CHINA MARKET PROFILE Demographic n China has

CHINA MARKET PROFILE

Demographic n China has 1, 382, 710, 000 people (2016). China ranks No. 1 among 196 countries. – 15 – 64 years account for 70% of the population – 56 ethnic groups with the Han as the largest group accounting for approximately 91% of the population n Mandarin is the standard dialect widely spoken and understood with Cantonese commonly used in the province of Guangdong n Fourth largest country in the world with 9. 3 million sq. km. land area n 23 provinces, 5 autonomous regions and 4 municipalities n Major business centers are Beijing, Shanghai, and Guangzhou n According to WTO), China will become one of the top 3 outbound tourism markets by the year 2020 and the largest inbound tourism market.

Connecting with Outbound Chinese. Tavellers n More than 100 M Chinese travelled overseas by 2014 n In 2015, more than 130 M journeys were made (HK SAR, Macao SAR and Chinese Taipei) n Primary reason for growth in travel: Economic Growth plus govt policy on overseas travel

Preferred Leisure Pursuits by Chinese Middle / Upper Class n Travel – 56% n Reading – 39% n Tea Tasting – 28% n Famil Time – 23% n Driving – 15% n Spa – 13% Source: www. pata. org

Three Generations in China ‘ 70 s ‘ 80 s ‘ 90 s Focus in Life Responsibility & Happiness Fun Excitement Core Values Family Friends Self Internet Value Time Saver Social Arena Extension of Self Outlook on Trends Follow Trends Choose Trends Create Trends Online Content Sharing Information Creating Information Colleting Information publications@PATA. org

Triggers for Taking a Trip n Always wanted to visit the destination and it felt like time – 42% n Always wanted to take this particular type of holiday or trip – 33% n Wanted to spend quality time with friends of family – 28% n Always have a holiday or break at this time of year – 17% n I feel run-down and needed a break – 12%

Top 5 Motivations for Selecting last Intercontinental Destination Motivation % Selected Ecotourism and Nature 73% Cultural / Historical 67% Beaches / Seaside Attractions 61% Urban Attractions / Nightlife 59% Dining / Gastronomy 54%

Reasons for Travel in 2015 Reason Percentage Leisure Travel 82% Exploring the World 40% Adventure Travel 23% Cruises 26% Polar Exploration 16% Road Trip 12% Heath & Recovery 17% Hoeymoon 11% Celebrations & Events 12% Study 11% Golf 7%

Traveller Information Sources n We. Chat Official Subscription Account n We. Chat Moments n Websites n App Push Messages n We. Chat shares by travel Advisers n Friends’ Recommendations n TV / Magazines / Email / Newspapers / SMS / Sales Calls

Most Popular Apps Name of Apps Percentage Ctrip 73% Qunar 51% Tuniu 30% LY. COM 22% Altrip 17% Elong 17% Uzal 3%

Visitor Profile: CHINA The Philippines International Arrivals 2016 675, 663 3 rd 2015 490, 841 Growth 37. 65% Rate Biggest Source of Arrivals in 2016 Average Length of Stay 2016 4. 21 nights Average Daily Expenditure 2016 $63. 37

Visitor Profile: CHINA Average Age: 33. 13 years Main Purpose of Visit: Holiday/Pleasure (65. 80%) Type of Accommodation: Hotel (76. 00%)

Visitor Profile: CHINA Average Daily Expenditure BREAKDOWN US$ Accommodation 6. 13 Food/Beverage 20. 58 Guided Tour 3. 50 Entertainment and Recreation 13. 35 Local Transport 2. 08 Shopping 1. 28 Visit to Historical/Cultural Sites 0. 09 Miscellaneous 0. 37 Average Daily Expenditure 63. 3 7

Top Tourist Destinations, 2003 Visitor Volume ( in Million) France Spain United States Italy China United Kingdom Austria Mexico Germany Canada Visitor Receipts (in US$ Billion) 75. 0 52. 5 40. 4 39. 6 33. 0 24. 8 19. 1 18. 7 18. 4 17. 5 36. 6 41. 7 65. 1 31. 2 17. 4 19. 4 13. 6 n/a 19. 1 n/a

Chinese Outbound Travel (in Thousand) Growth Rate 21% 37% 16% 13% 7% 3% 32% 38% 21% (. 002%)

