Last year, China surpassed Canada as the number one international inbound travel market into Los Angeles.
Ernest Wooden Jr., president and CEO of Discover Los Angeles, visited Skift’s New York office recently to discuss how the destination marketing organization was one of the first U.S. tourist boards to open an office in Beijing over a decade ago.
Since then, members of the bureau and other tourism and economic stakeholders in L.A. have worked with local Chinese airlines and tour operators to drive higher levels of inbound traffic year-over-year.
Additionally, almost 200 U.S. and Chinese tourism leaders gathered in Los Angeles to discuss new partnerships and policies in September 2015 for the 9th annual U.S.-China Leadership Summit. Wooden says that kind of collaboration is one of the reasons why Chinese arrivals has surged 523% in the last decade, with double digit increases in the last five consecutive years.
“Most people in the U.S. never thought about China when we opened up our office 10 years ago, when the Chinese didn’t even register in terms of visitation in the top 10,” Wooden Jr. told us. “But we saw this coming, and sure enough it’s happening. The growth is just phenomenal. Last year was 22% growth year-over-year. So far this year, it’s 20% over last year.”
Following is an overview of the Chinese market’s evolution and how Wooden Jr. sees it growing in the future.
Skift: How big of a market is the Chinese?
Ernest Wooden Jr.: Last year about 107 million of them traveled the world, so they’re the number one ethnicity traveling today. The fact that the Chinese market is our number one international market speaks about the power of the Chinese traveler now.
We’ve had a presence very early on as a DMO, going back to when we opened up our first office exactly 10 years ago. Two and a half years ago, we opened a new office in Shanghai. Then about six months ago we went further south, closer to Hong Kong, to Guangzhou. Guangzhou is a very large and very well-known populous area, and an international trading area. I suspect that within the next 12 months or so we will expand even further west into China.
Skift: How successful have you been in attracting more direct airlift?
Wooden Jr.: The reason for our expansion, opening offices in China, is because we’re having great success in getting flights to come nonstop into Los Angeles. Guangzhou is the home of China Southern Airlines. China Southern Airlines is now coming nonstop into L.A., so we sort of follow our success. We’ve got China Air, American Airlines and United Airlines. In fact, today we have coming nonstop from mainland China into LAX more than 17,700 seats a week.
Changsha is a city that we’re completely focused on right now because we just got a new flight with Hainan Airlines that’s now flying. Hainan is something like our Jet Blue. It’s a kind of youngish airline. Now they’re coming from Changsha direct to Los Angeles, and they’re looking to expand their interior connections with Los Angeles. Because, frankly, we do a lot of work merchandising and teaching and training travel agents, tour operators, meetings and conventions operators, for example, about Los Angeles to stimulate that demand. We’ll see a lot more of that.
Skift: Why has Los Angeles been successful attracting Chinese travelers versus other U.S. destinations?
Wooden Jr.: One of the things we do with the bureau, we are also responsible for flight development for LAX and promoting LAX as a destination around the world. Everything now is China, China, China. We’re spending considerable monies merchandising directly to the Chinese people because we have one of the rare licenses to do that as a city. Most of the licenses to market directly to Chinese citizens are owned by states and countries. The state of Hawaii has one. The state of Nevada has one. France and Belgium and England and places like that have them. No other city other than Los Angeles has one.
That’s why most of the representation that you see for DMOs in China is with large representation offices, where people have offices and they’re representing many different cities and things like that. For us, our offices are staffed with our own employees, and that gives us a particular advantage because they spend 100% of their time thinking about how to draw Chinese business to Los Angeles.
Skift: What is the attraction of L.A. for the Chinese traveler, specifically?
Wooden Jr.: L.A. is a wonderfully exciting place for the Chinese. It’s the Oz of America, which is understandable because most of what they know about America they’ve learned through movies and television and music. I did some of my doctoral work at Fudan University in Shanghai, and it was fun, for example, to see the kids walking around with white earphones, and nothing attached to them, just the white earphones because it was a fashion statement.
A lot of Chinese young people, millennials and others, they’re fascinated with Los Angeles. When you’re from L.A. and you’re in China, they want to know if you see movie stars. Do you shop with movie stars? They know them all by name, and they know all the music in English. They can chant the music like a disco here. For them, Los Angeles is a bucket list kind of place.
Skift: What are some of the factors, beyond the rise of the Chinese middle class, fueling this growth?
Wooden Jr.: Today in China there are about 350 million middle income people, out of a total population of about 1.4 billion. So to put that in perspective, 350 million people is roughly the same as of the entire population of the United States. These are all people for who 10 years ago it was illegal to travel. Today the laws have changed so dramatically, because about a year ago the United States was able to negotiate a visa program that allowed them to go from a single one-year visa and turn it to a 10-year visa.
