Thomas Cook is to launch a joint venture in China, as the tour operator seeks to capitalise on a tourism boom in one of the world’s second-largest economy. The Chinese recently overtook Americans as the world’s biggest-spending tourists, splashing out $165bn (£106bn) in 2014, with more than 100 million people travelling abroad. Hong Kong and Macau remain the biggest holiday destinations for Chinese tourists, but Europe is popular among an affluent minority.
In a bid to profit from that growing wanderlust, one of the world’s oldest travel firms has unveiled a joint venture with Fosun International, one of China’s largest conglomerates. Thomas Cook’s chief executive, Peter Fankhauser, described the deal as a significant milestone.
Thomas Cook said the joint venture would marry its “brand heritage and expertise in international travel” with Fosun’s “local market knowledge and operation resources”. The two firms are putting in a combined £1.6m to launch the venture, which will also sell internal tours.
Thomas Cook, which began life in 1841 by selling rail excursions to a temperance rally in Loughborough, has been trying to reinvent its business for the internet age after it almost collapsed in 2012 following a slump in bookings. The firm hopes that the deal will allow it to develop upmarket hotels in China, which will be exclusive to Thomas Cook customers.
Fosun, which was founded by four university graduates in Shanghai in 1992, is one of China’s largest conglomerates, with interests spanning banking, pharmaceuticals and mining. In March, Fosun paid £92m for a 5% stake in Thomas Cook, raising speculation of an eventual takeover. Fosun also bought the ailing French holiday company Club Med in February, having acquired a 7% stake in 2010.
The joint venture could bring a wider range of holidays to China’s burgeoning middle class. “Today 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 our new joint venture to gain a competitive advantage,” said Qian Jiannong, president of Fosun’s tourism and commercial group.
Wolfgang Georg Arlt, director of the China Outbound Tourism Research Institute, agreed there was “too much run-of-the-mill stuff” for Chinese tourists. He said that a second wave of Chinese tourists – younger, well educated and more likely to work for international companies – wanted bespoke holidays. “They are less interested in ticking off a list of famous places and more interested in doing things” – such as learning local dances, taking cookery classes or going punting in Cambridge.
But the “five countries in 10 days” coach tours most associated with Chinese tourists in Europe are likely to remain popular. Stefanie Gallob, head of research at the European Travel Commission, said more Chinese tourists were travelling independently, but the market was likely to remain dominated by group travel for the medium term, because it was easier to obtain travel documents from Chinese authorities. “It is not a free travel market – it is a highly regulated and centralised market.”
France was named as the top “dream destination” in a survey of outbound Chinese tourists conducted by China Confidential, a research arm of the Financial Times. Italy was in second place, followed by the UK and Germany, although the top five countries actually visited were all in Asia.
The UK, which is outside the EU’s Schengen area of passport-free travel, attracts barely one-third of the tourists who went to France: between January and September 2014, 619,294 Chinese tourists visited France, but only 239,967 went to the UK, fewer than went to Switzerland, Germany or Russia.
Last year, George Osborne announced that 25,000 Chinese tourists visiting the UK in organised groups could get their visa costs refunded, as the government seeks to entice more high-spending holidaymakers to visit Britain. Bicester’s retail village, in Oxfordshire, is among the most popular UK destinations for Chinese tourists.
The ETC said it had not yet seen any change in Chinese tourists’ holiday intentions since the changes were announced.
