Fuzhou, April 30, 2015 /PRNewswire/ -- In 2015, China’s business travel market will continue to thrive.
According to the "2015 Business Travel Management Research Report" released by German corporate travel management company BCD Travel, 31% of travel managers surveyed predicted that their companies’ business travel volume would increase in the coming year, while 36% believed that overall business travel spending in China would rise in 2015.
Since American Express and China International Travel Service (CITS) established CITS American Express Travel Services Co., Ltd. in 2002, international TMCs (travel management companies) such as HRG, CWT, and BCD have flocked to the market. Leveraging their years of accumulated service advantages, they have steadily expanded their presence, gobbling up market share from domestic OTAs, travel agencies, and numerous hotel and ticket booking companies. Some domestic players involved in TMC services, including eLong, have suffered continuous setbacks and even completely exited the business travel management field.
In 2006, after nearly three years of careful preparation, Ctrip, a leading domestic online travel service provider, officially entered the business travel management market, becoming the local representative of this imported industry.
After nearly a decade of development, China’s business travel management market has begun to take shape, and domestic TMCs have gradually caught up, ending the dominance of foreign TMCs. According to publicly available financial reports, Ctrip Corporate Travel achieved transaction volume of 8.1 billion RMB in 2014, with an annual growth rate of nearly 40%—a pace that many foreign TMCs find hard to match. Currently, Ctrip Corporate Travel provides business travel management services to over 5,000 large enterprises, including more than 100 Fortune 500 companies. Among Ctrip Corporate Travel’s new corporate clients, an increasing number are foreign enterprises that previously used foreign TMCs under global frameworks, as they have gradually realized that choosing a domestic TMC in China is a wiser decision.
As the saying goes, "Foreign monks may chant better scriptures," but in the business travel management industry, local advantages are brought into full play.
Local roots, deeper local understanding
In terms of product resources, compared to foreign TMCs, domestic TMCs—born from traditional travel agencies and OTAs—can secure better resources thanks to their long-term partnerships with domestic airlines and hotels.
Additionally, in China, whether employees are from foreign, state-owned, or private enterprises, most are Chinese. TMCs need to study employees' behavior patterns and travel preferences. The DNA of domestic TMCs and their years of experience in China’s tourism industry mean they understand Chinese employees better, thus providing travelers with higher satisfaction.
Value-added services, pricing with a "people-friendly" touch
Domestic TMCs are also highly competitive in value-added services. Beyond common offerings, they delve into customer needs, addressing pain points such as cash flow and mobile work through monthly billing and mobile services. To enhance service quality and attract more clients, some domestic TMCs are now adopting a strategy of "adding value without raising prices."
On the other hand, compared to foreign TMCs, domestic TMCs have relatively lower labor and operational costs, resulting in lower service fees for clients. Coupled with access to locally sourced, competitively priced products, domestic TMCs hold a clear advantage in overall pricing.
Tech-focused, rapid innovation
In recent years, mobile internet has permeated various industries in China. Travel management companies, which previously relied on services and air/hotel products, are now focusing on driving new business through technological innovation.
Fang Jiqin, Vice President of Ctrip and CEO of Ctrip Corporate Travel, explained that Ctrip itself is a technology-driven company. To support the rapid growth of its corporate travel business, Ctrip Corporate Travel has a dedicated technology team of over 100 people. In 2013, Ctrip Corporate Travel launched China’s first business travel management app—Ctrip Corporate Travel App—pioneering mobile functions such as flight and hotel bookings, seat selection, approval authorization, and changes/cancellations. In 2014, at the GBTA (Global Business Travel Association) Global Conference held in the U.S., Ctrip Corporate Travel’s innovations in mobile services garnered widespread attention and recognition from international peers.
In contrast, most foreign TMCs still use third-party-developed standard apps for their clients. This situation arises partly because domestic TMCs benefit from China’s favorable internet environment, and partly because foreign TMCs face insurmountable regional and policy barriers.
Quick adaptation, high efficiency
Since the headquarters of foreign TMCs are overseas, major decisions and deployments often go through a lengthy top-down process. China offices, as just one part of the global operations of international TMCs, must follow the headquarters’ global plans. Without a dedicated local technical team, even technology solutions "imported" from headquarters not only lag in timeliness but also face local compatibility issues. In contrast, domestic TMCs, rooted in China, are faster and more efficient in technological innovation, market responsiveness, and decision-making execution.
Intel founder Grove introduced the concept of strategic inflection points in his book *Only the Paranoid Survive*: when one of the six factors affecting a company’s competitiveness (which adds complementary enterprises to Michael Porter’s competitive pressure model) undergoes a 10X Change (a tenfold change), the company faces the threat of a strategic inflection point.-With the continuous emergence of new technologies and models, domestic business travel management companies are accelerating into a period of transition. During this transformation, domestic TMCs that can respond promptly and innovate quickly will undoubtedly benefit again.
Based on international experience, in the near future, the concentration of the business travel management industry will further increase, eventually forming a landscape where a small number of domestic and foreign TMCs compete on equal footing.
The comeback of domestic TMCs has only just begun.