CITS American Express Global Business Travel today announced the results of its 2015 China Business Travel Survey (The Barometer) during the eleventh annual China Business Travel Forum (CBTF), held in Shanghai.
Despite a continued slowdown of economic growth in China, company executives have indicated that their travel and entertainment (T&E) budgets have grown year-on-year by 4.79%, more than the 3.1% that had been anticipated in the 2014 survey.
Forty-five percent of the surveyed organizations reported keeping their T&E budget stable year-on-year; however, 43% have reported an expansion, which is an increase from 34% in 2014. Conversely, twelve percent of companies have reported a reduction in their T&E budget, a decrease from the 17% reported a year ago.
“Our research indicates companies are increasing their annual T&E budgets, despite the challenging economic environment in China. Business leaders recognize the importance of travel as a contributor to revenue growth. As conditions get tougher, they seem to be sharpening their focus on driving top-line growth and making more efficient and effective usage of their business travel budgets” said Marco Pellizzer, Vice President of American Express Global Business Travel, Mainland China and Hong Kong.
Stronger alignment between business travel and organizational objectives
According to the Barometer, 49% of companies see travel as ‘investment’ rather than a ‘necessary cost’, which is an increase of 11% compared with two years ago. Further, 74% of the interviewed companies report aligning their travel procurement decisions to their sales and project pipelines.
The distribution of the spending between domestic and international travel remains basically unchanged, however there was a six percent increase in ‘international-only trips’ year-on-year. The increase in international travel has been a gradual but noticeable trend over the past few years, and is most likely due to the increasingly international outlook and expansion of Chinese companies.
Further, it appears as though companies believe meetings, incentives, conferences and event (MICE) activities also remain important in driving business development. The number of MICE activities that companies carried out during the last year has increased: 32% of companies have carried out three or more MICE activities over the last 12 months, up from the 17% and 19% reported over the last two years respectively. This implies a slow but steady return of the MICE industry after the economic slowdown of the past few years that inevitably affected MICE activity.
From many to one
The practice of using multiple travel management companies (TMCs) or agencies has softened this year. Forty percent of companies interviewed are using one primary agency, which is a substantial increase from the 18% reported a year ago.
“There is a continued desire amongst local and multinational companies based in China to simplify the operational aspects of their travel management programs, in recognition of the benefits that economies-of-scale can bring, and the disadvantages of resource duplication,” that said Mr. Pellizzer.
When it comes to expectations of TMCs, the top three priorities are: savings (73%); best practices (60%); and, reporting and insights (40%). Senior management appear to be more involved and increasingly interested in reviewing travel programs with 43% of top management reporting that they review travel program data at least once per month, up from the 32% reported two years ago.
Technology on the rise
With 89% of companies reporting the use of online tools, the practice continues to be prevalent. However, fewer than half (42%) use specialized corporate tools, with the majority still relying on generic online travel agency websites. An opportunity exists to create more widespread efficiencies in processes with the adoption of corporate online tools, which are specifically designed for use in business travel.
Further opportunities exist in encouraging the widespread and more frequent usage of online tools, with 30% of travelers still making fewer than 50% of their bookings online. Similar to last year, the two main reasons travelers cite for using online solutions are ‘cost savings’ and ‘ease of use’.
Mobile applications continue to gain popularity and have become an essential tool in the hands of modern business travelers. This year, 57% percent of companies reported that a critically important factor in selecting a travel agency is the availability of a mobility application to support their travelers.
Mr. Pellizzer concluded, “The inbound influence and outbound impact of China’s economy within the rest of Asiais apparent, and it is increasingly clear that China no longer operates simply within its geographical boundaries. Business leaders in China continue to recognize the importance of travel when it comes to their organizational growth, but are seeking to maximize their spending by adopting technology tools to make their travel programs more efficient. They are also becoming more involved in reviewing their overall travel program to understand the return on investment. Companies are working closer than ever with travel management companies to obtain specialist advice and tools to help realize travel program efficiencies”.
The Barometer is an annual report detailing the current status of, as well as forecasts for, the China business travel market. The 2015 Barometer surveyed executives from 188 companies in China ranging from small enterprises with fewer than 100 employees to large companies with well above 500 staff. The organizations are located in major economic areas in China, such as Shanghai, Beijing, Guangzhou, Shenzhen and Wuhan. The top industries represented within the survey respondents were manufacturing, technology, financial services and pharmaceutical.