Successful Engagement with the Chinese Outbound Tourism Market South East Europe Tourism – SEET 2016 Dr. Minjuan Deng-Westphal, Head of Research, COTRI www.china-outbound.com 28 September 2016

COTRI “COTRI is the world’s leading institute for research and consulting services related to the Chinese outbound tourism market, and cooperates with all leading international and Chinese tourism organisations.” (China Daily, March 2016) COTRI was started in 2004 as independent institute offering research and consulting by Prof. Dr. Wolfgang Georg Arlt FRGS. Offices are located in Hamburg/Germany and Beijing/China, with a global network of regional partners on all continents. COTRI IN GERMANY COTRI China Outbound Tourism Research Institute West India House Eiffestraße 68 D-20537 Hamburg COTRI IN CHINA COTRI China Office 21th Fl, Wangjing Greenland Center B Hongtai East Street, Chaoyang District Beijing 100102 Knowledge partner www.china-outbound.com

Trends on Chinese Outbound Travel Market Arrival numbers & destination choices Evolving traveller profiles Policy, visa, flights connections Global view Europe perspective South East Europe focus Statistics Analysis Opportunities www.china-outbound.com

Trends on Chinese Arrivals and Destination Choices (H1 2016) Global View Growth of border-crossing slowing down – along with the Chinese economy Sharp drop of arrivals to Greater China (Hong Kong, Macau and Taiwan) Thailand, Japan and South Korea, USA, Australia and New Zealand saw surge of arrivals in H1 2016 Thailand 4.9 mn South Korea 3.82 mn USA 1.4 mn www.china-outbound.com

Trends on Chinese Arrivals and Destination Choices (H1 2016) Europe Perspective “Traditional” European destinations and Turkey suffered Continuous growth on arrivals to Northern EU, Southern EU and South Eastern Europe – “new European destinations” France 905,000 Germany 595,000 Switzerland 75,000 Denmark 80,000 Turkey 860,000 5,000 60,000 23,500 127,000 14,600 129,000 135,000 119,000 www.china-outbound.com

Trends on Chinese Arrivals and Destination Choices Chinese Outbound Visitors Arrivals to SEE Countries South East Europe Focus Strong growth of arrivals from China Most SEE countries continue to see more Chinese visitors in H1 2016 6,800 41,000 3,900 5,600 8,200 19,000 www.china-outbound.com

Evolving Chinese Travellers Profile There is no “the Chinese traveller”. Demographics A majority of middle-aged travellers  born after 1980 and even 1990 (almost 60%) More children with families & 60+ citizens Group packages vs. FITs More package groups from 2nd & 3rd tier cities Less countries involved More themed and customised group tours Rapid growth of FITs: more than 60% in 2015 Information source and booking channels Online, online, online – Chinese social media, OTAs and the Internet Visit purpose and interests Visiting landmarks  experience local life style and local cuisine Famous but oversold brands  smaller lifestyle-orientated brands, variety and regional products gaining in importance. Accommodation Groups: mainly 3-4* with increase of 4* and 5* FITs: 20% interested in local accommodation and apartments, booking online Restaurants / Dining Groups: mostly Chinese meals with a few local cuisines FITs: passionate in tasting local cuisines www.china-outbound.com

Policy, Visa and Flights to SEE Countries Countries and Regions Within China’s “One Belt One Road” Initiative Visa convenience – 56 countries and territories allowing visa-free or visa-on-arrival No direct flights to SEE – but transferring in Munich, Frankfurt, Vienna, Budapest www.china-outbound.com

SWOT – SEE Countries’ Potential in Developing Chinese Market Strengths Novelty – “new” destinations Affordability Movie themes Common grounds of (previous and current) communism regimes Diversity of historical, cultural and natural attractions Weakness Inadequate knowledge of the Chinese market Insufficient (online) market exposure in China Lack of a strong destination brand, compounded by historical issues Diversity and depth of current products Difficulty obtaining visa Lack of direct flights Shortage in Chinese guides and restaurants O T Opportunities Perceived as safer destinations compared to “traditional” European destinations China’s “One Belt, One Road” initiative More repeat Chinese visitors, FITs Threats Increasing competition from other destinations on the Chinese outbound market Slowing-down Chinese economy and weaker yuan Uncertainty such as Europe’s terrorist attacks and refugee crisis www.china-outbound.com

COTRI Contacts Hamburg, Germany Prof. Dr. Wolfgang Georg Arlt FRGS Tel. +49 40 558 99 576 Mail arlt@china-outbound.com Web www.china-outbound.com Beijing, China Ms. Kate Li Tel. +86 139 1151 0490 Mail li@china-outbound.com www.china-outbound.com July 6, 2016