Mainland tourist numbers to continue to soar in coming years

For the past 15 years gaming stocks and luxury good stocks have soared. Aaron Fischer, CLSA's regional head of consumer & gaming research, has ridden this wave with bullish calls for the sectors year after year. Yesterday was no exception with the publication of a new report - "Chinese Tourists - Exploring New Frontiers". This discusses the phenomenon of outbound mainland Chinese tourism, what's driving it and the impact it's having on gaming and luxury goods sectors and on destination countries.

Chinese tourists are going to double by 2020 which is good for everything related to the travel industry. Although it's been running in one direction for 15 years that doesn't necessarily make it an easy ride for the analyst. What's the recommendation for a stock that has doubled or trebled within a year? It's not always that easy to say keep on buying.

Gaming stocks have increased in value 10-15 times over the past five years but Fischer remains bullish. Although people say that most of the tourists in New York and Paris appear to be mainland Chinese, he says the numbers of tourists visiting these cities will triple or quadruple over the next seven years. "We're still near the beginning of this," he says. While Hong Kong and Macau have experienced a surge in mainland tourists for a number of years, they have had less impact on other global destinations. "But there's a lot more to come," Fischer says.

Mainlanders are highly visible in the Maldives and Kenya. Apparently one of the most frequent questions mainlanders ask their guides, while on safari trips, is which animals are good to eat. The surge in tourism has prompted the National Tourism Administration to issue "Guidelines on Civilised Travel Abroad." These include "Do not pick your nose in public, soiling a swimming pool is frowned upon. Country-specific warnings include, don't ask the British if they have eaten, in France don't bring yellow flowers if invited to someone's home, and in Hungary, don't smash mirrors. It reminds us of the lifting of travel restrictions in South Korea in the 1980s. After a number of incidents involving South Korean tourists the government issued guidelines which included asking tourists not to indulge in excessive shopping or sex.

Less fear of flying

You will be pleased to hear that flying is getting safer. The Association of Asia-Pacific Airlines recently issued a statement noting that 2013 was the safest year in terms of commercial airline jet fatalities. Last year saw seven major accidents which involved large Western-built commercial airline jets, which resulted in a total of 115 fatalities - a loss rate of one major accident for every four million flights. Asia-Pacific carriers experienced three major accidents involving large Western-built commercial airline jets, which led to a total of 24 fatalities.

There was a useful tip in the statement, in that it observed that while turboprop aircraft maintained their "good safety record", they "remain in focus" as they continue to experience somewhat higher accident rates compared to larger jet aircraft, though they are often flown in "more challenging environments and conditions".

Kit Kats galore

We see that Nestle seems to have figured out how to crack the Japanese market. If possible be weird, wacky and downright strange. It is poised to launch a Kit Kat Choclatory store in the Seibu department store in Tokyo's Ikebukuro district. Kit Kat in most countries is a fairly ordinary biscuit covered in chocolate, but the new store will stock exclusive varieties of the chocolate bar created in collaboration with Japanese chocolatier Takagi.

In Japan, Kit Kat has been the country's favourite chocolate since 2012. Indeed Kit Kat is close to achieving cult status in Japan, according to Kit Kat's global brand manager, Stewart Dryburgh, who says he is thrilled that the new shop will showcase new premium products. Kit Kat's success has been fuelled by the launch of hundreds of unusual and innovative flavours to meet Japanese tastes and "sense of style." They include Purple Potato, Cinnamon Cookie, European Cheese, Bean Cake and Wasabi - unwrapping sticks of pale green, delicate pink and lilac chocolate that look and taste very different from those anywhere else in the world.

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