China accounts for nearly 25 per cent of global business travel spending
Despite a moderating economy, China remains one of the fastest growing business travel markets in the world, according to the GBTA Foundation’s latest business travel forecast, GBTA BTI™ Outlook – China 2016 H2.
Total business travel spending is expected to grow 9.2 per cent this year reaching US$317.9 billion. In 2017, another 8.4 per cent increase is expected bringing total Chinese business travel spend to US$344.6 billion. By comparison, U.S. business travel spending is expected to reach US$293.1 billion in 2017, a US$51.5 billion difference, further solidifying China’s new-found position as the largest business travel market in the world.
“China accounts for nearly 25 per cent of global business travel spending, up dramatically from a 5 per cent share in 2000, demonstrating the truly global nature of today’s economy,” said Michael W. McCormick, GBTA Executive Director and COO. “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.”
Additional key findings from GBTA BTI™ Outlook – China 2016 H2 include:
Domestic business travel comprises over 95 per cent 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 per cent this year and 8.6 per cent in 2017.
Despite the slowing 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 per cent, 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 per cent 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 per cent this year and only 2.6 per cent in 2017 reaching US$13.9 billion.
The GBTA BTI™ Outlook – China 2016 H2 report is available exclusively to GBTA members by clicking here and non-members may purchase the report through the GBTA Foundation by emailing [email protected].