Destinations of Chinese Tourists Destinations Hong Kong SAR Macao SAR Thailand Vietnam Russia Republic of Korea Malaysia Japan Australia 2001 2000 Growth Rate 4, 448, 583 3, 005, 733 695, 372 672, 372 606, 102 482, 308 453, 206 391, 384 171, 900 4, 142, 191 1, 644, 421 707, 456 n/a 400, 958 n/a 595, 660 126, 852 7% 82% (1%) n/a 20% n/a (34%) 36%

Preferences of Chinese Travelers n Extremely price – conscious – – Price is a major consideration Tour cost has to be cheap Mass market and not high-end nor deluxe No optional tours but would not mind paying extra to go shopping or take part in activities not included in the package. Extra cost must not be too high – 3 -star accommodation – Demand compliance with tour description n Information in Chinese language – Word-of-mouth communication from friends and relatives is still an important information source

Preferences of Chinese Travelers n Multi/Single-destination tied with varied interesting spots – Beautiful scenery – Shop authentic but cheap souvenirs for neighbors, colleagues, etc. – Relaxation, knowledge and experience different culture – Taste different food – Give status in the community

Travel Arrangements for Pleasure Travelers Source: PATA China Outbound Travel Study, 1994

Most Popular Items Chinese Buy When Traveling Abroad Items Pleasure Traveler Food/ candy/ chocolate Liquor/ Tabaco Women’s clothing Souvenir Men’s clothing Jewelry Electronics Leather goods Source: PATA China Outbound Travel Study, 1994 57% 34% 36% 30% 31% 25% 18% 17% Business Traveler 50% 36% 17% 20% 17% 19% 20% 12%

Chinese Travel Outlook Type of travelers Pleasure Business (46%) Economic Non-economic 54% 48% 40% Frequency of travel Once Twice Frequent 38% 46% 70% City Beijing Shanghai Guangzhou 61% 39% 38% Source: PATA China Outbound Travel Study, 1994 Place of work Foreign-invested/foreign owned enterprises 51% State enterprises 48% Academic/ research 48% Government 41% Other non-profit orgs 33% Have relatives living abroad Yes 48% No 26%

Major Sources of Outbound Travel Beijing (Peking) Population Urban Population (Guangzhou) Per Capita Income Guangdong 16 M 7. 5 M 72. 70 M 2. 6 M US$ 13, 471 US$ 13, 602 US$ 2, 029 Capital of China Places of interests Shops Historical sites Theme parks Museums Casino/ Bar 13 M 4. 7 M Shanghai Industrial/ Financial/ Commercial Center 83% 65% 46% 41% 13% 85% 75% 45% 35% 9% Political/Economic Technological/ Cultural Center 93% 66% 58% 41% 15%

Chinese Travel Outlook n Rising rapidly and will be first tourist source nation by 2020 n Major visitor-generating market for ASEAN destinations n 7 th largest tourism spender in the world n Global trend for short - haul travel n Workers enjoy seven-day holidays on May 1 (International Workers Day) and October (National Day) for a total of 14 days yearly

Factors Fuelling Outbound Travel Growth n Growing gross national income which is number six (6) in the world n Growing disposable income with household savings in urban and rural areas exceeding 10 trillion RMB. GDP per capita is expected to reach US$ 1, 000 n Shifting consumption pattern from dressing warmly and eating one’s fill, to living a well-off life

Factors Fuelling Outbound Travel Growth n Outbound travel restriction are being relaxed – Exit clearance has been lifted since 01 February 2002, However, Chinese traveling abroad must obtain or hold a valid visa issued by a foreign government before they are allowed to exit China – Chinese tourists can take between US$ 3, 000 – US$ 5, 000 on a trip abroad – Outbound tourists can also buy foreign currency themselves rather than thru travel agency – More travel agencies are being allowed to operate outbound tours n Simplification of passport application procedures

Factors Fuelling Outbound Travel Growth n Improving air capacity infrastructure. By 2019, China is projected to have 22, 000 passenger airplanes which is more than 10 times the world’s total n Increasing number of destinations being granted ADS from 4 in 1992 (Thailand, Malaysia, Singapore and Philippines) to 73 in September 2004 n Outbound tour is no longer a once-in-a-lifetime event. Repeat outbound travel is becoming common. n Middle-class families are becoming main force. Middle-aged travelers and educated young adults with high incomes comprise a big proportion of outbound tourists

