Rising internet use to fuel tourism in second-tier cities

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Internet usage in China’s second-tier cities is rising and that’s expected to accelerate outbound travel from these areas, potentially benefiting Macau, Bloomberg analyst Vey-Sern Ling said in a presentation at G2E Asia.

Speaking about the impact of the internet on travel in China, Ling pointed out that although internet penetration in urban areas is at about 71 percent, that figure drops to 35 percent in rural areas. The overall rate runs at 56 percent.

Given that Chinese on average spend four hours a day online and both young and old use the internet as a way to search travel blogs, the increasing penetration in second-tier cities will be a major driver for growth, he said.

Outbound tourism growth rates from these cities is already growing and research analysts have noted that this trend is likely to fuel gross gaming revenue in Macau. Morgan Stanley in a recent report said that Chinese visitors represented 66 percent of total visitors to Macau in 2016, and half of this number came from Shanghai, Beijing and Guangdong province. The other half came from  lower-tier cities and this will be further supported by improving transportation infrastructure and increasing hotel room supply.

Bloomberg Research said departure rates in 2017 from Xi’an were up 323 percent from the prior year, while Changsha was up 235 percent and Wuxi 112 percent.

Last year about 376 million people booked their travel online, with 78 percent of internet users booking their flights online. But by far the most common use of the internet was messenging, with 92 percent of users frequenting chat sites such as WeChat, QZone and Weibo.

“Internet is disrupting the way people look for travel,” Ling said. “If you want to reach the young you need to be on the internet.”

An analysis of keyword searches related to travel showed that the word “island” came out top, followed by “amazing food; nature exploration: outdoor activities: family activities and 5-star hotel.