The growing economic and political status of China on the global stage is no secret, and has been openly discussed by economists for quite some time. Since the famous 2003 economic paper entitled “Dreaming with BRICs” was produced by Jim O’ Neil - who was at the time the Head of Global Economic Research for Goldman Sachs (today he is the Chairman of Goldman Sachs Asset Management) - the consensus that China would become an economic powerhouse of the 21st century has been largely accepted as self-evident.
Another BRIC in the wall
The significance of this paper is such that the BRIC term coined by O’Neil is now used by Brazil, Russia, India and China themselves to describe their union of purpose. The report infamously predicted that the four BRIC nations would assume prominent global economic positions by the year 2050, with China enjoying a particularly significant role as the world’s largest economy.
The prognostications of Goldman Sachs were if anything somewhat on the conservative side. Already the second largest economy in the world, China is expected to succeed the US at some point in the next couple of years. According to a recent report in the Financial Times, it could happen before the year is out.
This general economic trend is already having significant implications for the travel industry. The United States has been the dominant commercial marketplace for many decades, and this has been reflected in the quantity of business travel that the country’s businessmen and women have engaged in. However, a recent report produced by the Global Business Travel Association (GBTA) indicates that the way we think about business travel may need to change rapidly, as China continues to spend more both in the present and near future.
China business travel exploding
According to the GBTA, within two years, China will have overtaken United States to become the world’s biggest spender on business travel. By 2016, China is forecast to spend $346.4 billion per annum on business travel, compared with $319.5 billion on the part of the United States.
As one might not unreasonably expect, the GBTA notes that business travel is very strongly linked to behaviour in the global economic system. It would perhaps surprise some then that in these austere times the amount of revenue being spent on business travel shows no signs of abating; quite the opposite. Global business travel spending will reach a record $1.18 trillion this year, and the GBTA reports that the majority of the 7 percent growth that this represents can be attributed to the aforementioned expanse of Chinese business travelling.
Already the Asia-Pacific region accounts for nearly 40 percent of global business travel, compared to just over 20 percent for North America. However, New York remained the most popular destination with business travellers in 2013, closely followed by Moscow and Shanghai.
Opportunities for travel companies
This boom in business travel from East Asia and other rapidly industrialising areas provides a wealth of potential opportunities for the travel industry, as well as tourist boards and destinations. Already US airlines such as Delta Air, and large hotel operators including Starwood Hotels & Resorts, have reported that business travel has significantly contributed to their quarterly profit increases.
As a consequence, popular destinations are attempting to communicate directly and specifically with business travellers. One of the most popular approaches has been to implement a section on tourist board websites dedicated to business travellers. But appealing to this group can actually be quite tricky, given that destinations are often rather in the dark with regard to the specific needs and desires of this affluent demographic.
One of the world’s most important centres of commerce is leading the way in this matter, specifically targeting business visitors as part of its Tourism Vision 2020. Dubai’s Department of Tourism and Commerce Marketing (DTCM) has specifically announced plans to achieve sustained 7-9 percent compound annual growth rate in business visitors. 20 percent of visitors to Dubai are business travellers, and DTCM is aiming to ensure that business travellers, who typically have a short stay in a city, experience an attractive enough overview of Dubai to encourage them to return.
Understanding the new business traveller
This ties into a very important aspect of modern business travellers; the fact that they share many characteristics with tourists. Business travel is becoming less formal, and people venturing out on business trips increasingly engage in the sort of activities that are associated with leisure travel. Tapping into business travellers’ desire for mobile entertainment and functionality could be a very profitable route for companies to explore.
With no immediate signs of the global economy slowing down, in the short-term future the boost in business travel from China and other developing economies can be a real source of income for a wide variety of travel-related companies and organisations.
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