Shanghai, March 31, 2015 /PRNewswire/ -- Recently, Ctrip Business Travel, a leading domestic corporate 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 report presents the current state and future trends of China's business travel market from five aspects: an overview of the Chinese business travel market, segmented product reports, the current state of business travel management, future market forecasts, and recommendations. It also forecasts the price indices for the two most critical products in business travel management... -- air tickets and hotels for the coming year.
2014 China Business Travel Market Report
Restrictions on "Three Public Consumptions" Business Travel Industry in Rapid Transition
Measures such as restrictions on "Three Public Consumption" have changed the travel habits of business travelers and 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 symbolized status, to more personalized experiences.
In the civil aviation sector, although first-class consumption has been restricted, business travel demand remains strong. For airlines, this segment has become a new growth point. For example, Spring Airlines introduced last year its Business Economy Class, a cost-effective service product that contributed 60% of its business economy sales.
For the hotel industry, the impact of the government’s eight-point regulation has forced the high-end hotel market to focus more on the business sector, hoping to achieve transformation by catering to the middle class and business professionals. Meanwhile, mid-range hotels emerging from economy hotels have been promoting personalized culture and services, emphasizing thoughtful and considerate service to provide the best accommodation experience for business travelers. Business travel hotel products will play 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 reduction in high-end and official group-oriented business travel projects. 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 strategies, 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 watch in the future.
High-Speed Rail Captures Medium- and 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 top choice for business travel — air tickets — can no longer be ignored.
The Ctrip Business Travel report shows that the impact of high-speed rail on the aviation industry is mainly in passenger transport. Where flight routes overlap with high-speed rail lines, drawing on domestic and international experience and statistical data, it can be estimated that for journeys under 500 kilometers, high-speed rail's competitive advantage is maximized, theoretically leading to a complete diversion of air passengers; for medium-distance travelers, the choice between high-speed rail and airplanes becomes a trade-off between price and time. High-speed rail is cheaper, while airplanes are relatively faster, but the total time spent on flights includes waiting time, and flight delays have long been an unspoken pain point in China’s civil aviation industry. Therefore, the diversion effect of train tickets for medium-distance travel shows a left-skewed long-tail trend; for long-distance journeys, because high-speed rail does not hold a clear advantage in either 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, the two are also continuously exploring joint transportation solutions to turn rivals into partners. Taking China Eastern Airlines as an example, its "Air-Rail Connect" product, launched over a year ago, now sees 8,000 passengers using it each month, with a steady stream of high-speed rail passengers feeding into civil aviation, while civil aviation passengers also "feed back" into the railway system. Ctrip has also launched a one-stop booking service for both air and train tickets.
Although "air-rail intermodal" services still face issues such as limited train schedules, combined ticket purchasing and printing, and direct baggage check-in, as high-speed rail continues to improve and mobile technology advances, along with the renovation, expansion, and construction of airports and railway 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, in 2014, the insurance purchase rate for domestic air travel accident insurance was around 20%, and about 9% for international routes. Although the percentage of business travel company clients allowing employees to purchase insurance is rising month by month, it still remains below 50%. Although the insurance purchase rate has increased compared to the past, there is still a significant gap compared to developed countries such as the UK, US, and Japan.
Travel insurance is one aspect, but comprehensive safety services form the other half of this protective chain. The concept of business travel safety services also originates from abroad and has only emerged in the Chinese market in recent years. Taking Ctrip Business Travel’s safety services as an example, they include early warning alerts for clients and traveler location tracking. This provides a strong safeguard and support for business travelers who frequently travel abroad, especially to higher-risk areas such as the Middle East.
The report points out that as market safety awareness increases, business travelers’ attention to and demand for travel insurance and safety products will gradually grow.
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 primarily to achieve "standardized processes," while 36% list "cost savings" as their main goal. The awareness of business travel management among 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 app bookings, hoping to enhance the effectiveness of business travel management through scientific approaches.
The report indicates that China’s business travel market is expected to maintain a growth rate of 16%-17% in 2015. Economically, accelerated reforms in state-owned enterprises, alleviation of financing difficulties for small and medium-sized enterprises, and the rapid development of free trade zones are all advancing the internationalization of Chinese enterprises. This not only supports the sustained and stable growth of China’s economy but also creates a multiplier effect for the business travel service industry. Internationally, many countries, including the US and Germany, have relaxed visa policies for China, particularly for business travel, greatly facilitating outbound business activities and bringing positive impacts to the entire market.
Mobile Business Travel Is Unstoppable
To cope with the fast-paced and ever-changing nature of business travel schedules, business travelers require mobile app terminals more than ordinary leisure tourists. Data shows that in 2014, 12% of business travel orders in the US were made via mobile apps, and currently, the mobile app booking 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 rise in its booking share since its launch. It provides managers with auto-pushed authorization requests and pending authorization lists, greatly improving approval efficiency; it also offers flight status updates and change notifications. Business travelers can use the app to book travel, change or cancel flights, check in, and select seats.
After several years of development, China's business travel market has approached the scale of the U.S. market, while corporate demand for business travel is also growing steadily. Domestic business travel companies, leveraging their geographical advantages, are also paying close attention to product and technology development. Just take Ctrip Business Travel — 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 (Source: Ctrip Business Travel)