While the U.S. struggles with the downturn of the economy, the country is not realizing its potential to increase jobs and GDP through international tourism – more specifically, Chinese outbound tourism. The demand exists – the booming economy in China has enabled more and more people to travel farther and for longer. The supply exists – the US has great cultural, natural, and commercial resources to attract tourists from different socioeconomic classes with a plethora of different interests. So, what is missing? What is lacking that is the most fundamental piece in bringing the demand to meet the supply for tourism?

Providing the tourists with an easy visa obtainment process; in other words, rolling out the red carpet for our guests.

The Chinese Tourism Demand is Growing and Lucrative
China, along with Brazil and India, has a rapidly growing middle class population that is already spending billions of dollars on overseas travel. The most popular activity being “shopping,” Chinese tourists spend considerably more money compared with tourists from other countries. According to data from 2010, at $6,243, the average travel spending (“the spending”) per Chinese visitor to U.S. was higher than the average travel spending per any other international tourist. The spending per visitor from India and Brazil followed at $6,131 and $4,940. By comparison, the same measure from key European countries (Germany, France, and United Kingdom) was only $3,132, or roughly a half of the Chinese visitor’s.

Between 2000 and 2010, Chinese outbound travel increased more than five-fold, from approximately 10.5 million visitors to 57.4 million visitors which equates to a compounded annual rate of 18.5%. Forecasts anticipate this pace of growth will be sustained; between 2010 and 2020, the number of visitors is expected to increase by 151%¹.

The Current U.S. Visa Obtainment Process Does Not Accommodate the Demand
For an average middle class Chinese citizen to obtain a visa to visit the U.S., the visa candidate has to jump through multiple bureaucratic hoops and incur various costs as summarized below. The process can take as long as 120 days, compared with only twelve days to obtain a visa from the United Kingdom consulate. While the United States requires all applicants to be interviewed and the United Kingdom does not, this factor alone does not explain the dramatic difference in visa processing efficiency. The process, the costs associated and the period for which visas are valid all contribute to the problem.

The Process
The current U.S. visa application process in China can be summarized as follows:

1. Applicant assembles required documentation and a properly formatted digital photo
2. Applicant pays $140 fee directly to designated branches of CITIC Bank²
3. Applicant purchases a pre-paid PIN card from the bank or online, which is used to schedule an interview appointment or ask questions about the visa process
4. Applicant completes visa application online in English
5. Applicant waits two to 100 (or more) days for interview
6. If no consulate is nearby, the applicant must travel to the city in which a consulate is located; this often requires an overnight stay
7. Applicant waits in line, usually for hours, to be interviewed at the consulate
8. Application is reviewed, fingerprints are taken and name check is performed
9. Applicant interview takes place while the supporting documents are reviewed
10. Name check results are reviewed
11. Applicant is informed of denial or approval onsite; if a security advisory opinion (SAO) is needed, the applicant returns home and waits a minimum of 20 days until an inter-agency review is conducted
12. Applicant picks up passport and visa at a designated post office

Altogether, the process is cumbersome, time consuming, and inefficient for the applicant.

Cost and Accessibility
In a survey conducted by U.S. Travel Association, more than 40% of Chinese respondents cited visa costs as a barrier. Starting with the application fee of $140, potential additional fees could add another $50. On top of the visa processing fees, applicants who do not live in one of the five cities in which a U.S. consulate is located incur hundreds or thousands of dollars in expenses (and take time off from their work or studies) to undergo the mandatory face-to-face interview. While the U.S. has only five consulates in China, the United Kingdom and France have twelve and six consulates respectively. Providing easier accessibility to the U.S. consulate would enable tourists to travel to the U.S. and spend money that would otherwise be spent on trips to other consulate locations.

Validity period
Chinese nationals must apply for new U.S. visas every year. For most other countries, citizens receive 10-year multiple entry visas to the U.S. For some countries under Visa Waiver Program³, a visa is not required for visits of 90 days or less. Chinese tourists who may be traveling more than once in ten years have to visit the consulate more often than other countries’ citizens, making a need for a more efficient, accessible process even more critical.

One-year visa expiration is disruptive and expensive not only for Chinese visa applicants but also for American business and universities that attract international citizens. In the case of universities One-year visa expiration is disruptive and expensive not only for Chinese visa applicants but also for American business and universities that attract international citizens. In the case of universities in particular, international students seldom qualify for any financial aid and yet still pay the full tuition; therefore, it is in the best interest of the school and the government to make the visa process as easy as possible for the international students. China has become the single greatest source of international students in the U.S. According to the Opendoors 2010 Facts Report on college demographics for international students; over 127,000 students came from China to attend a U.S. college for the 2009-2010 academic year, and the number is only growing.

Case Study: South Korea’s Success Supported by Eased Visa Requirements
South Korea is one of the closest places to travel from China; Seoul, the capital city of South Korea, is only 600 miles from Beijing, the capital city of China, or approximately a two-hour plane ride. Despite this clear advantage, however, South Korea lagged behind its competitors in capturing the growing Chinese tourists from 2000 to 2005, due to strict restrictions by Korea as well as Chinese authorities.

In July of 2006, South Korea added China to the Visa Waiver Program (VWP) of Jeju-island, Korea’s largest island and a significant tourism demand generator, as part of an effort to reduce travel restrictions for Chinese tourists. After the introduction of VWP, and various other efforts, Korea experienced a 91% increase in the number of Chinese tourists from 2006 to 2009.

In 2010, South Korea ranked as China’s most popular overseas destination with approximately 1.9 million mainland Chinese visitors - a 40% increase from 2009 and a 55% increase from 2008. The success in 2010 was supported by Korea’s initiative to issue multiple-entry visas to employees of China’s top 500 companies, schoolteachers, pensioners, holders of various professional licenses and graduates of prestigious colleges.

South Korea continues to take different measures to provide easier entry to the country for eligible Chinese citizens. The country announced a plan to provide “double-entry" visas allowing Chinese citizens to enter the country twice within a set period of time for tourism purposes. The tourism ministry estimates the new measures will help attract roundly 3 million Chinese tourists annually beginning in 2012.

Currently the challenge faced by Korea is catering to the different customer segments. The country lacks select- or limited-service hotels to host the value-oriented tour groups that want to spend the least time and money at a lodging facility. The U.S., however, has a wide array of hotel brands serving all segments. The challenge for the U.S. is to open the doors and roll the carpets out for the tourists just waiting to visit.

Industry Efforts Are Pushing for a More Efficient and Eased Visa Processing
"As a nation, we're putting up a 'keep out' sign."
-Roger Dow, president, U.S. Travel Association

The U.S. Travel Association, a national organization for tourism trade, is working to persuade the American public and its elected leaders of the necessity to ease back on restrictions on foreign tourists via a plan called “Ready for Takeoff.” The organization stresses that security should be provided through technology and information sharing rather than inefficient visa processing, and points out the potential benefits of attracting the growing tourism demand from emerging countries such as China, Brazil, and India. U.S. Travel Association insists that “Those bent on illegal activity will try to find ways around the roadblocks. The legal visitor likely will go somewhere more welcoming. That’s a policy the country can ill afford during a major recession.”

The increase in foreign visitors will undoubtedly create jobs for the hospitality sector. The “Ready for Takeoff” plan has a Steering Committee of which more than half comprises major hotel brands as evidence of the importance of this source of tourism to the hospitality industry.

FIGURE 1. "READY FOR TAKEOFF" STEERING COMMITTEE