Shanghai, Nov. 24, 2014 /PRNewswire/ -- Business travel management has a history of over a century in developed countries, but Chinese enterprises only became acquainted with the concept after 2000. In 2003, Ctrip developed a business travel management system, but market awareness of such products was extremely low, let alone demand. As a result, the project faced difficulties in development and was even temporarily suspended. It wasn’t until 2006, when the demand for business travel management from multinational corporations increased and some joint ventures began to explore the Chinese business travel management market, that Ctrip Business Travel set sail once again. Ctrip established a dedicated department, which was later spun off as the Business Travel Division in 2012, becoming an independent entity with its own finance, technology, and client services. Recently, a reporter from Shanghai Business News conducted an exclusive interview with Fang Jiqin, the head and CEO of Ctrip Business Travel, to discuss how Ctrip Business Travel views the business travel market and the efforts they have made.
Ctrip Business Travel landing page
Fang Jiqin, CEO of Ctrip Business Travel
84% of the market remains to be developed and educated
As the second-largest cost for enterprises, business travel expenses can save 25%-35% through proper management. In China’s business travel market, Ctrip Business Travel’s share does not exceed 8%, a figure that may not sound impressive, but is already on par with foreign TMCs in China. Fang Jiqin believes the reason for this market segmentation is that 84% of companies entrust their so-called business travel management to small and medium-sized travel agencies.
The above data clearly shows that the professional corporate travel market is a blue ocean, but educating users remains a long and arduous task.
Fang Jiqin stated that 84% of companies are unaware of the existence of professional business travel management companies. Even if they know, they believe that business travel expenses of only 20,000 to 30,000 yuan per month are insignificant and won’t attract the attention of professional business travel management companies. As a result, they either handle it themselves or casually hand it over to a small travel agency. But small and medium-sized travel agencies simply cannot provide standardized and customized services, nor can they offer transparent pricing. The goals of cost savings and improved business travel management for enterprises cannot be fully achieved.
Local professional enterprises have advantages in efficiency and technology
Aside from the aforementioned 84% of untapped market, among those enterprises that have already adopted and started using professional business travel management services, many overly value global brands and only collaborate with global business travel management companies.
Global business travel companies generally have a history of over a hundred years abroad. They entered China along with the needs of multinational corporations, but their ability to develop the domestic corporate market is not strong, hence their relatively small market share. This is because their product offerings are not as rich as localized companies, and they lack flexibility. Moreover, they do not have a professional technical team in China; any technical improvements rely on their headquarters, resulting in slower response times to customer needs. These disadvantages directly allowed the young Ctrip Business Travel to compete evenly for the other 16% of the market that doesn’t require zero-based education.
Ctrip Business Travel has a technical team of hundreds of people, ready to respond to market changes and special customer needs flexibly and promptly. Fang Jiqin said that in any public tender, Ctrip Business Travel’s service quality, product competitiveness, and technical capabilities are absolutely leading among domestic companies and also superior to those of global business travel companies.
Business travel management is a complex field
Is business travel management just about booking the cheapest hotels and flights? Fang Jiqin said that the first thing to clarify in corporate travel is the concept of "business travel management."
The core of business travel management lies in control and standardization. Take control as an example: if a company wants to book flights at the lowest price, whether it’s the lowest within one day or within a week, it can all be customized through Ctrip Business Travel. Another example is when clients request products to be displayed based on agreed rates and to show the lowest prices within the next hour for customers to choose from—these are services that business travel can provide but general OTAs or travel agencies cannot.
At the same time, Ctrip Business Travel can tell enterprises whether their employees’ travel behaviors are standardized and in compliance with company standards. For instance, if an employee who is only allowed to stay in economy hotels books a five-star suite, the manager has the right to reject the booking request, thus avoiding gray areas such as kickbacks and unnecessary spending. This elevates "business travel service" to "business travel management."
In terms of details, Ctrip Business Travel has automated the service process, leaving only 10%-20% of steps such as refunds, changes, and cancellations to be handled manually.
Business travel services for SMEs are just getting started
The development of small and medium-sized enterprises (SMEs) is rapid, but business travel management services for SMEs are still in their infancy. Fang Jiqin stated that Ctrip has a responsibility in China to promote the concept of business travel management, establish industry service standards, and engage in market education. "The SMEs served by Ctrip Business Travel have huge growth potential. As long as SMEs are willing to manage their travel expenses, Ctrip Business Travel is willing to provide corresponding services," he said. However, SMEs’ monthly travel expenses are less than 30,000 to 50,000 yuan, accounting for less than 5% of Ctrip Business Travel’s total business volume. The reason Ctrip Business Travel values the SME market is to pave the way for the potential business travel market. "Who knows which SME might grow into the next giant?" he said.
That said, the number and scale of SMEs are truly enormous, and no TMC can realistically attend to the personalized needs of every SME, including Ctrip Business Travel. Therefore, in May of this year, Ctrip Business Travel launched a self-service business travel platform for SMEs, aiming to meet the most basic business travel management needs of SMEs with standardized services and products.
The platform provides systematic solutions in three aspects: cost control, technology, and service. In terms of cost control, enterprises can set travel standards and policies online and enforce them through an authorized approval system, eliminating overspending and waste caused by subjective factors and moral hazards. From the perspectives of technology and service, employees can book flights and hotels not only via PC but also through mobile apps, making it convenient and fast. Travel managers can check employees’ booking status online at any time, and once an order is generated, the system will send authorization information to the relevant person in charge for approval via app or email. The platform also provides comprehensive real-time online analysis reports to help managers understand the travel expenses of the company and its departments. Additionally, Ctrip Business Travel offers monthly billing services to eligible SMEs, reducing their capital costs. According to official data, the SME self-service business travel platform has already registered over 17,000 enterprises.
Case: BAIC Yunnan Ruili—no need to worry about any travel details
BAIC Yunnan Ruili Automobile Co., Ltd. is a startup company with average monthly travel expenses of 20,000 yuan. It is currently a user of Ctrip Business Travel’s SME self-service platform. Before engaging in business travel management, BAIC Yunnan Ruili booked flights and hotels on Ctrip as individual travelers, but employees were often unwilling to pay upfront, so the company sought out a local ticketing office hoping to receive business travel services.
Zhou Wei, the travel manager of BAIC Yunnan Ruili, said that although tickets were booked by phone with the local ticketing point and settled monthly, a series of problems still arose: apart from flight prices being 200-400 yuan higher than online bookings, there was also time wasted on flight and price communications, sometimes leading to misunderstandings; payments were all made in cash with longer settlement cycles; and no formal invoices were provided for refund or change fees.
In May of this year, after Ctrip Business Travel launched the SME self-service platform, Zhou Wei contacted Ctrip Business Travel. Through phone communication and signing an agreement, all the above issues were effectively resolved: Ctrip Business Travel’s flight prices are lower than those of the ticketing office; settlements are also monthly, but payments can be made to a corporate account on the business travel platform, saving a lot of time; Ctrip Business Travel consistently provides formal invoices, eliminating much hassle during reimbursement.