Understanding Growth Markets: China & India - Nielsen Outbound Travel Monitor

Understanding Growth Markets: China & India - Nielsen Outbound Travel Monitor -
Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.
Trends and Influences shaping Urban India & China

#1. The two fastest Growing Economies globally

GDP Growth
World Bank Estimates
9.3
8 8.4 8.5
8.7
8.8
2011
2012
2013
2011
2012
2013
Growing Disposable Income

51% over 5 years
Million US$
Early this year, International Monetary Fund (IMF) predicted Beijing will take a mere five years to become the world's largest economy.
Source: Euromonitor

#2. Both optimistic, Indians most confident

Nielsen Consumer Confidence Index
140 130 120 110 100 90 80 70 60 2nd Half '06 1st Half '07 2nd Half '07 1st Half '08 2nd 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd Half Quart Quart Quart Quart Quart Quart Quart Quart Quart Quart '08 '09 '09 '09 '09 '10 '10 '10 '10 '11 '11 Global Average US INDIA China
137 135
133 122 129 127 114 112 99

89 95
129 131 131 126
120 117
108 101 104 109 104 108 100 105
108
105
106
106 100
98 95 96
99
93 87 82 92 85 87
97
94
88 83
84 82
80
82
86 84
90 81
90 81
92 83
89 78
77 80

#3. Rising Consumerism

How they plan to utilize spare cash (besides savings/ investment/Debt payment)
INDIA
CHINA 52% 55% 37% 51% 19% 3%
GLOBAL
Growing confidence and optimism resulting in a sentiment conducive to spending across categories
Holidays/vacations tops the list in China: globally the highest mentions
New Clothes
38% 34% 33% 32% 22% 7%
32% 32% 19% 22% 29% 16%
Holidays/ Vacations Home Improvement New Technology Pdt Out of home entertainment No spare cash
Source: Nielsen data

#4. Premiumisation Trend in India and Super-premiumisation in China

Willing to pay if they see value
The cars are getting swankier Holidays in Goa giving way to Holidays in Phuket The homes are getting bigger Spend on interiors is growing From curricular to Extra curricular
Is predicted to grow 18 percent annually from 2010 to 2015, and reach $27 billion by 2015 China would account for more than 20 percent of the world's luxury market by 2015
Luxury segment in China growing rapidly
Premium FMCG segment growing at 46%: much faster than total FMCG

#5. Rising influence of Social Media

Rapidly gathering momentum
100 mn Indians Online and growing rapidly
Influencing and shaping opinion

67% of Indians
on the web use Online reviews to make purchase decisions
45,000 new
users getting connected to social network sites each day
Indians spend more time on social media than they do checking personal email
Social Media was key force in galvanising recent anti-corruption movement
60% of social
India has worlds media users in India are open to being approached by brands
3rd largest
facebook community
Source: Nielsen data + Industry data

#5. An increasingly hectic pace of life in China

Biggest concern over the next 6 months
CHINA
GLOBAL
Increasing Food prices Economy Work/Life Balance
Holidays/ Vacations an avenue to cope
Increasing Food prices Work/Life Balance Health
China and HK have highest mentions globally on this Chinese less likely to cut down holidays/ vacations to save on expenses than Indians
Source: Nielsen data

Both are High growth markets for Travel; India will have the faster pace and China the numbers
Outbound Traveler Numbers (mn people)
100
India
China
41 46 47
57 50
29 20 5.4 6.2 7.2
31
34 10.9 11.1 12.5
8.3
9.8
2003 2004 2005 2006 2007 2008 2009 2010

Source: 2003-2010 figures: Indian Tourism Ministry. China National Tourism, 2020 Projection: UNWTO
2020

The Nielsen Outbound Travel Monitor:

Providing a holistic understanding of the travel experience
Understanding the Planning process -Trip Pre Planning, Destination Selection -Trip characteristics Destination Performance Understanding travelers image perception and satisfaction with that destination Capturing the travel experience -Understanding usage behavior & measuring satisfaction on key trip enablers: Transportation, Accommodation, Communication, Travel Expenditure

10
Snapshot of Research Design

26 cities: Top 3 + 23 Tier II
11 cities: Top 6 + 5 Mini-metros
Ludhiana
Lucknow Ahmedabad Kolkatta Nagpur Pune Hyderabad Chennai Bangalore Chennai
Top Tier II
Mumbai
Target Sample Size Report Release
Business & Leisure N= 2,395 Q1, 2011
Target Sample Size Report Release
Business & Leisure N= 3,935 Q1, 2011

11
A look at the Indian Outbound Traveller: Leisure Segment

12
Indians are travelling at younger lifestage than before

All figures in %
Life stage
2008
2011
Carefree
Years Young and single with no responsibility
Spending Years
Married/divorced/widowed with no children
Responsible Years
Middle aged married/divorced/widowed with dependent children
Settled Years
Married/divorced/widowed with independent children Other Insights
Leisure travelers from Tier II towns have a more mature skew (responsible/settled) vis a vis their Tier I counterparts

