Carlson Wagonlit Travel (CWT), the global leader in business travel management, is keenly eyeing the domestic business travel market as the sector is set to witness double-digit growth fueled by the pace of China's economic expansion.
"China is now among the 12 key countries that represent roughly 90 per cent of the global business travel market. The growth of business travel is usually around 1.5 to 2 times a nation's GDP (gross domestic product) growth," Hubert Joly, global chief executive officer of CWT, said during his recent visit to Shanghai.
CWT claims to have grabbed a 20 per cent share of the local business travel market since the company entered China in 1996. Focusing on multinationals, the firm's sales volume hit US$72 billion in 2004.
Statistics from the General Administration of Civil Aviation show that the nation spent around 60 billion yuan (US$7.26 billion) on air travel in 2004.
And business travel now accounts for about 15 per cent of the entire travel market. With annual GDP growing at a rate of 9 per cent in recent years, there has been a revolution in the domestic business travel market.
"As more multinational companies come to China and Chinese companies go global, the travel needs here become more international and travel management becomes more complicated for companies," said Joly.
In 2004, multinational companies in China spent approximately 5 billion yuan (US$605 million) on business travel.
"The corporate travel service is really helpful in dealing with the huge amount of domestic business trips our salespeople go on," said Tracy Pan, who works at a US-based pharmaceutical enterprise in
Shanghai which has offices in major cities across the Chinese mainland.
Still newcomers to the Chinese market, foreign travel agencies like CWT and American Express are competing hard with local agencies who hold the lion's share of the market. "Compared with local agencies, we have purchasing power to negotiate with airlines and hotels and thus we are able to offer clients the lowest prices," said Joly.
However, local travel agencies maintain they can compete with foreign giants even though their opposition are global names with advanced technology and management.
"We don't see much challenge from overseas travel agencies, because China's travel market, with an annual volume of over 500 billion yuan (US$60.46 billion), is huge and growing rapidly," said He Jing, manager of public affairs at Ctrip.com International Ltd, China's largest booking website.
"Besides, various travel agencies are specialized in diversified market sectors - over 70 per cent of Ctrip's business comes from individual business trips, with only a little coming from corporate business travel."
"We have experience and an understanding of the local market. Most importantly, we have cultivated a group of loyal customers," said Gu Dongwen, general manager of
Shanghai Wanyou Travel Agency which has less than 20 employees.
By 2007, CWT expects gross global travel spending to be approximately US$870 billion, of which US$350 billion is expected to come from business travel. Of global travel spending, the Asia Pacific region is believed will account for US$260 billion, close to 30 per cent.
Analysts predict the growth of the business travel sector in this region will be driven by Asia's rapid economic growth. It will be further accelerated by a growing trend of consolidation and outsourcing of travel management, as an increasing number of companies realize that professional travel companies will offer them good service and great savings.
