Business Travel Conference High-Level Dialogue: Innovative Thinking in China’s Corporate Travel Management Services

Beijing, June 7, 2016 /PRNewswire/ -- The 2016 China Business Travel Innovation Development Conference, hosted by Jinglv.com, Jinglv Consulting, and TravelChina Club, and supported by Lvmama Business Travel, was successfully held at the Langham Hotel Beijing Capital Airport. Themed “Transformation, Innovation, and Win-Win,” the conference gathered over 400 distinguished guests from national ministries, relevant international organizations, Fortune 500 multinational corporations, central and local state-owned enterprises, private sector corporate travel managers, executives from corporate travel management service providers, airlines, hotel groups, travel agencies, ticket agencies, media, and tourism authorities. In-depth discussions were held on new thinking in China’s corporate travel management services, new changes and trends in China’s MICE market, and innovations in corporate travel services, technology, finance, and big data.

Guest Dialogue: Innovative Thinking in China’s Corporate Travel Management Services

During the conference, a dialogue session moderated by Ding Chongyang, Assistant President of CYTS Holdings, featured distinguished guests including Zhu Yuebo, Deputy General Manager of China Southern Airlines Sales Department; Wu Kejian, Deputy General Manager of Ctrip Corporate Travel; Chen Shujie, Senior Vice President of Tempus Global Business Service; Bai Ming, President of Mango Travels; Zhang Xue, General Manager of Lvmama Business Travel Division; Liu Baiyan, General Manager of Air China Shangtu Business Travel Beijing; Stefan Schilling, Managing Director of HRS China; Ding Weijie, Chairman of Hengshun Travel; and Li Hai, Secretary-General of the State-Owned Assets and State-Owned Enterprises Industrial Innovation Strategy Alliance. The guests engaged in an engaging discussion and shared insights on the topic of “Innovative Thinking in China’s Corporate Travel Management Services.”

As an important part of corporate travel services, changes in airline policies are closely related to the corporate travel market and corporate travel service enterprises. Zhu Yuebo, Deputy General Manager of China Southern Airlines Sales Department, gave a detailed sharing on the policy changes in China Southern Airlines' ticket distribution field. She stated that in the future, in the ticket agency market, China Southern will support compliant agents with customer sources, making TMC companies one of China Southern’s important partners. Recently, China Southern has also issued many new policies to regulate the chaotic ticket agency market, which will also bring a more effective and fair competitive environment for TMC companies.

Zhu Yuebo furtherpointed outthat China Southern’s rectification of the ticket agency market includes three aspects:First,issuing new regulations to strengthen the regulation of the ticket agency market, addressing both agents and online platforms, and cutting the existing lengthy supplier model; second,，to standardize terminal market prices and fees for ticket changes and refunds, requiring distribution channels to sell according to the fares published by the airline;Third, starting July 1 this year, China Southern will also raise the entry threshold for agents. According to data from China Southern, in the first quarter of 2016, there were about 3,800 authorized sales agents for China Southern, but only about 2,800 actually made sales, among which over 580 domestic sales agents accounted for 90% of distribution revenue. Therefore, China Southern will choose more capable ticket distribution agents to work with in the future. All three aspects are extremely beneficial for TMC companies with standardized operating procedures. In addition, Zhu Yuebo also shared the airline's positive vision for future cooperation with TMC companies from the perspectives of TMC ticket sales incentive mechanisms and joint marketing efforts with TMCs.

As a veteran industry expert with years of experience in the corporate travel market, Wu Kejian, Deputy General Manager of Ctrip Corporate Travel, shared his insights on the corporate travel market from the perspective of his extensive experience. He said that China’s corporate travel management has gone through several major changes. First is the collection of service fees. In 2003 and 2004, the domestic service fee transaction costwas $6per transaction, while Ctrip Corporate Traveladopted the net price plus service fee modelfrom day one, giving all agent commissions to clients, and the service fee being lower than the $6 cost—clearly this model was not sustainable. Therefore, Ctrip Corporate Travel established China’s first low-cost domestic service center in 2006, achieving a break-even point for domestic transactions by reducing labor costs.

The second change is e-tickets. Wu Kejian said that the emergence of e-tickets in 2007 simplified the corporate travel service transaction process to some extent, but only solved part of the problem. The overall business processes and needs of the end-user client side did not change, nor did it simplify the complex procedures companies have to go through during business travel.

