Ctrip.com Sees Expansion In China Travel

3rd Jan 2001

THE CORPORATE travel market has had a hasty evolution in China in the past two decades as doors have opened to foreigners.
Now, with entry to the World Trade Organisation imminent, hotels and travel companies face another boom.

Twenty years ago, foreign business travel in China was almost non-existent. Domestic travellers had to be of a certain status before they could book an air ticket. As foreigners trickled in, they relied on their clients to book hotels in a country where a different language and culture were minefields for the average American businessman far from the land of hamburgers and fries.
Change has happened fast, and these days all you need is money, locals and foreigners usually receiving the same treatment. At the start of the 1990s, multinational hotel groups grasped a golden opportunity.
“In the early 1990s there was tremendous growth as China opened its doors,” said Neil Shen, chairman of Ctrip.com, which offers corporate travel services via the Internet. “Need was tremendous. Multinational hotel groups such as the Hilton and the Shangri-La started coming to China. When the Shangri-La opened in Beijing in 1986 it was the hotel because there were so few multinational- managed hotels.” Companies focusing on corporate travel have opened in the past five or six years, but their services have been far from comprehensive, relying on guangxi, or connections, with a few hotels to negotiate deals. Most steered clear of offering airline services due to the small profit margins.
“There have always been very strong travel agencies such as China Travel and China International Travel,” said Mr Shen. “They are mostly state-owned and have been around for a long time, but they ignored the corporate travel market. The market has been very segmented.”
With Ctrip, companies operating in China can for the first time customise their travel services through an intranet system. Internal databases can be updated to specify which level of employee may travel business class, as well as personal details such as who prefers a window seat or individual choice of hotel bed size.
Once a booking is made, an e-mail is automatically sent to an employee`s superior for approval. The Ctrip back office generates an itinerary which is e-mailed to the employee. Travellers fill in expense claims and other details online upon return. This way companies link their travel services with internal accounting systems on a real-time basis.
While global corporate travel behemoths such as American Express, Farrington and Westminister have so far done little in the China market, a rapidly changing business climate is expected to change that.
“They will follow their existing clients, such as big firms like General Motors, who are investing heavily in China and which have substantial travel needs,” said Mr Shen. Ctrip aims to build a strong presence through consolidating a fragmented industry. In October, it moved some way towards achieving this ambition with the purchase of Beijing Modern Express Corporate Travel Service, making it the country`s largest corporate travel agency by business volume.
By all accounts, growth of business travel in China will be strong. These days business travellers, whose needs include fast modem links, secretarial and translation services, access to international media and connected conference facilities, are spoilt for choice.
Global hotel chains are rushing to expand. The Ritz Carlton has a hotel in Shanghai and is planning to open one in Beijing. The Marriott has a strong presence, with 20 establishments across the country. They have four more hotels under construction - two in Shanghai, one in Suzhou and one in Dalian - which will open within the next two years.
The Shangri-La chain has 15 hotels and is planning to open another three, one in Nanjing early next year, one in Zhongshan late next year and one in Zhengzhou in early 2002. Shangri-La chief executive Giovanni Angelini said: “We see huge potential in China, which is benefitting from major growth in domestic travel as well as the increase in business and leisure travellers. We [aim] to capture much of this new business in secondary cities, which should increase further with China`s imminent entry into the WTO.”
Luxury brand Four Seasons is opening its first establishment in Shanghai in 2001. The Harbour Plaza group is adding to a chain of four mainland hotels with the opening of its giant new flagship hotel in Beijing in the middle of next year, catering to “the discerning business traveller”. Companies whose needs are less sophisticated and whose budgets do not extend to four or five-star proportions, can pick from 4,500 star- rated hotels, 90 per cent of which are domestically managed.
According to Mr Shen, three-star establishments are catching up and foreign travellers will find staff conversant in English and access to limited business facilities. Hotel vacancy rates are about 40-50 per cent and they hope to benefit from growth in travel company networks. For the moment, multinationals are opting for the bigger chains for their global reach and good communication links. “Looking ahead, the corporate travel growth stream will probably be higher than in leisure travel,” Mr Shen said. “About 20 years ago, corporate travel was a very small percentage of total travel expenses in China. When the WTO is formally passed, a lot of multinationals will enter in a big way.”


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