China will overtake the US as the number one business travel market in the world in 2017, according to China Confidential.
The Chinese are also now travelling for experiences, not just for shopping, claimed online travel agent Ctrip. It suggested that twice as many mainlanders will visit Japan for the spring cherry blossom season in 2015 compared to 2014, while Australia’s largest provider of camping vans revealed Chinese rentals have doubled over the past year.
Thomas Cook’s joint venture with Fosun International will be looking to tap into the the largest outbound tourism market in the world since 2012. In 2014, the number of outbound tourist departures from mainland China hit 100m for the first time. That number will double within the next five years, according to the Chinese government.
The venture, which will be based in Shanghai, will start selling domestic holidays before applying in two years’ time for a licence to sell foreign holidays to Chinese travellers.
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“Why it could seem that we are now rushing is because it takes two years before you can apply for the outgoing licence,” said Thomas Cook CEO Peter Fankhauser. “So that is why we agreed to do it as soon as possible.”
He added that the joint venture would marry its “brand heritage and expertise in international travel” with Fosun’s “local market knowledge and operation resources”. Qian Jiannong, president of Fosun’s tourism and commercial group, claimed that there is a lack of innovation and differentiation in the travel product offerings for Chinese tourists in China and abroad, presenting an excellent opportunity for this latest offering to gain a competitive advantage.
The two firms are putting in a combined £1.6m to launch the venture, which will also sell internal tours.
The initiative, in which Fosun will have a 51 per cent stake, comes three months after the company took a five per cent stake in the UK-listed company for almost £92m. According to Reuters, Fosun is further expected to raise its stake in Thomas Cook to ten per cent.
Thomas Cook will be sending managing director Reto Wilhelm to China in order to take charge of the business. Wilhelm previously headed Kuoni’s Asia and China division.
“We are taking it sufficiently seriously that we have put our A-team in there,” said CFO Michael Healy.
In the meantime, the two companies will sell holidays to Fosun’s Club Med properties in China and to a selection of Chinese hotels picked out by Thomas Cook’s team. In the long term, Fankhauser said Thomas Cook was planning to build some concept hotels in China.
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