Is Maine ‘China-ready’? Surge of Chinese tourists in US expected in next five years

Posted June 09, 2014, at 3:40 p.m.

PORTLAND, Maine — Chinese tourism to the U.S. is expected to explode in the next five years, and while Maine isn’t first on the newcomers’ itineraries, some forward-thinking entrepreneurs in the state are positioning themselves to capitalize on the influx.

Capt. John Nicolai of Bar Harbor is among them. He’s learned to speak Mandarin for giving tours of the state’s lobster industry aboard his boat, Lulu, a name written on the bow in English and in Chinese characters.

“We’re thinking probably the most important segment of travel today is the emerging Chinese market,” Nicolai said. “And many of the travelers are very affluent.”

The U.S. Department of Commerce projects the number of Chinese visitors to the U.S. to increase nearly 140 percent in the next five years, to more than 4.3 million, with the average Chinese tourist spending about $7,100 per visit, twice the average for overseas visitors. Last year, it was fifth-highest for overseas visitors to the United States.

“I was in the investment business for 25 years managing mutual funds, and the thing I always knew was the way to make a lot of money was to get in front of large demographic trends,” said Mike DiCarlo, executive vice president of the Boston-based marketing firm Attract China, which has offices in Beijing and helps companies advertise to Chinese tourists. “And this is the biggest one in the history of the world.”

While most tourists from China enter the U.S. in primary markets such as Los Angeles, New York and Washington, D.C., tourism industry insiders expect Maine and other parts of New England will start seeing more in the coming years, fueled by a variety of recent developments.

Among them: The first direct Boston-Beijing flight will start this month, travel restrictions have eased in recent years and urban household income is projected to double in China by 2022, according to analysts at McKinsey & Co., allowing a greater number of people from China to travel more frequently and independently, beyond the standard tour-group markets.

“What generally happens is that if a Chinese traveler comes to New York City, they will go to two other places,” DiCarlo said. “It’s the same with Boston, when that direct flight comes in June, you’ll see them go to two or three other places for small excursions like Cape Cod, Cape Ann, the Berkshires or Maine.”

He expects Chinese visitors to Boston to increase about 70 percent this year, up from 147,000 last year. And by 2020, he projects annual Chinese visitors will top the city’s population of more than 630,000. Around 60 percent of that travel occurs from May to October.

Just how many of those tourists are coming to Maine is quantifiable only through anecdote, as there’s no primary point of entry for Chinese visitors traveling on their own. Hoteliers such as Don Haggett, the director of sales for Lafayette Hotels, which has 22 properties in the state, say there’s not been a major uptick in independent traffic from Chinese tourists yet, but Haggett expects up to 200 group tours in Maine this year.

Carolanne Ouellette, director of the Maine Office of Tourism, and Greg Dugal, executive director and CEO of the Maine Restaurant Association and Maine Innkeepers Association, said China is not a primary focus for tourism in Maine, but it’s coming on the radar.

The state does not market itself as a tourist destination directly to countries overseas but coordinates that effort through the six-state group Discover New England. That group recently started discussions about whether to add China to its list of primary markets, Ouellette said.

DiCarlo, whose company helps U.S. businesses connect directly with Chinese tourists in online searches and elsewhere, said that marketing strategy is changing, as an estimated 70 percent of Chinese tourists are traveling independently, a major shift from a decade ago.

“People still think Chinese tourists are getting off buses everywhere, and in 2005, that was about 100 percent true,” he said, noting that loosened federal travel restrictions and rising incomes are changing how visitors look for and find out about travel opportunities.

Haggett said group travel from cities such as Philadelphia, New York, Boston, Montreal and Ottawa still makes up almost all of the customers his hotels host from China.

But the trend of increasing independent travel means opportunity for businesses such as Capt. Nicolai’s, whose newly designed website includes sections for Japanese and Chinese visitors. And Nicolai thinks more can be done in the Bar Harbor area and around the state to lay out the welcome mat to guests from China.

“Linguistically, we’re not making it easy for them to visit,” Nicolai said, noting that he’s been a vocal advocate of Acadia National Park adding MP3 audio tours in various languages that independent international tourists could use as guides.

That’s a market where Xiaorong “Sharon” Horton, a Brownville-based real estate agent and vice president of the Maine China Network, also sees opportunity. She thinks her new company called Happy Trails of Maine will be able to bring more tourists from China by offering customized tours, travel agent services and connections with real estate and business investment opportunities in the state.

Some hoteliers, such as Cheryl Delisle of Witham Family Hotels, which has properties from Bar Harbor to Boston, are turning attention to the trend of independent travel and considering how to accommodate independent Chinese travelers by understanding cultural expectations and investigating systems to accept credit cards from UnionPay, the company that has an estimated 98 percent of the credit card market in China.

With around 755 million cardholders, UnionPay is a key portal to the new disposable income that millions of Chinese travelers will have, according to Steve Gent, founder of the Maine-based startup Travel Payments Direct.

His company sells systems for accepting UnionPay, something Delisle said she’s researched and is proposing to her bosses in the coming weeks, largely in anticipation of more tourists from China.

“We’re just beginning to look at that market,” she said.

The UnionPay cards are accepted through the major American credit card processors, but Gent said the swipe-card readers can’t serve all UnionPay cards, like the pin-and-chip variety also common in Europe. His company makes money from a monthly fee and a percentage charge on transactions.

Earlier this week, Gent traveled to Boston to start discussions with the company’s first potential restaurant and nightclub group and a high-end clothing store, both places he said indicate where the market is now, but that’s expanding.

“It started with luxury goods, and now a lot of the hoteliers are trying to incorporate the ability to process UnionPay,” he said. “And it’s bubbling down into attractions and restaurants.”

For the seven-employee company that also has offices in Florida, Colorado and California, Gent said California, New York and Hawaii have been the markets with the strongest interest, but he sees a future for accepting UnionPay in his home state, too. That’s as the cruise industry, ski industry and outlet shopping destinations in the state become “China-ready,” which he said involves everything from accepting UnionPay payments to developing cultural savvy.

But for now, he said, his piece of that puzzle is keeping him busy enough.

“We’ve been drinking out of the firehose called China,” he said.