GLOBAL REPORT—China reigns supreme as the world’s largest business travel market when it comes to spending, according to the latest data from the Global Business Travel Association. This is spurring hoteliers to build new hotels and position existing properties for the country’s largely domestic business traveler boom.
According to the GBTA, China, which just surpassed the U.S. for the top spot, had business travel spending in excess of $291 billion in 2015, up 11.4% from 2014.
Experts say these trends stem from the broad shift away from the agricultural and manufacturing industries that have traditionally dominated the Chinese economy, toward a rise in business services firms, as well as China’s burgeoning middle class, its slew of new airports and its expanding high-speed railway. It all but guarantees a steady stream of Chinese professionals seeking both short-term stays and extended “bleisure” trips around the country.
“The volume is still strong in the first-tier cities like Beijing, Shanghai, Guangzhou and Shenzhen, but aligned with the growing influence of the middle-class, we also see more traction in second and third-tier destinations,” said Jesper Palmqvist, Asia-Pacific area director for STR, Hotel News Now’s parent company.
“There’s increased development there and more importantly, expanded accessibility, due to the better infrastructure, like-new airports and the ever-growing high-speed rail network,” Palmqvist said. “Since the high-speed train system is more developed now, locations near train stations become more attractive for business travelers, and from a hotel development standpoint.”
It’s an opportunity that hasn’t gone unnoticed. According to STR, as of July, 55% of the hotel rooms under construction in the Asia Pacific region were in China.
GBTA Foundation VP of Research Jeanne Liu said China’s widespread infrastructure upgrades continue to set the pace for expansion across the country.
“China is one of those markets that’s making a huge investment in infrastructure,” Liu said. “They’re building additional airports in all the major cities: Shanghai, Guangzhou, Beijing. Beijing has a second one already under construction and once complete can accommodate an additional 100 million travelers a year. They’re making a lot of strides in that direction and the government definitely supports that.”
Most of those travelers will be flying in from another Chinese city. Domestic travelers comprise 95% of China’s total business travel spend, according the latest GBTA BTI Outlook report. On the other hand, inbound business travel to the country from other nations has become less of a factor due to declining exports and markets.
“The trend is that it’s going down a little bit, just because the demand for commodity products within China is not as high right now,” Liu said. “As we make that shift, China’s not exporting as much anymore. Also, China’s main trade partners—the U.K., the U.S., and some of the emerging markets—are not doing really well right now. Demand for Chinese products is probably also a little less, and therefore I think international inbound travel to China is probably taking a little bit of a hit.”
The profile of the average frequent business traveler in China is a married male between the ages of 26 to 45 with advanced levels of education who earns a high salary and usually holds a management position, said Bruce McKenzie, Hilton Worldwide’s SVP of operations, greater China and Mongolia, citing a 2013 Ipsos travel study.
“Business travelers typically spend more on hotel services and amenities, like room service, for greater convenience and to save time in their busy schedules,” McKenzie said. “In addition, we are seeing a growing ‘bleisure’ trend, where business travelers extend their business trips for leisure activities.”
The exterior of the Hilton Yuxi Fuxian Lake. (Photo: Hilton Worldwide Holdings)
Like many companies, Hilton is expanding its footprint in the country to meet demand. The company has opened five properties in China this year, and more are on the way, including five branded hotels headed to Chengdu.
“Our simple guiding principle is to establish ourselves in locations where our guests want to be,” McKenzie said. “We have been continuing to strengthen our presence in new and exciting locations, such as Yunnan, Guangdong, Shaanxi and Sichuan.”
Experts predict the Chinese business travel market will continue to grow and thrive in the future, but perhaps at a slightly lessened pace. The GBTA is forecasting Chinese business travel will grow by 10.1% in 2016, reaching $320.7 billion. Liu sees certain global factors could create more opportunities in 2017.
“We think that overall in 2017 the global market will pick up,” said Liu. “Oil prices will stabilize, and we think all of that will have a very positive impact on China. We’re expecting to see an increase in 2017 for business travel. Everything is huge there, so there’s a lot of potential. China’s one of those interesting markets, where it’s go big or go home.”