China increases focus on managed business travel: study
Published: 05 Dec 2007
Sharing the results of 2007 China Business Travel Survey (The Barometer), conducted by Research International from May to August 2007, interviewing 230 Chinese and foreign companies with 100 and more employees in six key industries in Shanghai, Beijing and Guangzhou, the company stated that the China business travel market is also maturing with increased focus on Travel & Entertainment (T&E) management.
The Barometer shows continued growth in T&E expenses in China:
· 46% of companies experienced increases in their T&E budgets, compared with last year at this time when only 28% of companies had experienced growth in their T&E budgets.
· The Chinese business travel market is very similar to the US market in that it is self-sufficient and the majority of expenditure takes place domestically – 69% of expenditure takes place in Mainland China.
· T&E expenditure remains the second largest controllable cost for companies within China. The percentage of employees going on business trips is up from 28% in 2006 to 33% in 2007, and 60% of employees are generating T&E expenditure compared to 56% in 2006. Meals & entertainment continued to be the largest portion of business travel expenses, followed by air travel and hotel/ accommodation.
The Barometer shared that companies in China have been paying greater focus in optimising and controlling T&E expenses, showing that business travel market in China has become more mature and structured over the last few years:
· More companies have policies for controlling T&E expenditure – 81% of the companies surveyed indicated that they have a T&E policy, up from 70% last year.
· Compliance rates for T&E policies are improving – this year 47% of companies have a compliance rate above 50%, up from 28% of companies last year, with similar compliance rates for both Chinese and foreign owned companies.
· 86% of companies surveyed measure the efficiency of their T&E policy, compared to 69% in 2006. The most common method used by companies measuring their T&E policies is measuring whether or not expenditure is in line with the T&E policy, i.e. using preferred suppliers and using negotiated fares for air travel.
· Business travel is becoming more managed as more and more rates for air travel and hotel accommodation are negotiated – 93% of companies have rules for air travel compared to 87% in 2006, while 93% also have rules for hotels compared to 90% last year.
· Almost half of the companies surveyed are using a travel agency for business travel, compared to 34% in 2006. However, more foreign owned companies are using travel agencies than Chinese owned companies.
Its also indicated that the Internet is becoming a much more important means of booking business travel because it is convenient, easy to use and fast. (61% said they use online tools, up from 37% last year.) New online tools, which can provide maximum convenience, flexibility and efficiency will be welcomed by corporations.
While more companies are using a travel agency for business travel (48% this year versus 34% in 2006), only 15% of companies use a sole travel agency for business travel, with the vast majority using two or more. In such a situation, companies are not benefiting fully from using a travel agency as expenditure is spread over a number of agencies, making expenditure more difficult to control. The main selection criteria remain the competitive price for each ticket bought, with national coverage being the second most important criteria. In fact, companies should also leverage on the travel management consultancy capabilities of travel agencies, which is not yet a priority for most companies.
Cash remains the most common method of payment for companies operating in China and use of corporate cards had declined, all indicating a need for further education on the advantages of modern payment methods which enable companies to have a central billing system for all expenditure carried out by their employees.
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