Nîn håo! I’m writing this post from Shanghai as we kickoff our 2nd annual GBTA China Conference 2014. The conference promises to offer both local and international participants the opportunity to learn more about the Chinese business travel market – a market that continues to grow at impressive levels according to our latest forecast.
Yesterday, the GBTA Foundation released its latest semi-annual China business travel forecast report, and we project China’s total business travel spend to grow 16.5 percent in 2014. That is more than double the rate of China’s GDP growth – just astounding. China’s business travel market represents roughly 20 percent of the global business travel market, up from 5.1 percent in 2000.
China’s recent announcement of 2013Q4 and full year GDP growth at 7.7 percent paints a picture of slow (by China standards), but steady economic growth. Throughout 2015, GBTA expects business travel spending to continue to pick up the pace, expanding 17.8 percent to $309 billion USD.
As we have said time and again, China is poised to overtake the U.S. as the number one business travel market in the world. Given our current projected growth in business travel in the two markets, this could happen as early as next year.
The surge in Chinese business travel spending is driven by both domestic and international outbound travel with domestic being the main driver though, making up nearly 95 percent of the spending on Chinese business travel. Despite China’s ever-emerging presence as a global commerce juggernaut, domestic business travel will likely continue to pick up ground on international outbound as China grows its middle class, which is likely to spur domestic consumption.
The domestic business travel growth continues even as domestic meetings and events have faced some headwinds of late, however, due to restrictions on spending in the public sector. According to Chinese news sources, spending on conferences by the Ministry of Public Security has fallen 80.9 percent from a year ago. Additionally, these mandates are forcing smaller conference sizes as events with more than 1,000 participants were down 75 percent between 2010 and 2012. Fortunately, this impact has been more than offset by the growth in transient domestic travel as well as expanding private sector meeting and events.
International outbound also shows some promising signs of growth thanks to China’s improving export performance and improved economic performance among China’s key trading partners – the U.S. and Europe.
Another positive we saw in the report is the continuing breakneck speed of infrastructure growth. Over the last decade China’s largest airports have doubled in size and the construction of additional airports continues including Beijing’s second international airport, slated to begin this year and open in 2018. It will house half a dozen civilian runways – double the number at Beijing’s current airport relieving a tremendous amount of pressure on Beijing Capital International Airport, currently the second busiest airport in the world (ranked by passenger volume). In addition to airports, the latest available data from Lodging Econometrics (2013Q2) shows China had 1,695 hotel projects in the pipeline amounting to 435,000 additional rooms, hitting another historical peak.
The principles of inertia tell us an object in motion tends to stay in motion. The unprecedented growth in China’s economy continues to propel the nation’s business travel market, and it will not be surprising when China takes its place as the number one business travel spend market in the world.