HRG: China will overtake the US to become the largest business travel market
China is set to become the largest corporate travel market according to Hogg Robinson Group (HRG), the award-winning international corporate services company. HRG’s experts cite investment in Chinese infrastructure as one of the vital factors in the rise of business travel across China.
Yates Fei, Director of Sales & Account Management, HRG China said: “Despite a slowdown in the speed of economic growth in China, business travel to the region continues to increase: business travel expenditure was $18 billion in 2000, $62 billion in 2010 and is expected to reach $277 billion in 2020, according to the World Travel and Tourism Council. China began investment in infrastructure a long time ago, with particular peaks before 2008 to accommodate demand from the Beijing Olympics, and the pace has picked up in recent years. Figures from the GBTA suggest China will become the world’s biggest travel market within three years; investment is expected to continue with approximately $237 billion being spent on infrastructure, such as airports, between 2011 and 2015. $239 billion is committed to further develop high-speed rail tracks, directly improving business travel in the country.”
Air travel currently accounts for 85% of business trips, although rail travel is expected to rise as the ‘Ministry of Rail’ wants high speed rail to all cities with more than 500,000 inhabitants by 2020. But as part of the Chinese government’s commitment to improving infrastructure, new air routes have already opened including Finnair’s service to Chongqing and Air France’s route to Wuhan, with further routes planned. Currently, long-haul international destinations are the least well served in China as small local airports are unable to accommodate larger aircraft, but improvements such as lengthening runways and the opening of secondary airports, including Chongqing and Chengdu, will provide better options for business travellers from outside China.
Chinese carriers are expected to grow at an annual average rate of 8.9% over the next 20 years, according to Boeing, in part due to the growing internal market, but also because Chinese carriers will have the capability and resources to compete in the tough long-haul international market. Boeing also recently forecast that China will need 5,260 new commercial aircraft, valued at $670 billion, over the next 20 years. Over 75% of this demand will be for growth rather than replacement. This growth will see Chinese carriers shaking-up the rise of Middle Eastern ‘megacarriers’ such as Emirates, which is on track to be at least twice the size of every other long-haul carrier by 2015. China will become a viable and cost-effective midpoint stop for Europe-to-Asia traffic.
China has already made big steps to utilise travel management. The average Chinese business traveller has embraced technology and the use of online booking tools or travel apps. Adoption rates are as high as 80% in some cases, as clients are looking to streamline internal processes and mange policy compliance. In addition, many companies are using reporting facilities to review their travel programmes to identify potential areas to drive further savings.
HRG’s most recent Hotel Survey found that the stabilised hotel rates in the established markets of Beijing and Shanghai are evidence that the business travel landscape in China is maturing and that infrastructure in key areas is satisfying demand. Shenzhen, Guangzhou and Chengdu are the fastest emerging business travel destinations in China with the level of corporate travel growing significantly over the past few years. These cities now have healthy and growing infrastructure in place including international airports and hotel chains, as well as frequent connections to China’s international hubs to support the increased inbound business travel.
Yates Fei said: “The next few years will be an exciting time for the Chinese business travel market, particularly as the infrastructure expands to open up more of the country to both Chinese and incoming international travellers.”