13
A more diverse traveller today

All figures in %
Increase in the mid-affluent base Socio Economic Class Spread

2008 2011
Other Insights
Note: SEC in India ranges from A1 (upper) to E2 (lowest). SEC A1: Typically affluent, Mid to Senior level corporate sector SEC A2: Typically junior level of the corporate sector as well as large businessmen SEC B1: Will largely have those owning smaller businesses
Leisure travelers from Tier II towns have a greater proportion of SEC B profile

14
VFR forms an important segment

All figures in %
Travel Motives
Primary Travel Motives

Visiting friends/ relatives Good Leisure activities
11% 3% 3% 3% 4% 8% 9% 11% 20% 28%
Scenic/ natural beauty Romantic destination Tourist friendly Affordable flight fares Kid friendly Good entertainment Cuture/heritage Others
Other Insights
VFR Motivation far stronger among Tier II travelers

15
Expanding horizons of the Indian traveller

All figures in %
Singapore still the most popular destination, but down from 2008 Top Destinations - 2010
Singapore Malaysia Dubai Thailand Nepal (10) USA Australia (3) (5) (17) (15) (12) (32)
A lot of different destinations have come up as options for the Indian traveler- e.g. S. Africa, Maldives, Macau and even neighboring Bangladesh
NOTE: Figures in (xx) indicate corresponding % from 2008 round

16
Customised Package segment: Small, but growing

All figures in %
Driven by greater need for customisation voiced by travellers Type of Tour

Other Insights
(10% in 2008) (31% in 2008)
Tier II city travelers prefer Self organized tours, perhaps since many are going to meet friends/relatives Custom Tour travelers on average have a higher spend and are a lucrative segment
(58% in 2008)

17
A rise in online booking

All figures in %
Travel booking medium: Transportation

42
Local Travel Agents Tour Operator Online Travel Agent

12 15 27
33
28
Through transportation booking office Through friends/relatives in destination
14 5 2 0 10 2008 22
Other Insights
10
Tier II town travelers have less comfort with Online booking (only at 11%)

18
Average spending per visit has increased marginally among leisure travelers; fair share is discretionary
Per Person Trip Expenditure
(Mean : USD)
3%
Total Trip Expenditure: % across different heads Among Non package tour travelers
1608 1645
2010 2008
31% 46%
Travel & Stay Shopping
23%
Other Activities
USD
1 USD= Rs. 44.5
Note: Among Package travellers, too the shares were fairly similar

19
A look at the Chinese Outbound Traveller: Leisure Segment

20
In Leisure, Sightseeing and Shopping are key purposes, VFR is not a very prominent segment
All figures in %
Travel Motives (Leisure Segment)

Sightseeing Shopping Culture Tourism Relaxation Eco-tourism Visiting friends Visiting relatives Special interest
30 63 80
Other Insights
26 23 19 14 12
N=6817
HK and Macau are popular shopping destinations for Chinese travelers
Base : All most recent 4 leisure trips

21
Chinese Leisure Travellers are now increasingly going beyond Hong Kong & Macau
All figures in %
Top Destinations Leisure - 2010

Hong Kong Macau France Taiwan Australia Japan Singapore USA Thailand Germany
NOTE: Figures in (xx) indicate corresponding % from 2008 round
(51) (28) (7) (5) (6) (6) (8) (4) (6) (4)

22
Packaged Group Tours are growing and now have largest share of market
All figures in %
Type of Tour
Other Insights Group Tours more common for short haul Asian destinations like Thailand, Malaysia, Taiwan, Korea
`

23
A rise in online booking

All figures in %
Travel booking medium

50
Travel Agent
33
47
Online travel agency : Stay Online Travel Agency: Transport Online Travel Agency: Tours Hotel/Airline Website Book via Friend at Destination
11 16
27 29 22 22 19 17 18 2 0 10 2008

24
Chinese spend is far higher and growing significantly; Discretionary spend share is higher too
Total Trip Expenditure
(Mean : USD) 20%
3550 2968
26% 37%
Shopping & Entertainment Other activities not covered in package Travel & Stay
Total Trip Expenditure: % across different heads
2010 2008
37%
USD
1 USD=6.72RMB(17 Sep 2010)

25
Summing Up & Implications for the Travel Industry

26
India & China: Growth Markets

Growing Confident Consumerist
Willing and have capacity to travel:

Ensure you understand them well, Understand the differing needs & motivations of sub-segments and develop relevant strategies and offerings
They will have higher service expectations than before:

Ensure you meet & exceed servicing standards to gain buy in and loyalty
They are broadening their horizons

