American Express Business Travel: China Will Lead Business Travel Recovery

American Express Business Travel announced the findings of two surveys which offered separate yet similar predictions on the health and future of business travel heading into 2010.

In a release, the Company noted that it surveyed its Global Business Partnership (GBP) clients, its largest global clients, as well as 180 client organizations based across Shanghai, Beijing, and Guangzhou in China through its annual China Business Travel Survey (The Barometer). The findings indicate that clients expect China will lead business travel recovery. Further, investment by global companies and local companies in China should increase over the next 12 months. The results of the company's GBP survey and Barometer were revealed during the fifth annual American Express China Business Travel Forum (CBTF) held in Shanghai this week.

"Economic conditions over the past year have undoubtedly impacted the travel and entertainment industry on a global scale, however increase in demand will help to drive business and encourage investments, particularly in China," said Charles Petruccelli, president American Express Global Travel Services. "As we look ahead to next year, we believe travel spend will play a crucial role in fueling recovery not only in China, but on a broader scale as countries begin to emerge from the recessionary environment. Businesses that will be best placed to take advantage of business opportunities in China, the U.S., or anywhere will strike the right balance between supporting necessary business-generating travel with applying smarter controls that don't deplete the bottom line."

The GBP survey reported the findings of 20 percent of American Express Business Travel's largest corporate clients, representing more than $1B in air volume. Sixty-eight percent of respondents anticipate that China's economic prospects would be better than those of the United States, followed by India. Eighty-nine percent of companies surveyed expect their companies to invest in China over the next twelve months while 79 percent say they will invest in India over the next year. A further 46 percent stated that China would be a top priority for international expansion in the short term.

The Barometer reported that respondents expect China as being the first country to emerge from the current economic cycle, with 72 percent of firms expecting to invest in China over the next twelve months. Interestingly, 60 percent of Chinese organizations surveyed have already started to hire staff or intend to finish hiring additional staff by the fourth quarter of 2009.

Meetings and events are reported as seeing the brunt of cutbacks with the survey stating more than 70 percent of companies have an opportunity to better control spending on meetings and events, a far larger percentage than those who felt they could cut back on air or hotel to control their costs.

The Barometer reveals that the global economic crisis has slowed, but not stopped, many organizations in China from investing in T&E. Twenty-nine percent of companies surveyed admit they have increased spending in this area over the past 12 months, though there is a visible slowdown in pace compared to last year's 43 percent. Fifty-five percent of organizations indicate their T&E spending remained flat while only 16 percent reported a reduction in spending.

Chinese companies have tightened their monitoring and control of travel expenditure

Travel policy compliance continues to improve and has been a focus of companies during this turbulent past year as they fight to gain tighter control over expenses.

Over the last four surveys, the focus on employee efficiency has been a growing concern while cost still remains important in devising T&E policy. The Barometer reveals that a vast majority of companies in China have consistently focused on monitoring and controlling travel expenditure, some highlights include:

- Almost 80 percent of organizations surveyed have formal policies in place, up from 70 percent last year.

- Policy compliance among employee travelers is also on the rise with 68 percent of companies reporting they have attained more than 50 percent compliance, up 17 percent from last year.

- Companies continue to use a mix of methods and tools to control their T&E expenditure. This year, the finance / purchasing departments show a greater role than the travel manager in the controlling of the expenses.

- A high number of Chinese organizations continue to have negotiated rates with suppliers i.e. 78 percent with airlines and 79 percent with hotels.

- Chinese firms are also encouraging the use of lower class for air travel and accommodation. The use of economy fares remains predominant due to the weight of domestic demand in overall travel spending.

Gregor Lochtie, vice president and general manager, Greater China, American Express Business Travel said, "We've seen more organizations strive for an equal balance between cost and employee efficiency through robust travel policies. There's no doubt progress has been made, but there is still room for improvement. The survey also shows China-based companies still enjoy varying degrees of autonomy and make decisions such as how to book their travel and what form of payment to use."

((Comments on this story may be sent to newsdesk@closeupmedia.com))

Related terms: beijing, book, business, china, corporate, economy, entertainment, environment, hotel, india, investment, local, partnership, policy, president, rates, shanghai, strike, travel, travel services