List of ADS Countries Approved Destination Status Year Countries 1983 Hong Kong, Macau 1988 Thailand 1990 Singapore, Malaysia 1992 Philippines 1999 Australia, New Zealand, Republic of Korea 2000 Japan, Vietnam, Cambodia, Myanmar, Brunei 2002 Nepal, Indonesia, Malta, Turkey, Egypt 2003 Germany, India, Maldives, Sri Lanka, South Africa Croatia, Hungary, Pakistan, Cuba 2004 Austria, Belgium, Cyprus, Denmark, Estonia, Finland France, Greece, Italy, Latvia, Lithuania, Luxembourg Netherlands, Poland, Portugal, Ireland, Slovakia, Slovenia, Spain, Sweden, Norway, Iceland, Switzerland, Liechtenstein, Romania, Zimbabwe, Brazil, Tanzania, Russia, Ethiopia

Chinese Passport and Visa n Before – Chinese citizens wishing to travel overseas need to apply for a passport which is valid only for the journey applied – Invitation from foreign country is required – For ADS countries, invitation is not required but the number of Chinese citizens visiting said countries is established through “quota system” for authorized travel agents only allowed to sell outbound tours – Exit clearance is required

Chinese Passport and Visa n After – July 2000: Chinese citizens can obtain passport without an invitation letter from foreign country but requirement to obtain “permission” /exit permit or visa for each journey remains – February 2002: Exit clearance has been lifted, however, valid visa from foreign country to be visited must be secured before Chinese tourists are allowed to exit China

Strengths, Weaknesses, Opportunities and Threats (SWOT) of the Philippines as a destination for Chinese tourists Weaknesses Strengths - natural scenery (beaches, etc. ) - friendly to Chinese (Chinese heritage of Filipinos) - different culture - variety of seafood (for southern Chinese) and sunny island resorts (for northerners) - lack of information on Philippine destinations (consumers and tour operators) - pricing (high price and not one price) - negative image re: security problems - no variety in tour offerings - lack of infrastructure development - proximity to China - lack of professional Mandarinspeaking tour guides - English-language facility - aside from Manila, no direct flights from China to Cebu and Davao - fragmented private sector

Strengths, Weaknesses, Opportunities and Threats (SWOT) of the Philippines as a destination for Chinese tourists Opportunities - compared to Bali and Phuket, several Chinese tour operators prefer Boracay - China is a seller’s market, so with enough local advertising and information to operators and consumers , Philippine tour packages can be pushed more - China is used to charters - good relationship established between DOT and CNTA and local officials - large portion of outbound market are first-timers out of China - Future events in China require them to learn English fast (i. e. , 2008 Olympics) Threats - More countries granted Approved Destination Status (ADS) as of 2003 especially in Europe - terrorism and security problems - aggressive marketing and sufficient budget

Approved Destination Status (ADS) According to the China National Tourism Administration (CNTA), several countries who have been granted ADS , have not been successful in getting substantial share of the Chinese outbound market due to : – no advertising for tour offerings in publications of travel agencies – high price is a major obstacle – no brochures and lack of communications making it difficult for Chinese travel agencies to promote new destinations – more professional tour guides required

COMPETITORS’ PACKAGES n Thailand - Beijing-Phuket, 6 days – 5 nites, with airfare 3980 RMB or $ 485. - Beijing-Bangkok-Pattaya (full board), 6 days-5 nites, 4480 RMB or $ 545 or $691 during high season (May and Oct) • Thailand spent $200, 000 in advertising in China during 1 st year of operation Philippines - Beijing-Manila-Cebu, 6 days-5 nites, 5980 RMB or $ 728. n

Central Asia & China n Mainland Chinese – Travel in package tours with regular hotel standards but expect amenities in 3 stars hotel rooms like what they have in China – Count every centavos – Speak very little English – Very meticulous with Chinese food – Up to 6 days program – Average of travelers in their 50’s

