Chinese travel budgets rise despite economic slowdown

TD Guest Writer

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49% of Chinese companies see travel as 'investment' rather than a 'necessary cost'
49% of Chinese companies see travel as ‘investment’ rather than a ‘necessary cost’

Company executives in China have indicated that their travel budgets are continuing to rise, despite the headwinds facing the Chinese economy.

In their latest China Business Travel Survey, which was released in Shanghai this week, CITS and American Express Global Business Travel revealed that Chinese corporate travel and entertainment (T&E) budgets have grown 4.8% this year, more than the 3.1% anticipated in the 2014 survey.

Forty-five percent of the surveyed organisations reported keeping their T&E budget stable year-on-year, but 43% have reported rising budgets, which marks an increase from 34% in 2014. Only 12% of companies reported a reduction in their T&E budgets, 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,” said Marco Pellizzer, vice president of American Express Global Business Travel, mainland China & Hong Kong.

“Business leaders recognise 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,” he added.

The report also found that 49% of companies see travel as ‘investment’ rather than a ‘necessary cost’, which is an increase of 11% compared with two years ago. And 74% of the surveyed companies reported aligning their travel procurement decisions to their sales and project pipelines.

The distribution of the spending between domestic and international travel remains almost unchanged, however there was a 6% increase in ‘international-only’ trips year-on-year. The report noted that the rise 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.

It also appears that companies believe MICE activities remain an important driver of business development. The number of MICE activities carried out by companies in the last year has increased, with 32% of respondents saying they have undertaken three or more MICE activities over the last 12 months, up from the 17% and 19% reported over the last two years respectively. This, according to the report, “implies a slow but steady return of the MICE industry”.


MICE and mobile are both growing trends, according to the report
MICE and mobile are both growing trends, according to the report

Another key trend in the report found that 40% of companies are now using one main 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 programmes, in recognition of the benefits that economies-of-scale can bring, and the disadvantages of resource duplication,” said Pellizzer.

An overwhelming 89% of companies reported the use of online tools, but fewer than half (42%) use specialised corporate tools and the majority still rely on generic online travel agencies. Mobile applications continue to gain popularity, with 57% of companies reporting that the availability of a mobility app to support their travellers is a ‘critically important’ factor in selecting a travel agency.

“The inbound influence and outbound impact of China’s economy within the rest of Asia is apparent, and it is increasingly clear that China no longer operates simply within its geographical boundaries,” said Pellizzer.

“Business leaders in China continue to recognise the importance of travel when it comes to their organisational growth, but are seeking to maximise their spending by adopting technology tools to make their travel programmes more efficient.

“They are also becoming more involved in reviewing their overall travel programme to understand the return on investment. Companies are working closer than ever with travel management companies to obtain specialist advice and tools to help realise travel program efficiencies,” he concluded.
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