A ready market for destination marketers. Ensure visibility and highlight destination features which tie in with travel motivations
27
Implications for the Travel Industry
Continued and sustainable growth in Travel market expected in China. Vacations/ Holidays key on their priorities. Unlikely to be impacted in short term by rising economic pressures Opportunity in both the long vacation as well as the short break (2-3 day trip) market
Long term prospects are positive. However, if inflationary pressures continue, consumers likely to curb spending and Outbound travel market could be impacted in the short-term Opportunity greater in the long vacation market

28
Implications for the Travel Industry (contd.)
Packaged Group Tour market growing: Well designed and marketed packages and services likely to be lapped up by Chinese travelers Online has gained critical mass. It is the channel of the future for bookings and also a critical source of influence. Ensure presence and visibility as fight for mind-space is likely to get more crowded.
Self Organised travel still dominates; though Customised holidays segment growing & lucrative. Tap into this opportunity early Brick and mortar dominates, though Online growing rapidly. However, some comfort building still required. Focus on increasing enablers. For Tier II market, conventional channel still the medium to reach them. Social media already shows signs of becoming a powerful tool and influence: Positive buzz in social webspheres will help get early 29 Nielsen Outbound Traveler advantage. Copyright 2011 The Nielsen Company. Confidential and proprietary.
India & China: Growth Markets (contd.)
Trip expenditures are growing rapidly. Significant share of spend is discretionary and 35% spend is on shopping. Shopping is also a key motivation for many to travel abroad. Understand their brand preferences and channel preferences to garner this spend. As propensity for Luxury grows, Niche destinations have an opportunity to grow alongwith marketing of Luxury holiday packages
Trip expenditure grew marginally. Significant share of spend is discretionary though share of shopping is lower than in China. More likely to have broad-based spending locally produced goods & mid-range global brands. Good opportunity for mass-tige segment. Top end Luxury segment yet niche.

30
THANK YOU

31
Design & Methodology: Details

Geographic coverage 6 Big Cities and 5 small Cities
Tier I cities Delhi, Mumbai, Bangalore, Chennai, Kolkata & Hyderabad Tier II Cities Ludhiana, Lucknow, Nagpur, Ahmedabad, Pune
Target
-
Respondents
Male and Female residents -Above 18 years of age -Socio Economic Class (SEC) A/B - Who have traveled outside India in the last 12 months -Stayed at least 2 nights away from home (either business or leisure travel)
Sample
Size
Timing
1190 Leisure Segment Travelers 1205 Business Segment Travelers
Report Release: Q4, 2010

32
Design & Methodology: Details

Area Covered Key Cities
Beijing / Shanghai / Guangzhou

North Harbin Shenyang East Nanjing Hangzhou Ningbo Suzhou Wuxi South Wuhan Xiamen Shenzhen Zhuhai Fuzhou Changsha Foshan Zhongsha n West Xi'an Chongqin g Kunming Chengdu
Other Regions
Dalian Tianjin Qingdao Jinan
Sample Criteria
CATI General Population Online Survey Those who traveled outbound in 2010
Total Sample Size
N= 3,935
Conducted in
Q1, 2011
33


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Understanding Growth Markets: China & India - Nielsen Outbound Travel Monitor -

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

Trends and Influences shaping Urban India & China

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

#1. The two fastest Growing Economies globally

Growing Disposable Income

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

#2. Both optimistic, Indians most confident

133 122 129 127 114 112 99

129 131 131 126

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

#3. Rising Consumerism

CHINA 52% 55% 37% 51% 19% 3%

38% 34% 33% 32% 22% 7%

32% 32% 19% 22% 29% 16%

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

#4. Premiumisation Trend in India and Super-premiumisation in China

Luxury segment in China growing rapidly

Nielsen Outbound Traveler

#5. Rising influence of Social Media

Influencing and shaping opinion

Social Media was key force in galvanising recent anti-corruption movement

Source: Nielsen data + Industry data

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

#5. An increasingly hectic pace of life in China

Holidays/ Vacations an avenue to cope

Increasing Food prices Work/Life Balance Health

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

29 20 5.4 6.2 7.2

34 10.9 11.1 12.5

2003 2004 2005 2006 2007 2008 2009 2010

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

The Nielsen Outbound Travel Monitor:

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

Snapshot of Research Design

11 cities: Top 6 + 5 Mini-metros

Lucknow Ahmedabad Kolkatta Nagpur Pune Hyderabad Chennai Bangalore Chennai

Target Sample Size Report Release

Business & Leisure N= 2,395 Q1, 2011

Target Sample Size Report Release

Business & Leisure N= 3,935 Q1, 2011

Copyright 2011 The Nielsen Company. Confidential and proprietary.

A look at the Indian Outbound Traveller: Leisure Segment

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

Indians are travelling at younger lifestage than before

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

A more diverse traveller today

Increase in the mid-affluent base Socio Economic Class Spread

Nielsen Outbound Traveler

Copyright 2011 The Nielsen Company. Confidential and proprietary.

VFR forms an important segment

Primary Travel Motives