled directly from the Internet Booking Engine and delivered seamlessly to the MetaSearch channels of choice. This approach eliminates the need for hotels to allocate inventory or update an extranet and provides a single admin for managing bids and budgets across all platforms. This puts hotels in a top placement position for Google Hotel Price Ads (HPA). Consumers get to see these hotels first. This allows the consumers to click directly to the hotelier’s website to complete the transaction. In addition the same functionality can work on TripAdvisor, Trivago, Kayak, Skyscanner etc.
A couple of these MetaSearch booking service providers have sophisticated administrative options that include built in bid management tools, dynamic real-time ROI, (real time not monthly reporting dashboards) and some can even be structured by brand and market to maximize efficiency. As with Revenue Management, true success demands that somebody is actively managing this process. Like spaghetti sauce, you can’t just put it on the stove and walk away. It really does require attention and adjustment as necessary. But the outcome is well worth the effort.
One iron clad certainty is that this will continue to be a fast moving space but finally hoteliers are being offered more sophisticated tools and refined options to compete more equitably with OTA’s and other third parties and can leverage the online and offline relationship they have with their guest.
Consumers will always prefer to book directly with hotels rather than OTAs. Guess what, so do hotels and MetaSearch booking tools have just made this a lot easier. If this is not in your 2015 business plans I suggest you add it today.
I was talking with a veteran sales professional and we were discussing what makes a great sales person? Are people born with the sales DNA or is it learnt? Art or science? Making this question more challenging, the journalist asked me to list my top five essential characteristics of a great sales person. Just five !! The bigger challenge was more about what characteristics to leave out. What would or wouldn’t make the cut.
I have been selling or marketing for over 30 years. Along the way I have witnessed super sales skills and also learnt from my own mistakes. I have looked and listened to others, and tried to replicate winning behaviors and characteristics of successful sales people all over the world. I am not suggesting that a sales approach in Paris, France will translate into success in Paris, Texas but there are common traits.
Too many companies undervalue the tremendous value a well-trained sales team contributes to the success of the organization. When I worked in Germany I was given a customized German street sign that said “Wirallelebenvomverkauf”, which roughly translates to “We all live from sales”. Nothing happens until somebody sells something.
Before I share my top five list, I am of course assuming that the company has…….
Recruited the right fit Rock Star sales people
A motivating incentive plan that has effective stretch goals
Clearly defined performance measures and recognition program
Top shelf training program that continues to raise the bar
A “C” level sales champion to crusade internally on behalf of the sales team
The best sales tool box and tools to get the job done
Here is my short list of five winning characteristics that help define the Art of the Sale.
Gaining trust and confidence from your customer will accelerate your conversion rate. You have to demonstrate that you know more about the customer’s company than they do. Devour annual reports, press releases, LinkedIn, Glassdoor, and related articles. You have to show that you understand the goals of the company, and you have to position yourself as a reliable asset that will help them meet and exceed their goals faster. This means being open and candid and the ability to confront reality. Don’t get sucked in to the hype of your product or service. Can you deliver on time, at the agreed price, and working as promised? Can you share “bad” news constructively?
Trust is earned. When your presentation is over and the lights are turned back on it comes to down to the simple principle of whether you trust each other. If the answer is yes you will both find ways to reach consensus and a deal. Successful sales people have figured out that trust is the fastest route to results. See more about the Art of Trust here http://bit.ly/1rwCdDJ
Success is not an overnight phenomenon. It is not easy. Success is a demanding. It is not giving up. The below statistics are more urban legend than reality (cannot trace a definitive source) but seem reasonable. The key question is how long it takes to close the sale.
2% of sales are made on the 1st contact
3% of sales are made on the 2nd contact
5% of sales are made on the 3rd contact
10% of sales are made on the 4th contact
80% of sales are made on the 5th-12th contact
Having the right mindset and drive to pick yourself up after every time you are knocked down defines a winner. It defines resilience and it reminds me of the famous Vince Lombardi quote “It does not matter how many times you get knocked down, but how many times you get up”. Listening to many successful business owners, they all share the fact that success was eventually gained through a number of failures. But they all learned from what went wrong and did not repeat the same mistake twice.
