Released on May 21st, 2012
BEIJING, May 21, 2012 /PRNewswire-Asia/ ? The Global Business Travel Association (?GBTA?), the world?s premier business travel and corporate meetings organization, announces the results of its inaugural GBTA BTI(TM) Outlook ? China, sponsored by Visa Inc. The GBTA BTI(TM) Outlook ? China includes the GBTA Business Travel Index(TM) (GBTA BTI(TM)). The GBTA BTI(TM) provides a way to distill market performance and the outlook for business travel into a single metric that can be tracked over time.
Highlights
??? Business travel spending in China is forecast to increase by 17 percent in 2012 and 21 percent in 2013, to US$202 billion and US$245 billion respectively
??? Growth in international outbound travel spending is expected to be particularly strong, rising by 27 percent in 2013
??? The Chinese investment in infrastructure is vital as they must have the infrastructure in place to keep up with the explosion in demand. As such, in the past 10 years, the four largest airports have doubled in size and there are plans in place for over 100 new hotels in the next decade:
o?? Over the past ten years, China?s four largest airports (Beijing / Shanghai-Pudong / Shanghai-Hongqiao and Guangzhou) have doubled in size
o?? Plans are in place for approximately 100 new airports in the next ten years
??? Key contributors to China?s surge in business travel expansion is in step with increasing manufacturing output, trade growth, job gains, business formations and infrastructure investment
??? Business travel has evolved into a key contributor and benefactor of the Chinese economic growth showing strong correlations with economic indicators like GDP growth, retail sales, job growth, exports, profits and sales.
??? China is currently ranked second in the business travel market according to the GBTA findings, but is forecast to surpass the US by as early as 2015
??? Real GDP in China is forecast to increase by 8.2 percent and 8.9 percent in 2012 and 2013 respectively
??? GBTA BTI(TM) will reach 340 by the end of 2012 and 475 by the end of 2013. This represents an increase of almost 41 percent in just two years? time.
Michael W. McCormick, Executive Director and COO of GBTA, commented:
?With China on a robust upward trajectory in business travel spending, they are quickly becoming a world leader in the business travel market. For this reason, we believe it is a most opportune time to have undertaken our first Business Travel Outlook for the country. China?s phenomenal economic growth over the last decade has been mirrored in business travel which is now a key contributor to, and benefactor from, the country?s expansion.
We forecast significant increases in business travel by Chinese citizens over the next two years with at least two-thirds of the growth being real increases in trips and spending as opposed to rising travel prices. This should also be accompanied by GDP growth rates of 8-9 percent a year.?
Over the past decade, China has experienced rapid economic growth which has been reflected in China?s dramatic increase in business travel spending according to the research. Between 2000 and 2011, business travel spending averaged over 16 percent a year as a component of overall travel spend and was largely driven by both meetings, incentives, conferences and exhibition business trips alongside a rise in the amount of real spend-per-trip. The rise of business travel spending is also a reflection of increases in both domestic travel and international expenditure.
Welf J. Ebeling, Regional Director, GBTA Asia remarked:
?Business travel drives the economy and China is no exception. From this report we can see just how explosive this growth is going to be over the next few years. The Chinese recognize how important business travel is and the investments that are being made in vital infrastructure expansion demonstrate that.?
Over the next ten years, GBTA?s report forecasts that China?s business travel spending will reflect the slow restart of the global economy with both domestic business travel spending and international outbound travel spending showing strong percentage increases. Later in the forecast horizon, international outbound travel spending by Chinese business travelers is expected to increase even more in percentage terms and reach 27 percent in 2013. Domestically, business travel spending is expected to reach US$233 billion by 2013.
This expenditure correlates strongly with several domestic economic indicators including retail sales, job growth, construction activity, profit margins, GDP and exports.
As well as business travel spending being stimulated by a recovery in world economic growth, China?s success in removing supply side bottlenecks will contribute to forecast growth rates. The country?s four largest airports Beijing, Shanghai-Pudong, Shanghai-Hongqiao and Guangzhou have doubled in size over the last ten years and even second and third tier airports have doubled or tripled their capacity. Plans are also in place for 100 new airports to be built over the next decade, adding further capacity.
In terms of economic growth, a retreat from top-down central planning and the embracing of market-based reforms and targeted investment initiatives has enabled China to become a central player in the global economy.
