China - Travel and Tourism: Leisure and business activity driven market (Strategy, Performance and Risk Analysis)
China is one of the fastest growing economies in the world with a nominal GDP of US$11,271 billion in 2016, posting a CAGR of 7.1% over the review period (2012-2016) from US$8,570.5 billion in 2012. It is expected to grow at a CAGR of 6.0% over the forecast period (2017-2021) to reach US$15,057 billion by 2021, supported by an anticipated increase in exports. Moreover, the sheer size of its population offers a huge market, which makes it an attractive business destination.
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Regional markets to foster revenue growth
Total revenue from passenger airlines increased at a CAGR of 9.1% over the review period, reaching US$73.8 billion in 2016, and is forecast to increase at a CAGR of 13.4% from US$82.2 billion in 2017 to reach US$135.8 billion by 2021. Full service airlines accounted for the majority of revenue in 2016, and will be the key driver over 2017-2021. China’s top three state-owned full-service carriers (Big Three) rank among the top 10 airlines globally in terms of passengers carried. However, none of these are in the top 10 when only international passengers are taken into account, demonstrating the extent of dependence on domestic and regional markets, including Hong Kong, Macau, and Taiwan.
China recorded the largest car rental fleet size in Asia-Pacific
China is the largest car rental market in the Asia-Pacific region in terms of both market value and size. It reported an overall fleet size of over 200,000 cars in 2016. The majority of car rentals in China were for leisure purposes, with growth primarily due to a rise in self-drive rentals. In 2016, CAR Inc. self-driving revenue increased by 19.0% y-o-y, its customer base increased by 30.0% y-o-y, and registered members increased by 55.0% y-o-y.
Pricing strategies to drive the car rental market
The car rental market’s value in China reached US$2.1 billion in 2016 and is forecast to increase at a CAGR of 10.8% to reach US$3.5 billion by 2021. Growth in the Chinese car rental market is led by competitive pricing strategies through dynamic pricing and promotions. In the second half of 2016, CAR Inc. conducted a more aggressive pricing strategy, which increased its rental days by over 40.0% y-o-y.