The Global Business Travel Association (GBTA) recently announced the results of its inaugural GBTA BTI Outlook – China, sponsored by Visa. The GBTA BTI provides a way to distill market performance and the outlook for business travel into a single metric that can be tracked over time.
Based on the results, business travel spending in China is forecast to increase by 17 percent in 2012 and 21 percent in 2013. This would bring the total spend up to $245 billion in 2013. Growth in international outbound travel spending is expected to be particularly strong, rising by 27 percent in 2013.
“With China on a robust upward trajectory in business travel spending, they are quickly becoming a world leader in the business travel market,” said Michael W. McCormick, executive director and COO of GBTA. “For this reason, we believe it is a most opportune time to have undertaken our first Business Travel Outlook for the country. China’s phenomenal economic growth over the last decade has been mirrored in business travel, which is now a key contributor to the country’s expansion.”
To support this growth, the Chinese investment in infrastructure is vital since they will need it in place to keep up with the explosion in demand. In the past 10 years, the four largest airports have doubled in size and there are plans in place for over 100 new hotels in the next decade.
China is currently ranked second in the business travel market according to the GBTA findings, but is forecast to surpass the U.S. by as early as 2015.
“We forecast significant increases in business travel by Chinese citizens over the next two years with at least two-thirds of the growth being real increases in trips and spending as opposed to rising travel prices,” said McCormick. “This should also be accompanied by GDP growth rates of 8-9 percent a year.”
Over the past decade, China has experienced rapid economic growth that has been reflected in dramatic increase in business travel spending, according to the research. Between 2000 and 2011, business travel spending was largely driven by both meetings, incentives, conferences and exhibition business trips.
“Business travel drives the economy and China is no exception,” said Welf J. Ebeling, regional director of GBTA Asia. “From this report we can see just how explosive this growth is going to be over the next few years.”
According to the GBTA, there is currently only one significant weakness that could potentially dampen the growth of business travel, namely the European sovereign debt crisis. With about 50 percent of Chinese exports going to Europe and the U.S., the European slowdown was immediately felt. It is, however, expected that the economy’s diversification away from exports will reduce this exposure in the future.
Along with China, the GBTA also released its BTI Outlook – Brazil, which forecasts double digit percentage increases in business travel spending.
According to the report, Brazilian business travel spending will increase by 13 percent in 2012 and 15.7 percent in 2013. This translates into $31.1 billion and $36 billion respectively
“The resounding success of GBTA’s other business travel research to date has made it clear that strong demand exists for such data, and with the growth of the Brazilian market, it was the obvious country to focus on next,” said McCormick. “This inaugural report has highlighted some fascinating trends and bodes well for Brazil’s continued economic expansion and growth in the country’s international trade.”
Brazilian business travel spending has been expanding at an impressive rate over the past decade and as Brazil’s economy continues to expand and GBTA expects the business travel market to experience significant growth.
“Business travel is crucial to economic growth, and with its vibrant economy, Brazil is poised to become a major business travel hub in the next few years,” said Wellington Costa, president of GBTA Brazil. “The growth of the business travel market has been remarkable, especially in light of the economic slowdown of 2008-2009. In fact, Brazil’s business travel spend currently ranks ninth in the world at $28 billion, but this report shows that it will overtake its closest competitor within the next three years.”
The report also details a strong correlation between Brazilian job growth and travel expenditure. GBTA’s analysis of the Brazilian and the U.S. markets indicates that domestic business travel spending is ahead of gains in job creation by approximately one quarter. These findings suggest that the analysis of a country’s business travel spending can also be a significant economic indicator regarding future employment levels and business confidence.