Our then ambassador to China, Ambassador Locke, was directed by President Obama to improve the amount of time it would take to get a visa. It used to take a couple hundred days once you applied as a Chinese citizen to get a visa to visit the United States. It could take you almost a year. Ambassador Locke and the State Department opened up a variety of different processing places in the embassies around China and improved that, so today you can get a visa to the United States between five and seven days, and you can get it for ten years. That’s one thing.
The other thing that has really provided us a lot of octane is this year is the Year of Tourism between the U.S. and China. That was a declaration made by President Xi Jinping with President Obama when he came to visit here about four or five years ago. They declared that the year of 2016 would be the year of tourism between these two great countries. That has translated to a lot of tactical efforts on the part of tourism bureaus in China as well as over here. On February 29, in fact, just last month, there were 650 tourism officials, including three of our own, in Beijing meeting to build on those partnerships.
Skift: Do you anticipate this level of year-over-year visitation growth coming into LAX for the next few years.
Wooden Jr.: That’s exactly what our research department projects. We think it’s going to be double-digit growth, although right now we’re still being cautious, but we think it’s a couple years, two to three years at least, of double-digit growth. Folks always ask me about the Chinese stock market and bubbles and all that kind of stuff. We have not seen any indication of any softening of the demand coming to the United States as a result. Even the devaluation of the yuan has not shown up in terms of depressed demand, so we think that we’ve got at least a couple more years of continued double-digit growth.
Skift: We’ve heard from other DMOs that they’re surprised there’s so much demand from second and third-tier markets in China as well, so they’re putting a lot of marketing efforts beyond Beijing and Shanghai. Are you seeing the same widespread demand?
Wooden Jr.: We are actually focused on tertiary cities right now. What has changed now is that you have aircraft that can come nonstop from some of those deep tertiary cities. Although when we use the word “tertiary,” we think smaller cities. Some of these cities have 20 million people. Much bigger than New York, for example.
Skift: What exactly is your role as a CEO of a DMO?
Wooden Jr.: My job is very specific. When I took my job almost four years ago, we welcomed about 40 million to Los Angeles, and we established a goal to get to 50 million visitors by 2020. I’m myopically focused on how do I do that. We think about the strategy of those kinds of plans almost every day.
What are some of the things we’re doing? First of all, we understand where our best customers are. We have a very robust research group that helps us understand the ins and outs of who’s coming to Los Angeles, how long they stay, what their value is, what they spend by ethnic group. We’re able to tell you how much a Chinese visitor is worth on a daily basis as opposed to someone coming from France, Australia or Korea, for example.
Last year we welcomed just a tad shy of seven million international visitors. They’re our best customers. They stay longer. They spend the most money. They use our hotels. They pay taxes and they leave. We like those kind of visitors.
Skift: What about India and Middle East?
Wooden Jr.: Just this week I signed for representation offices in New Delhi and Mumbai. We’ve had a lot of success during the last two years in bringing over eight new nonstop flights coming out of the Middle East, out of Abu Dhabi and Dubai, nonstop into Los Angeles. But what’s interesting about that is those flights fill up in India. They originate in India, fill up, stop in Dubai, and then come nonstop into LA.
We see it as a great opportunity to exploit what is soon to become the highest populated country in the world by putting people on the ground there, filling up those flights, and growing that base. When you ask what is my job, it is to think strategically about where the opportunities are, and how to spend limited resources to exploit these areas. We fell into a pattern right now that when we are successful at getting the flight to come in, then we put boots on the ground, so to say.
Skift: How important are your websites and specifically the foreign language versions?
Wooden Jr.: Extremely important. For example, three and a half years ago we had about three million people come to our website in English. Today it’s 12 million. We have been able to expand that into a very deep website with over 500 pages deep. That basically helps you to understand everything going on, not only right now but in the future in LA, for itinerary development, that kind of thing.
The L.A. tourism website in Chinese is called HelloLA.cn in China, and that’s a standalone website there. It was not built and housed here, but it’s built and housed in China, so we don’t have the issues of censorship. When you build a website in China, you’re subject to the rules of China. There’s no censorship delays that hurts the site when it’s being translated over there. They can go very speedily through our website, as opposed to if it was housed over here, there would be a delay. It would be very slow-moving as censors would do whatever they do.
So we have a very deep site in Chinese, Korean, Portuguese, French and English. All of those sites are extremely important because of the nature of the millennials and how much they use their phones. That’s our targeted market, the millennials. We know they’re just as big as the baby boomers and are close to spending as much money as the baby boomers. We know that they’re the future, so we invested the required money and effort and flexibility into the website, for both the leisure website and the more formal meetings website that we just launched.
[Editor’s note: The original version of this post mentioned Chengdu as the new Chinese gateway for Hainan Airlines. The correct city is Changsha, the capital of the province of Hunan.]