Part of resilience is an honest understanding of your sales pipeline. So many sales people look at the sales pipeline through rose-colored glasses. What is the reality of your situation? Do you have your prospects listed with identified needs, anticipated close date, percentage of probability and an estimated gross revenue? With this simple tool you will have created a basic pipeline tool with a snapshot on your future sales. This tool keeps you honest and adds to your resilience factor as you keep knocking on doors to increase your ratio of success.
I have been fortunate to have led a number of global sales teams for iconic brands including Disney, Best Western, Choice Hotels and others. Many times I came across sales people who were brilliant “closers” and average “door openers”. At the same time I have met great “door openers” and less than stellar “closers”. Naturally we’d focus on the weakness and try to raise the bar to Rock Star status. It didn’t happen all the time and we made changes. (So many organizations continue to employ poor performers which sends a negative message to all other sales people).
Getting inside the organization and engaging is the most important aspect of the sales process, especially if the sale has a large dollar value. Based on the product type or service being sold, there are varying degrees of complexity. More functions become involved with the purchasing process from both buyer and seller. This allows you to introduce subject matter experts and “a closer” if that is a skill that needs more work.
Filling the sales funnel is crucial. An empty sales funnel is a recipe for disaster. Getting your foot in the door and getting more qualified leads in to your sales funnel will only accelerate your success. Fundamentally, sales is a numbers game. The more sales calls you make, the more prospects will fill your pipeline and a certain percentage will turn in to customers.
If push comes to shove, I would prefer to recruit a great “door opener” than a great “closer” because in my opinion, this skill is tougher today than it’s ever been. Making personal relationships, gaining initial traction and demonstrating value is an incredible skill.
Diagnose – Identifying the Pain
Remember that you cannot offer the remedy until you really know the symptoms. That’s like a doctor giving you a prescription without the examination. This is where great listening skills come in to play.
Every company has its pain points. These are the identified barriers to success. It’s what keeps “C” level executives up at night. You are the Knight in Shining Armor that will provide a solution to help make the pain go away. Your initial relationship building has enabled you to get inside the fortress. Now you start gaining valuable insight that will help you close the deal. This period of due diligence is an essential part of the process. You have to demonstrate a high degree of empathy through knowledge and understanding. You begin to identify pain points and frame up needs, timing, price sensitivity, and a decision-making process. A good tip is to always know way ahead of time who will actually sign the agreement. You don’t want to start the sales process all over again.
My father used to remind me that God gave me two ears and one mouth and I should use them in that order. Nobody likes the slippery tongued salesman (except the slippery tongued salesman). People do like to be intrigued, engaged, and understood. Gaining traction on a business and personal level will pay dividends and is the foundation for a long-term mutually beneficial relationship.
5. Don’t sell yourself Short
Great sales people don’t sell their product or service short. Getting the sale through discounting is not helping your bottom line or reputation. Once you discount it is virtually impossible to climb out of that hole you dug for yourself. Your integrity is at risk if you do not value your product or service. There is a reason you are at the bargaining table. Your prospect has a need and you have the solution. You are holding a highly valuable card – the value card. You have identified the pain points and your solution has intrinsic value. The price placed on value is variable. Like beauty, value is in the eye of the beholder. Value is a perceived concept. Is your pricing reasonable in this context? Do you have the confidence in your product or service and are you prepared to walk away from a sale, if necessary?
Make sure your conversation is focused on the value of your product or service and not focused on the price. Naturally this is always at your discretion but leave that price negotiation as an available option when you start talking volume or term length.
The Art of the Sale is (forgive the cliché) a journey not a destination. Successful sales people view customers as investments. It’s about the long haul and how one extends the life time value at a mutually beneficial pace.
If you control a sales and marketing team and budget, power up your calculator and look at your top performing sales people and see what impact a reasonable lift of 15% in sales revenue will have on your bottom line. Invest in great sales people and effective training. See if you can clone that sales Rock Star’s DNA, improve marginal performers, ensure accountability and remove those that continue to underperform………….and hire smart. Your future customers will reward you for it.