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The Evolving Landscape of The World’s Largest Business Travel Market – Asia

July 18, 2017 Business News No Comments Email Email

Asia accounts for more than a third of US$1 trillion in annual spending globally[1] and sets to dominate business travel spending over a rate of 80% until 2026[2].

By 2025, it is also estimated that 32% of all world airline traffic will originate from Asia[3]. With this positive outlook fuelling growth, stakeholders are raising the bar for Asia’s travel landscape with tremendous developments.

In December 2016, the Singapore-Kuala Lumpur High Speed Rail (HSR) was officially inked. This ambitious project is estimated to come to fruition in 2026 and will cut travel time between the city states from 4 hours (by car) to 90 minutes. Not only that, the continued proliferation of Low-Cost Carriers (LCCs) and the Pan-Asia Railway Network are events that will transform the travel ecosystem in the region.

Solid alternatives to traditional scheduled carriers

The developments of LCCs and railway transport present new solutions and more choices for business travellers. Asia’s business travel expenditure on LCCs has grown 11% annually over the past three years, nearly double the growth rate in North America[4], indicating a shift from traditional scheduled carriers.

In 2017, LCCs will continue to dominate the Asia business travel industry as the region sees greater connectivity with expanding routes such as AirAsia X reinstating their flights to New Zealand, parts of Europe and new flight services to Hawaii in 1Q 2017. Today, with 41% of Asian business travellers indicating their willingness to adopt LCCs for business[5], the runway is primed for greater opportunities.

In the same vein, the addition of railway infrastructure such as the Singapore-KL HSR and Pan-Asia Railway Network will create a more competitive travel landscape, resulting in potential cost savings for companies. Apart from offering more choices, the HSR can save up to two hours of travel time, presenting a huge bonus for productivity and a more seamless travel experience. Similarly, Hong Kong also introduced a series of Intelligent Transport Services (ITS) to ensure efficient mobility, efficient logistics, barrier-free community and adaption of intelligent technology[6] in the city.

Fragmentation of Asia’s business travel demographics

These developments not only signify the growth of business travel within Asia, but are also indicative of the shifts in perceptions and preferences amongst Asian business travellers. As reported by the Singapore Tourism Board, Asian business travellers enjoy greater autonomy and indicated freedom and flexibility as a priority.

However, while these are overarching trends, Asia’s melting pot of cultures means that travel managers have to be attuned to the specific needs and preferences of their travellers in order to customise travel policies that are not only cost effective but help to minimise risks. For example, the same study found that Singaporean and Japanese business travellers tend to be more budget conscious and prioritise loyalty points and comfort as compared to Chinese and Indonesian travellers who focus on service and prestige[7]. They also indicate greater willingness to fly LCCs for business as compared to Japanese and Singaporean travellers[8]. Sensitivity to these tastes and preferences differentiates a thoughtful travel management policy from an overly generic one.

Spatial developments giving rise to a region of golden opportunities

Currently India’s corporate travel market is worth $26 billion and is estimated to see a compound growth rate (CAGR) of 11.5 percent to $45 billion in 2019[9]. Similarly, China is gearing towards the same trend with a spending of $261 billion at present[10]. This trend is expected to prevail in other parts of Asia as the new developments open up a world of opportunities.

Facilitated by the HSR project, developed cities such as Singapore and Kuala Lumpur will evolve into megacities, giving rise to greater demand for corporate travel management services. As businesses cultivate closer ties and look to the region for more growth opportunities, travel management solutions is set to become the norm as a robust means for businesses to scale and manage travel.

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