China Overtakes the United States as World’s Largest Business Travel Market
While it is pretty much a photo finish, China edged past the United States in total business travel spending at the end of 2015 by a billion U.S. dollars making it the largest business travel market in the world. The two countries finished the year with $291.2 billion in spend compared to $290.2 billion, respectively, according to a recent report, GBTA BTI™ Outlook – China 2016 H1, that was sponsored by Visa.
Additionally, the study found that China will soar ahead in 2016 with business travel spend forecast to grow 10.1 percent to $320.7 billion USD, compared to 1.9 percent growth in the United States and $295.7 billion USD in total business travel spend.
Some other key highlights from the report include:
- Early 2016 volatility in China’s financial markets once again led to heightened concerns about a potential hard landing for China resulting in collateral damage to the global economy, but a steady stream of indicators continue to point towards controlled growth moderation as planned.
- GBTA’s expectations for the Chinese economy are for a continuation of GDP growth moderation bringing rates of 6.4 percent and 6.1 percent for 2016 and 2017, respectively. Growth will continue to come primarily from consumption and purposeful government infrastructure investment as China works to shift its economy to one driven by consumers, not just investment and exports.
- Despite the slowing Chinese economy, investment in travel infrastructure continues in anticipation of better days ahead for both business and leisure travel. A plan to open 82 new airports has been underway since 2011 and hoteliers are also continuing to increase their presence in China. Over 70 percent of the hotel construction pipeline in Asia Pacific can be attributed to China.
- Business travel spend in China continues to be dominated by domestic business travel, which comprises 95 percent of total business travel spend. Pressure from slower economic expansion will keep a lid on the tremendous levels of domestic business travel growth seen in previous years, but growth of roughly 10 percent is still expected on an annual basis over 2016 and 2017.
- GBTA’s forecast of 9.8 percent total business travel spend growth in 2017 would mark the first year of this millennium that China’s business travel spend growth rates dropped below double digits.
While the United States and China are currently neck and neck in terms of business travel spend, China’s business travel growth is forecast to grow significantly in the coming years while the United States’ will grow at a much more moderate pace. Regardless of which country is the largest market for business travel, 2017 is predicted to be a much stronger year for both markets once some of the current uncertainty subsides. This inflection point is an indication of the truly global nature of today’s economy.