China consolidates its position as world leader in business travel, new trends on the horizon
CHINA is an unstoppable force in the travel industry – a heavyweight whose appetite for travel is seemingly unending.
From May to July this year alone, over 18 million mainland Chinese – roughly the entire population of Chile – are crossing the borders to overseas destinations.
In the business travel market, to say China is a strong force seems an understatement. The country (excluding the greater China regions of Macau and Hong Kong) is the world’s biggest business travel market, and finished 2015 with a whopping US$291.2 billion in travel spend.
At the recent ITB Asia convention in Singapore, Hamish Wong of the Global Business Travel Association (GBTA) China Advisory Board, said that China’s business travel spend grew US$143 billion in the past five years, the biggest spike in any Chinese travel market.
If those numbers aren’t substantial enough, the republic makes up 25 percent of the world’s global business travel spend. By the end of the year, spend is projected to grow 9.2 percent to US$317.9 billion.
In 2017, another 8.4 percent increase is expected bringing total Chinese business travel spend to US$344.6 billion. To rationalize the scale of these numbers, US business travel by comparison is expected to reach US$293.1 billion in 2017, a significant US$51.5 billion difference.
Michael W. McCormick, GBTA executive director and COO, said in a statement by GBTA, “China accounts for nearly 25 percent of global business travel spending, up dramatically from a five percent share in 2000, demonstrating the truly global nature of today’s economy.”
However, a slowdown is envisaged in China owing to the country’s slow economic expansion. A report by GBTA revealed that despite the slowing economic growth, increased private and public spending on infrastructure continues in anticipation of better days ahead for the Chinese economy.
McCormick added, “We expect longer-term spending growth to continue to moderate until Chinese policymakers can achieve their goal of rebalancing the economy and diverting resources away from investment and towards consumption.”
Findings also revealed that international outbound business (IOB) from China has faced a series of setbacks, including reduced trade demand from markets in north America and Europe due to economic contractions.
— Online-Flughafen (@OnlineFlughafen) August 20, 2016
China has also been challenged by the rising value of its currency leading to decreased demand for Chinese exports. GBTA forecasts IOB spending to increase 8.3 percent this year and only 2.6 percent in 2017.
Despite the projected dip in businss travel numbers, airlines are scrambling to meet demand. China will invest in 6,810 new aircrafts worth more than US$1 trillion over the next 20 years.
Randy Tinseth, Boeing Commercial Airplanes’ vice president of marketing, said in a statement that he expects passenger traffic to grow by 6.4 percent in China annually over the next two decades.
But airlines are not the only ones taking note. CITS American Express Global Business Travel revealed results of a recent study at the recent China Business Travel Forum (CBTF) in Shanghai, indicating that duty of care and a more traveler-centric approach is being practised by companies to ensure that employees are supported and nurtured.
Marco Pellizzer, vice president of American Express Global Business Travel, mainland China and Hong Kong, said, “Our research indicates that because of continued economic uncertainty, companies are cautious when it comes to increasing their business travel spending.”
CITS American Express Global Business Travel today announced the results of its 2016 China Business Travel Survey… https://t.co/MAisJjYqaq
— GlobalTravelMedia (@EGTmedia) October 28, 2016
He added, “[Companies] recognize the importance of travel as a contributor to revenue growth and as such are trying to find smarter, more innovative and efficient ways to manage their business travel programs.”
“In keeping with increased disruption and instability globally, business leaders are more focused than ever before on supporting their traveling employees from a duty-of-care perspective.”
The study found that nearly 30 percent of organizations it approached would consider updating their business travel policies to address the needs of travelers, especially to take into consideration the use of enhanced safety measures.
As competition for talent in China continues to increase, the trend of leveraging better employee travel schemes for the purposes of retention and recruitment is expected to take off.
And as much as the business travel market in China continues to grow, companies are realizing the importance of putting into place travel regulations that more innately meet their employees’ needs.
This could mean simplifying operational aspects of their travel management programs, working with external travel management services, and of course, emphasizing the ‘duty-of-care” approach that’s vital to keep travelers happy.