China Accounts for Nearly 25 Percent of Global Business Travel Spending
On Monday, GBTA held a Gift of Knowledge Workshop in Chengdu focused on measuring the success of managed travel programs. The GBTA Foundation also released its latest business travel forecast for the Chinese market showing China remains one of the fastest growing business travel markets in the world.
Total business travel spending is expected to grow 9.2 percent this year reaching $317.9 billion USD. In 2017, another 8.4 percent increase is expected bringing total Chinese business travel spend to $344.6 billion USD. By comparison, U.S. business travel spending is expected to reach $293.1 billion USD in 2017, a $51.5 billion USD difference, further solidifying China’s new-found position as the largest business travel market in the world.
China accounts for nearly 25 percent of global business travel spending, up dramatically from a 5 percent share in 2000, demonstrating the truly global nature of today’s economy. While the projected growth rates are relatively slow for China, they still represent tremendous growth. We expect longer-term spending growth to continue to moderate until Chinese policymakers can achieve their goal of rebalancing the economy and diverting resources away from investment and towards consumption.
Here is a quick by the numbers look from the GBTA BTI™ Outlook – China 2016 H2 report:
- Domestic business travel comprises over 95 percent of spending on total business travel in China. Following years of double digit growth, as China’s economic expansion continues to slow, GBTA expects growth in domestic business travel spend to slow as well – falling to 9.2 percent this year and 8.6 percent in 2017.
- Despite the moderating economic growth, increased private and public spending on infrastructure continues in anticipation of better days ahead for the Chinese economy. Construction will have obvious long-term benefits to business travelers and companies looking to access cities and regions around the country including the construction of an additional Beijing airport that would accommodate more than 100 million passengers, making Beijing much more accessible to both leisure and business travelers.
- Lower levels of business travel demand should help keep a lid on Chinese travel prices over the next six months. Travel prices have largely outpaced prices on other consumer goods and services over that last five years, but that trend is beginning to reverse. In 2017, GBTA expects air prices in China to increase by just 0.6 percent, however ancillary fees paid by Chinese business travelers are likely to continue their rise as airlines continue to tap non-traditional revenue streams. Hotel price increases will also lag behind general consumer price inflation as demand continues to wane while a healthy hotel construction pipeline remains. GBTA expects a 1.6 percent increase in average daily rates in 2017.
- International outbound business (IOB) travel from China has faced a series of setbacks over the last few years. Most notably, trade demand from markets in North America and Europe has remained weak due to economic contractions. China has also been challenged by the rising value of its currency leading to decreased demand for Chinese exports. GBTA forecasts IOB spending to increase 8.3 percent this year and only 2.6 percent in 2017 reaching $13.9 billion USD.