Ctrip Business Travel released the "2014 China Business Travel Market Report"

Shanghai, March 31, 2015 /PRNewswire/ -- Recently, Ctrip Business Travel, a leading domestic business travel management company, released the "2014 China Business Travel Market Report." The report shows that in 2014, due to the reduction in "ThreePublic Consumption," the mid-to-high-end civil aviation industry entered an adjustment period, with mid-range hotels becoming a battleground for competition; the rapid growth of high-speed rail lines offered a new choice for business travel; and the insurance awareness of business travelers increased, with more attention being paid to flight delay insurance and accident insurance. At the same time, research among corporate travel managers found that an increasing number of companies are choosing business travel management companies not just for the simple goal of "achieving cost savings," but also to help achieve "standardized processes" through professional and standardized business travel management services.

The report presents the current state and future development trends of China's business travel market from five aspects: an overview of the China business travel market, segmented product reports, the current state of business travel management, future market forecasts, and recommendations. It also predicts the price index for the two most critical products in business travel management— -- air tickets and hotels—for the coming year.

2014 China Business Travel Market Report

"Three Public Consumption" Restrictions Business Travel Industry in Rapid Transition

Measures such as restrictions on "Three Public Consumption" have changed the travel habits of business travelers and have also pushed the hotel and civil aviation industries into an adjustment period. Business travelers have shifted their focus from first-class cabins and high-end hotels, which symbolize status, to more personalized experiences.

In the civil aviation sector, although first-class consumption has been restricted, business travel demand remains. For airlines, this segment has become a new growth point. For example, Spring Airlines introduced its Business Economy Class last year, and this cost-effective service product accounted for 60% of its business economy sales.

For the hotel industry, the impact of the government’s eight-point regulations has forced the high-end hotel market to focus more on the business sector, hoping to achieve transformation by attracting the middle class and business professionals. Some mid-range hotels that evolved from economy hotels have emphasized personalized culture and services, promoting thoughtful and considerate services to provide the best accommodation experience for business travelers. Business travel hotel products are playing an increasingly important role in the revenue of mid-to-high-end hotels.

This year, policies and the economic environment will continue to affect the overall business travel market, with a decrease in business travel projects primarily targeting the high-end and official groups. However, the market's self-adaptive and adjustment capabilities are gradually taking effect. Service providers significantly affected, such as airlines, hotels, and business incentive trip organizers, have begun to shift their thinking, hoping to reclaim the market through innovation and personalized services. This is also one of the development trends that business travel management companies need to pay attention to in the future.

High-Speed Rail Captures Mid-to-Short Distance Business Travel Market

With the improvement of high-speed rail lines and more user-friendly railway transportation services, the impact of the train ticket market on the traditional first choice for business travel—air tickets—is no longer negligible.

The Ctrip Business Travel report shows that the impact of high-speed rail on the aviation industry is mainly in passenger transport. When flight routes overlap with high-speed rail lines, drawing on domestic and international experience and statistical data, it can be estimated that for trips under 500 kilometers, the competitive advantage of high-speed rail will be maximized, theoretically leading to a complete diversion of air passengers; for medium-distance travelers, the choice between high-speed rail and airplanes will become a contest between price and time. High-speed rail tickets are cheaper, while airplanes take relatively less time, but the total travel time for airplanes also includes waiting time, and the delay rate has long been an unspoken pain point for China's civil aviation industry. Therefore, the diversion effect of train tickets for medium-distance travel will show a left-skewed long-tail trend; for long-distance journeys, because high-speed rail does not have a clear advantage in terms of time or price, its diversion effect on the aviation industry is not significant.

Given the current situation, although competition between civil aviation and high-speed rail is inevitable, efforts are also being made to explore joint transportation to turn adversaries into allies. Taking China Eastern Airlines as an example, its "Air-Rail Connect" product, launched over a year ago, now sees 8,000 passengers choosing it each month. A continuous stream of high-speed rail passengers is "fed" into civil aviation, and civil aviation passengers also "nurture" the railways. Ctrip has also launched a one-stop booking service for air and train tickets.

Although "Air-Rail Intermodal" still faces issues such as limited train schedules, combined ticket purchase and printing, and direct baggage check-in, as high-speed rail continues to improve and mobile processes accelerate, along with the renovation, expansion, and construction of airports and train stations, a win-win situation is just around the corner.

Rising Safety Awareness Boosts Air Travel Insurance Rates

With issues such as air disasters and frequent flight delays, aviation accident insurance and delay insurance are gradually gaining attention from travelers. For business travelers, who travel frequently, there is an even greater need for reliable travel protection. According to the latest statistics from Ctrip Business Travel, the insurance purchase rate for aviation accident insurance on domestic routes in 2014 was about 20%, and about 9% on international routes. Although the percentage of business travel company clients allowing employees to purchase insurance is increasing month by month, it is still less than 50%. Although the insurance purchase rate has risen compared to the past, there is still a significant gap compared to developed countries such as the UK, the US, and Japan.

Travel insurance is one aspect, but comprehensive safety services are the other half of this protective chain. The concept of business travel safety services also originates from abroad and has only recently emerged in the Chinese market. Taking Ctrip Business Travel's safety services as an example, they include early warning information alerts for clients and traveler location tracking. This provides a good level of protection and support for business travel clients who frequently travel abroad, especially to higher-risk areas such as the Middle East.

The report points out that as market safety awareness strengthens, business travelers' attention to and demand for travel insurance and safety products will gradually increase.

Cost Savings No Longer the Primary Goal

The report also includes a survey conducted by Ctrip Business Travel among corporate travel managers. Survey data shows that 52% of companies choose business travel management companies mainly to achieve "standardized processes," while 36% list "achieving cost savings" as their primary goal. The business travel management awareness of state-owned enterprises in China has also improved markedly, with nearly half of SOE travel managers beginning to focus on process tools such as OA system integration and mobile client booking methods, hoping to enhance the effectiveness of business travel management through scientific management.

The report indicates that China's business travel market is expected to maintain a growth rate of 16%-17% in 2015. Economically, the acceleration of SOE reforms, easing financing difficulties for small and medium-sized enterprises, and the accelerated development of free trade zones are all advancing the internationalization process of Chinese enterprises. This not only supports the sustained and stable growth of China's economy but also has a multiplier effect on the business travel service industry. Internationally, many countries, including the US and Germany, have relaxed visa policies for China, especially for business travel, greatly facilitating outbound business activities and having a positive impact on the entire market.

The Mobile Trend in Business Travel Is Unstoppable 

To cope with the fast-paced and ever-changing nature of business travel schedules, business travelers need mobile app terminals more than ordinary leisure tourists. Data shows that 12% of business travel orders in the US in 2014 were made via mobile clients, and currently, the app order rate for Ctrip Business Travel has exceeded 20%.

Taking Ctrip Corporate Business Travel as an example, this client app, which is only 1.75MB in size, has seen a continuous increase in its order share since its launch. It provides managers with automatically pushed authorization requests and pending authorization lists, greatly improving approval efficiency; it also offers flight status updates and change notifications. Business travelers can make travel bookings, change or cancel flights, and select seats through the app.

After several years of development, China's business travel market has approached the scale of the United States in size, while the business travel needs of enterprises are also growing steadily. Domestic business travel companies, leveraging their geographical advantages, are also placing strong emphasis on product and technology development. Just take Ctrip Corporate Travel as an example — it offers a range of industry-leading, and even unique, business travel management services, including mobile apps and OA system integration.

Purpose of choosing a business travel company (Data source: Ctrip Corporate Travel)