China Business Travel Spend Will Continue to See Double Digit Increases in 2015, 2016 despite a changing economy and this is great news for the world travel industry in general and Elite Travelers in particular.
The GBTA Foundation, the education and research arm of the Global Business Travel Association (GBTA) recently announced the results of its latest GBTA BTI™ Outlook – China report, a semi-annual analysis that relates unfolding economic events at home and abroad to their resulting impacts on China’s business travel market. The report, sponsored by Visa Inc., includes the GBTA BTI™; an index of business travel spending that distills market performance over a period of time.
China’s so called “soft landing” continued during the second half of 2014. This describes a condition where overall growth moderates in an orderly fashion while the underlying drivers of that growth shift away from investment and exports towards consumerism. China’s central authorities have skillfully applied fiscal, banking and regulatory policies to ensure that both goals continue to be met while still avoiding rapid increases in inflation and overheating local government debt.
GBTA slightly downgraded its forecast for Chinese business travel from its outlook published in the second half of 2014 due to expectations for slower economic growth in China coupled with continued uncertainty in the global economy. Total spending on Chinese-originated business travel grew an estimated 16.6 percent in 2014 to $261 billion USD. GBTA projects it will continue to grow 14.2 percent in 2015, down from our previous projection of 18 percent, and will grow another 12 percent in 2016 reaching $334 billion USD.
“While this is slower growth for China, it is all relative,” said Michael W. McCormick, GBTA executive director and COO. “There is simply no other market to compare China to as their economic engine continues to move forward at a phenomenal pace producing double digit business travel spending growth. Whether China becomes the world’s largest business travel market at the end of 2016 or the beginning of 2017 does not matter – what matters is that economic policies being set are showing signs of having a long term positive impact on the economy, which points to a healthy business travel industry for years to come.”
” China’s economic growth projections in the near term remain robust, which bode well for a strong business travel market, growing more rapidly than the other major markets globally,” said Stanford Lin, Vice President and Head of Products at Visa China. “Visa is committed to working with financial institutions and merchant partners to offer value-add benefits that help companies and business travelers better manage their travel expenses.”
More key highlights of the report include:
- A welcome surprise to China’s second half economic growth in 2014 has been provided by trade. Chinese exports rebounded strongly in 2014, and continued rising exports bode well for Chinese international outbound (IOB) travel in 2015 and beyond.
- GBTA expects IOB spending will continue to grow at double-digit rates projecting 13.6 percent in 2015 and 11 percent in 2016 hitting $14.3 billion USD, but will see challenges as the world economy remains on shaky ground.
- GBTA expects China to continue to grow its domestic business travel market much more rapidly than the other major markets in the world with projected spending growth of 14.2 percent in 2015 and 12.1 percent in 2016.
- The extraordinary growth in both leisure and business travel demand has led hoteliers to significantly increase their presence in China over the last decade. Demand growth outpaced supply growth in every class of hotel – luxury and upper upscale hotels typically favored by business travelers led this trend.
- As previously forecasted, 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, we expect China to surpass the U.S. in spending by 2017.