Bloomberg’s Shelby Holliday discussed Priceline Group Inc (NASDAQ:PCLN) on “In The Loop” and offered a view on why the company is keen on significantly boosting its spending on expansion outside the U.S. and especially into China. The company has earmarked about $500 million for its global growth agenda.
Holliday pointed out that Priceline Group Inc (NASDAQ:PCLN) is already the biggest travel agency in the U.S., and it is seeking for opportunities outside its domestic market and China appears to be an interesting market for the company. In any case, she noted, China is already the fastest growing travel industry in the world, having overtaken peers in recent times.
“[...] Two years ago, the Chinese travelers passed their American and European counterparts to become the top spending travelers in the world. Chinese tourists spent $129 billion in 2013. Americans and Germans just $86 billion, Russian and British travelers $53 billion,” she said.
According to Holliday, Chinese citizens are not just spending more than their counterparts, but they also travel more. She pointed out that the U.N. estimates that Chinese will make about 112 million trips this year with that number doubling in by 2020. Furthermore, she said Chinese travelers will make up 40% of the global tourists by 2030.
The reason Priceline Group Inc (NASDAQ:PCLN) is plotting big for China is that the middle class has risen and Chinese are everywhere, and they travel in droves because there is adequate disposable income to spend on tours and luxurious shopping.
“[...] Disposable income has absolutely risen, but visa restrictions are also easing, which is big for Chinese tourists and then it is becoming more and more popular to book independent trips, especially with young Chinese travelers,” reported Holliday.
She went on to state that Chinese young travelers are not like their parents or grandparents who just hopped on to buses and guided tours. Instead, they are going out there and book their own hotels, which presents a great business opportunity for Priceline Group Inc (NASDAQ:PCLN).
In conclusion, Holliday said Chinese spend a lot on luxury goods and most of their luxury shopping is done outside China.