Cont… Mainland Chinese – Tipping is pre-oriented – Considers Philippines value for money – love Philippine seafood – Very safety, time and health conscious – Usually have local Chinese contacts or association for their activities

MAP OF ASIA China Vietnam Singapore Thailand Indonesia Malaysia Philippines

Number of Rooms in Central Luzon 2015 Hotel Resort Tourist Inn Motel Lodging / Pension House Apartelle Special Interest MICE TOTAL AURORA BATAAN BULACAN CLARK NUEVA ECIJA PAMPANGA SUBIC TARLAC ZAMBALES 144 122 113 1371 223 2634 2398 330 329 7664 25 1166 592 685 148 265 375 3 1940 5199 139 0 85 0 57 807 22 0 212 1322 21 0 36 0 0 333 0 0 0 390 14 7 0 0 0 11 1 0 1 34 1 0 0 85 144 0 0 230 0 0 0 0 0 344 1295 826 2056 428 4135 2940 333 2482 14839 Angeles City – 2, 811 TOTAL

Number of Accommodation Establishments in CL 2014 AURORA BATAAN BULACAN CLARK NUEVA ECIJA PAMPANGA SUBIC TARLAC ZAMBALES TOTAL Hotel 10 4 2 8 8 55 46 7 15 155 Resort Tourist Inn 22 51 89 3 10 9 7 2 122 315 15 0 2 19 1 1 7 50 Motel Lodging / Pension House 3 0 2 0 0 9 0 0 0 14 14 7 0 0 0 11 1 0 1 34 Apartelle Special Interest 1 0 0 3 2 0 0 6 0 0 1 5 3 13 24 2 4 52 MICE 0 0 1 2 1 3 2 1 1 11 TOTAL 65 62 100 18 24 122 83 13 150 637

Number of Potential Guests per Year n n n No. of Rooms (Clark) – 2, 056 No. of Rooms (Pampanga / Angeles City) – 4, 135 Number of Rooms – 6, 191 (Clark / Pampanga / Angeles City) No. of nights / year – 300 Nights Total number of guests – 1. 8 M (Single Occupancy) Total number of Guests – 3. 6 M (Twin Sharing)

Questions? n Do we have enough rooms to host Chinese arrivals? n Do we have enough hotels at 4 -5 Star rating? 3 -Star – 10 4 -Star - 1 n Do we have existing tour packages @ 4 N/5 D? n Do we have strong tourism governance to oversee these arrivals (private and public sector alliance)?

Destination Theme n n n n n Nature – based Cultural / Heritage Health and Wellness MICE Sun and Beach Cruise and Nautical Educational Leisure and Entertainment Diving and Marine Sports

Manila City 1 Day Tour Duration: n n Eight (8) hours Including Manila Bay Sunset cruise with set meal Cost: • • Two (2) pax or more : Php 3500 each One (1) pax only : Php 5500 Inclusions • • FREE hotel pick-up/drop off at any hotel in Makati/Manila. Deluxe air conditioned roundtrip transfers. Driver/Guide Toll, Parking and Entrance Fees Rates per adult (in PHP) 50% off for kids under 8 years Discounts for groups of 5 or more

Manila City ½ Day Tour Duration: n Four (4) hours : AM / PM Cost: • • Two (2) pax or more : Php 2000 each One (1) pax only : Php 3000 Inclusions • • FREE hotel pick-up/drop off at any hotel in Makati/Manila. Deluxe air conditioned roundtrip transfers. Driver/Guide Toll, Parking and Entrance Fees Rates per adult (in PHP) 50% off for kids under 8 years Discounts for groups of 5 or more Destinations: n n National Museum of the Philippines to view the educational, scientific and cultural displays (Closed Monday). Ocean Park aquarium with a large variety of sea creatures. Mall of Asia - one of the largest shopping malls in the world. Sunset boat ride on the famous Manila Bay (optional dinner cruise available). Inclusive of entrance fees and Manila Bay boat ride.

Proposed Marketing Plan n n Website Development / Social Media Tour Packaging / Test Run Brochure (Mandarin) Seminars (Mandarin Language Tutor for Guides / Culinary) Meet and Greet Counter (Clark Intl Airport Terminal) Transportation / Shuttle Hotel / Restaurant Inspection Sales Mission (China) Familiarization Tours (Tour Operators) Consortium

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