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GBTA Predicts Growth in China Business Travel

May 21, 2012 By: Newswire Travel Agent

China is ranked second in the business travel market, but is forecast to surpass the U.S. as early as 2015, the Global Business Travel Association (GBTA) reports in its inaugural GBTA BTI Outlook – China. The report is the second of three in-depth reports in business travel sponsored by Visa.

Key highlights in the China report include:

Business travel spending in China will increase by 17 percent in 2012 and 21 percent in 2013, to US$202 billion and US$245 billion respectively - underpinned by the removal of previous supply side constraints such as:

Over the past ten years, China’s four largest airports (Beijing / Shanghai-Pudong / Shanghai-Hongqiao and Guangzhou) have doubled in size
Plans are in place for approximately 100 new airports in the next ten years.
“Business travel drives the economy and China is no exception. From this report we can see just how explosive this growth is going to be over the next few years. The Chinese recognize how important business travel is and the investments that are being made in vital infrastructure expansion demonstrate that," Welf J. Ebeling, regional director, GBTA Asia said.

Growth in international outbound travel spending is expected to be particularly strong, rising by 27 percent in 2013, the report notes.

"The Chinese investment in infrastructure is vital as they must have the infrastructure in place to keep up with the explosion in demand. As such, in the past 10 years, the 4 largest airports have doubled in size and there are plans in place for over 100 new hotels in the next decade," GBTA said.

Key contributors to China’s surge in business travel expansion are in step with increasing manufacturing output, trade growth, job gains, business formations and infrastructure investment.
Business travel has evolved into a key contributor and benefactor of Chinese economic growth, showing strong correlations with economic indicators like GDP growth, retail sales, job growth, exports, profits and sales.
Real GDP in China is forecast to increase by 8.2 percent and 8.9 percent in 2012 and 2013 respectively
“With China on a robust upward trajectory in business travel spending, they are quickly becoming a world leader in the business travel market. For this reason, we believe it is a most opportune time to have undertaken our first Business Travel Outlook for the country. China’s phenomenal economic growth over the last decade has been mirrored in business travel which is now a key contributor to, and benefactor from, the country’s expansion," Michael W. McCormick, executive director and COO of GBTA, commented.

"We forecast significant increases in business travel by Chinese citizens over the next two years with at least two-thirds of the growth being real increases in trips and spending as opposed to rising travel prices. This should also be accompanied by GDP growth rates of 8-9 percent a year,” McCormick said.

Over the past decade, China has experienced rapid economic growth which has been reflected in China’s dramatic increase in business travel spending, according to the research. Between 2000 and 2011, business travel spending averaged over 16 percent a year as a component of overall travel spend and was largely driven by both meetings, incentives, conferences and exhibition business trips alongside a rise in the amount of real spend-per-trip. The rise of business travel spending is also a reflection of increases in both domestic travel and international expenditure, GBTA said.
Over the next ten years, GBTA’s report forecasts that China’s business travel spending will reflect the slow restart of the global economy with both domestic business travel spending and international outbound travel spending showing strong percentage increases.

Later in the forecast horizon, international outbound travel spending by Chinese business travelers is expected to increase even more in percentage terms and reach 27 percent in 2013. Domestically, business travel spending is expected to reach US$233 billion by 2013.
In terms of economic growth, a retreat from top-down central planning and the embracing of market-based reforms and targeted investment initiatives has enabled China to become a central player in the global economy, GBTA says.

The fourth quarter of 2011 saw the GBTA BTI in China come in at 337. The impact of the recession of 2008-2009 was short lived for the Chinese economy and business travel sector. In fact, by the second quarter of 2009, the index had reached 242 or 2.4 times its level only four years earlier. Since the end of the recession, the index has added over 82 points in eight quarters – an increase of over 32 percent, driven primarily by domestic business travel expansion, GBTA says.
GBTA BTI in China is poised to return to its pre-2009 growth in 2012 and 2013. Domestic and international outbound travel spending will work together to expand the index by an additional 135 points by the end of 2013, reaching a new high of 475 – an increase of nearly 41 percent in just two years. 


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By Newswire | May 21, 2012
Growth in international outbound travel spending is expected to be particularly strong.
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