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Report: China to Replace U.S. as World’s Largest Business Travel Market by 2014
China’s business travel market will continue to show strong growth over the next 18 months, with total business travel spending forecast to grow by 12.5% in 2012 to $195 billion, followed by another 14.7% in 2013, according to a report out lately by GBTA (Global Business Travel Association).
The report also noted that Chinese business travel spending is one of the highest in the world, second only to the US – GBTA believes that at current prevailing growth rates, and with the increased investment in infrastructure, China will pass the US by 2014 to become the country with the highest level of business travel spend.
Stirred domestic business travel
In spite of its strong growth, China is still an inseparable part of the world economic and hasn’t been isolated from the current global slowdown, which was reflected by lower than expected GDP growth in this year, hence a revised forecast for lower business travel spend. Chinese government has launched policies to stimulated domestic growth, while domestic business travel has disproportionately benefited from these policies.
GBTA expects a growth of 12.8% for domestic business travel in this year but only 5% for IOB (International Bound) travel during the same period.
The policies were implemented through the introduction of fiscal stimulus,with an increase in infrastructure spending, exemplified by the Ministry of Railway increasing investment projects by 16%.
Rosy outlook in general
Despite the domestic economic slowdown, China, overall, sits on top ranks of the business travel spending in the world, second only to the USA.
GBTA believes that China will pass the USA by 2014 to become the country with highest level of business travel spend given the current prevailing growth rates, and with the increased investment in infrastructure.
Listed below are some highlights from the report:
- Chinese business travel will continue to show strong growth over the next six quarters. Chinese-generated total business travel
- spending will grow 12.5% in 2012 to $195 billion USD, followed by another 14.7% in 2013.
- Domestic travel will recover sooner and more strongly than international outbound (IOB). The former will benefit from government fiscal intervention in 2012 and 2013, as well as stronger domestic demand.
- The total of domestic and international outbound (IOB) business travel spending grew by a whopping 16.5% per year from 2000 to 2011.
- China’s business travel market is second only to the United States in size and, at prevailing growth rates, will pass the U.S. by as early as 2014.
- A key constraint on business travel growth during 2000-2011 came from the supply side.
- Room supply has risen dramatically in China’s major business centers, but second and third tier markets remain constrained.
- Expects Chinese business travel to continue to show strong growth over the next six quarters.
- The key risks to the 2012-2013 outlook for China lie with Europe and domestic demand.
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