The third issue is billing and settlement. At the beginning, Ctrip Corporate Travel also adapted to local market demands and met client billing methods, often with very long payment terms. But as the business volume grew, this became unsustainable, so Ctrip Corporate Travel made significant adjustments by introducing credit card payments and third-party payments. Therefore,nowadaysCtrip Corporate TravelinChinahas atotal business volumeof75% is resolved through credit cards and third-party payments, keeping the cash flow in a very stable state.

As a representative of business travel market hotel booking service enterprises, Shi Nanfei, General Manager of HRS China,shared his insights on the business travel industry. He stated that HRS is not positioned as a mere corporate travel management company, nor is it just an OTA, but rather engages in both. There exists a relationship of both competition and cooperation between HRS and business travel companies. Explaining the concept of coopetition further, Shi Nanfei said that HRS itself serves over 40,000 direct corporate clients globally, which means there is a certain degree of competition between HRS and corporate travel agencies. On the other hand, HRS maintains an open mindset in business. It has a strong advantage in hotel resources and is the only hotel content provider globally that has signed strategic partnerships with all known major GDS companies. It offers over 300,000 hotel resources worldwide and also maintains cooperative relationships with many TMCs. For example, it provides hotel resources to TMCs, signs cooperation agreements with clients together with TMCs, and helps TMCs upload international chain hotel agreed rates through the HRS backend.

Shi Nanfei mentioned that HRS established a branch in China as early as 2002, when the concept of corporate travel management was not yet very mature in China. HRS mainly served enterprises, and the hotel resources discussed were more focused on meeting the needs of corporate clients. After years of development, the demands of enterprises for hotels have changed. Especially with enterprises placing greater emphasis on reducing travel costs, more and more economy and mid-to-low-end hotels have become part of corporate travel needs, posing new challenges to HRS in terms of hotel resource coverage. On the technology side, China’s corporate travel market has evolved from being relatively slow to respond to rapidly developing, surpassing the United States to become the world’s largest corporate travel market. Corporate travel management has suddenly jumped from the most primitive“I want to implement a travel policy”to a technology era driven by consumption technology, which also places higher demands on corporate travel service providers.

As one of the representatives of local corporate travel service enterprises, Bai Ming, President of Mango Travel, shared his views on the business travel market. He said that Mango Travel has always focused on the development of the business travel market, with its main clientele being central state-owned enterprises. In recent years, with the advocacy and implementation of the Belt and Road Initiative, Chinese corporate travel clients have begun to go global, while international business travelers have increasingly come to China, leading to more frequent international business travel activities. According to statistics from Mango Travel’s corporate travel users, 65% of business travelers have international travel service needs. The business travel market will be one of the key areas Mango Travel will focus on in the future.

To seize the development opportunities in the business travel market, Mango Travel has made ample preparations. Bai Ming said that Mango Travel has upgraded and transformed many of its systems to meet the needs of enterprises to reduce travel costs; it has improved mobile terminal booking services becausemobiledevices are convenient, and more and more business travelers, especially younger ones, prefer using mobile apps to manage their travel itineraries. Mango Travel keeps up with user needs,and puts great effort into detail-oriented services, striving to provide the best and most considerate corporate travel services.

Chen Shujie, Senior Vice President of Tempus Global Travel, also shared his views. He introduced that Tempus Global Travel was founded in 1998, starting with airline ticket distribution, and entered the corporate travel management business in 2012, achieving double-digit growth of over 100% every year. It has provided travel solutions for many government and enterprise clients and has gained recognition from many corporate partners. Over the years of providing travel services, Tempus Global Travel has also encountered industry issues such as a chaotic airline ticket agency market and difficulties in covering costs. In recent years, Tempus Global Travel has been working hard to expand the application scenarios and value-added services of TMCs.

Chen Shujie also said that for corporate travel companies, honing internal capabilities and delivering services to the utmost is the foundation of innovation and also a reflection of the internet spirit. To achieve this, efforts must be made in two areas: one is corporate travel management, and the other is travel services. Especially regarding corporate travel management itself—whether the goal is to make travel efficient or to reduce costs—different management methods and approval processes should be established. Tempus Global Travel is also optimizing its system, including determining whether to prioritize urgent travel approvals by company or department structure, or to handle them post-event, as well as matching different travel strategies.