There has recently been a shift towards policies that promote domestic consumption, reducing China?s exposure to the external environment. The Chinese economy has been relatively resilient in the wake of the global economic crisis, and it is expected that China will continue to experience large growth rates. The GBTA BTI report forecasts that China?s GDP will continue to rise in 2012 to 8.2 percent and rise to 8.9 percent in 2013.
For China there is currently only one significant weakness that could potentially dampen the growth of business travel, namely the European sovereign debt crisis. With about 50 percent of Chinese exports going to Europe and the US, the European slowdown was immediately felt. It is, however, expected that the economy?s diversification away from exports will reduce this exposure in the future.
In addition, the GBTA BTI (TM) Outlook ? China includes the GBTA Business Travel Index(TM) (GBTA BTI(TM)). The GBTA BTI(TM) provides a way to distill market performance and the outlook for business travel into a single metric that can be tracked over time. It is derived from total business travel spending. An index base year of 2005 was chosen for consistency with GBTA BTI(TM) in other countries. Specifically, the GBTA BTI(TM) in China is set equal to 100 in the second quarter of 2005.
The fourth quarter of 2011 saw the GBTA BTI(TM) in China come in at 337. The impact of the recession of 2008-2009 was short lived for the Chinese economy and business travel sector. In fact, by the second quarter of 2009, the index had reached 242 or 2.4 times its level only four years earlier. Since the end of the recession, the index has added over 82 points in eight quarters ? an increase of over 32 percent, driven primarily by domestic business travel expansion.
GBTA BTI(TM) in China is poised to return to its pre-2009 explosive growth in 2012 and 2013. Domestic and international outbound travel spend will work together to expand the index by an additional 135 points by the end of 2013, reaching a new high of 475 ? an increase of nearly 41 percent in just two years.
Key Metrics
Country???? 2011 Total Business Travel Spending ($USD)
1 United States?? $250B
2 China?????? $182B
3 Japan?????? $65B
4 United Kingdom??$38B
5 Germany???? $35B
6 France??????$34B
7 Italy?????? $33B
8 South Korea?? $30B
9 Brazil??????$28B
10 Canada???? $22B
Further information
Pelham Bell Pottinger Victoria Geoghegan / Harriet Blackburn / Corinna Hoyer +44 207 861 3232
About the GBTA BTI (TM) Outlook ? China
The GBTA BTI (TM) Outlook ? China projects aggregate business travel trends over the next eight quarters. The report tracks business travel spending in total and by domestic and outbound segments. It relates unfolding economic events at home and abroad to their resulting impacts on China?s business travel market. GBTA BTI (TM) ? China 2012 is the inaugural report in the semiannual series.
The GBTA BTI (TM) Outlook uses an econometric model to better inform the forecast process. The model explicitly relates measures of business travel spending, uniquely sourced from other GBTA Foundation research, to key economic and market drivers of Chinese business travel including: Gross Domestic Product (GDP) and its components; employment and unemployment; measures of business and consumer confidence; international trade, foreign direct investment and exchange rates; commodity and oil prices; inflation measures; productivity rates for business travel; International Air Transport Association (IATA) Passenger and Revenue Performance and Smith Travel Research (STR) Global Hotel Performance.
The GBTA BTI (TM) Outlook ? China is free of charge to all GBTA Members by clicking here( http://hub.gbta.org/resources2/list?order=DESC&sortby=resource_date_desc&category=&keyword=&type=file ). Non-members may purchase the report through the GBTA Foundation by emailing pyachnes@gbtafoundation.org( mailto:pyachnes@gbtafoundation.org )
About the GBTA Foundation
The GBTA Foundation is the education and research foundation of the Global Business Travel Association (GBTA), the world?s premier business travel and corporate meetings organization.
Collectively, GBTA?s 5,000-plus members manage over $340 billion of global business travel and meetings expenditures annually. GBTA provides its network of 17,000 business and government travel and meetings managers, as well as travel service providers, with networking events, news, education & professional development, research, and advocacy. The foundation was established in 1997 to support GBTA?s members and the industry as a whole. As the leading education and research foundation in the business travel industry, the GBTA Foundation seeks to fund initiatives to advance the business travel profession. The GBTA Foundation is a 501(c)(3) nonprofit organization. For more information, see gbta.org( https://mail.sloanepr.com/owa/redir.aspx?C=c195184739b84cf9aedc8972f8aa6827&URL=http%3a%2f%2fwww.gbta.org ) and gbtafoundation.org.
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