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The Promise of China’s Enormous Corporate Travel Market

Despite an economic slowdown and a potential trade war, China has become important for Western travel managers not just as a destination, but also as an offshore operational base.

While managed travel in China may not be as mature as in other markets, it is growing fast in what has become the world’s largest corporate travel market. The Global Business Travel Association’s latest Business Travel Index noted that annual business travel spend in China grew from $32 billion in 2000 to around $347 billion in 2017, and is tipped to grow another 6.5 percent annually until 2022.

That growth, coupled with increasing global trade with China, has attracted the major travel management company chains to the market, starting with American Express, which created the first Sino-U.S. business travel joint-venture, CITS American Express Business Travel, in 2002.

Since then, according to Marco Pellizzer, vice president and general manager of Hong Kong and China for CITS American Express. the joint-venture has notched up a number of firsts: introducing the first online booking tool in 2004, being one of the first travel management companies to bring consulting and advisory services to clients, launching an enhanced meetings and events solution, and the July launch of China’s first travel artificial intelligence chat robot, Xiaoton.

Carlson Wagonlit Travel was hot on American Express’ heels, establishing a joint venture with China Air Service to form Carlson Wagonlit Travel China in 2003, with 27 employees in a single office location in Beijing, according to Albert Zhong, general manager.

Today,Carlson Wagonlit Travel China has more than 700 employees across five offices in Beijing, Shanghai, Guangzhou, Meishan, and Tianjin.

Australian-based global travel chain Flight Centre (FCTG) entered the Mainland China market in 2004 through a joint-venture with China Comfort, which at the time was one of the top five travel agency groups in the country. Over the next few years, FCTG increased its ownership stake to 95 percent and also set up a number of wholly-owned operations. FCm Travel Solutions China is now one of the most established travel management companies in the market.

The fast-growing Corporate Travel Management also has big ambitions for China, evident in its July 2018 acquisition of Hong Kong-based Lotus Travel Group. “This deal will result in CTM becoming the largest travel management company in Hong Kong servicing Greater China, with approximately 850 employees in Asia,” founder and CEO Jamie Pherous said.

Corporate Travel Management has been active in China for about five years, thanks to an earlier acquisition – Westminster Travel, one of the most established corporate travel businesses in the East Asian market.

CHINA IS THE KEY TO WINNING GLOBAL ACCOUNTS

While the domestic market may provide bountiful prospects, major travel management companies need to service China if they want to win and retain global multinational accounts.

Corporate Travel Management’s Pherous recognizes the importance of a Chinese presence for winning global accounts. “Having a foothold in the region, with local management that understands local nuances, has certainly contributed to CTM winning regional and global clients. This will undoubtedly serve us well with global and multinational clients, both now and over the longer term,” he said.

Pherous believes his group’s Australian roots provide a distinct advantage as competition intensifies for the Chinese market. “Australian companies have long been operating successfully in China, and Australia has a large Chinese community and welcomes many Chinese visitors. There are strong cultural and language ties and many Australian businesses understand the service expectations of the Chinese consumer within China and abroad.”

Bertrand Saillet, Flight Centre’s managing director of Asia, said his group’s continuing success in winning international accounts is fuelling the Chinese business “by default, because we need to set up those customers in China”. But this is only part of the picture as the travel group implements its strategies to “grow from the inside”.

“We don’t want to be one of those large multinationals that play in China just to serve customers from the rest of the world,” he said.

Similarly, American Express’ Pellizzer explained that opportunities are arising as Chinese companies grow and seek to become “major international organisations which are competitive on the world stage”.

Zhong noted that Carlson Wagonlit Travel’s presence in China and its work with clients in the market have certainly played an important part in winning new global accounts. “At the same time, there have also been instances where we’ve first started servicing a global multinational in China, and subsequently been awarded their business in other markets,” he explained.

For Zhong, the focus is shifting towards the domestic market.

“When CWT China first began its operations in 2003, it was primarily to provide travel management services to global multinationals with operations in China,” said Zhong. “Back then, I found that many domestic companies here didn’t understand their own travel needs or policies, much less perceive the need to have a managed travel program. Today, it’s a very different picture. The priorities of Chinese companies have changed, and they are beginning to see the benefits of managed travel. They are now focusing on consolidation, data and analytics, and technology, and they place a lot of value on cost optimization and compliance.”