Zhang Xue, General Manager of the Business Travel Division at Zailushang, stated that Zailushang Business Travel is positioned as a corporate business travel management consultant. It hopes to help enterprises implement the optimal travel services by assisting with everything from approvals and bookings to reimbursements, and finally providing management with decision-making analytical reports. On the capital front, Shanshui Shares, under Zailushang Travel, has successfully listed on the NEEQ, and the entire Zailushang Travel Group is also preparing for an overall IPO.

Zhang Xue also said that innovation in business travel services is essentially about helping enterprises solve practical problems encountered in travel activities. Zailushang Business Travel has always adhered to two attitudes:First,Zailushang Business Travel believes that travel companies should not merely provide solutions based on client needs. Instead, they should take on the role of a "doctor," proactively diagnosing where the issues lie with client enterprises and actively offering solutions to address those issues.;Second, Zailushang Business Travel believes that the business travel industry will definitely flourish in diverse ways over the next five to ten years, requiring cross-industry integration. Therefore, Zailushang Business Travel adopts a more open attitude toward competition and resource integration.

Ding Weijie, Chairman of Hengshun Travel, stated that the Chinese corporate travel market is becoming increasingly difficult to navigate, with profit margins getting lower. Some enterprises offer low or even no service fees to capture market share, making the market appear prosperous. However, for companies focusing solely on TMC services, the outlook may not be optimistic, as this requires strong capabilities in resource and product integration. Therefore, Ding Weijie believes that TMC companiesmustincrease volume and scale to have the potential to make profits. Putting the capital market aside, running a business ultimately aims for profitability.

He also said that Hengshun Travel’s positioning is business travel + tourism + MICE. This is a transformation Hengshun Travel has made after years of exploration, and this transformation process is also full of challenges. It requires Hengshun Travel to leverage two effects and six capabilities. The two effects refer to brand effect and scale effect, while the six capabilities include marketing ability, service ability, product integration ability, technical R&D ability, and financial capability—these are all aspects Hengshun Travel needs to improve.

Meya  " Liu Baiyan, General Manager of Shangtu Business Travel Beijing Company, said that over the past decade, Shangtu Business Travel has upheld the philosophy of technology + service + product to make business travel simpler and more controllable. In terms of travel services, it now refers not only to narrow-value-added services beyond products but also encompasses five aspects: marketing, service, product, technology, and finance. Many may think that Shangtu Business Travel mainly deals with third-party products and proprietary products, but there is a significant portion of products that have not received much attention—thatis corporate agreed-rate products. Shangtu hopes to use technological capabilities to provide enterprises with a managed platform for corporate agreed-rate products. Through this platform, enterprises can manage all cross-supplier and cross-product-line agreed-rate products in one place, enabling them to compare, purchase, and manage travel services more efficiently and transparently.

In addition, Liu Baiyan also said that Shangtu Business Travel has greater capability to uncover the personalized needs of corporate clients and hopes to transform these personalized services into standardized outputs. The standardized outputs from Shangtu Business Travel ensure self-service and automation, which will also make business travel services simpler and more controllable.

Li Hai, Secretary-General of the China State-Owned Assets and State-Owned Enterprises Industrial Innovation Strategy Alliance, has been engaged in the reform and development of central enterprisesandstate-owned enterprises for many years, and shared his views and perspectives on the business travel service needs of central enterprises based on his own work experience. He stated that with the introduction of many national policies for the development of central enterprises, these enterprises are currently in a period of transformation and also facing certain challenges. At present, the procurement capacity for business travel among state-owned enterprises is not sufficiently centralized, as state-owned enterprises have a special identity — including those in less market-oriented sectors such as military industry and aerospace, as well as more market-oriented ones. Enterprises with a higher degree of marketization are relatively flexible when it comes to business travel, but those in military industry, aerospace, and similar fields show a lack of centralized procurement capacity. Therefore, when providing business travel services, it is very important to understand user needs, especially for central enterprises, and it might even be advisable to conduct asurveyto fully understand corporate requirements.

At the end of the dialogue, Ding Chongyang, Assistant President of CYTS Holdings and guest moderator, concluded that a prevailing view is that compared to the highly intense competition in the mass tourism market, the business travel market represents a relatively blue-ocean market. At the same time, under the current so-called economic downward pressure, the demand for business travel across various enterprises remains, andthegeneral awareness of controlling and saving on business travel expenses is increasing. For the development of business travel enterprises,thispresents a very good opportunity.