China opens up for corporate travel solutions

Opportunities abound but travel agencies and travel management companies face some daunting challenges in the Greater China corporate travel sector, according to Asia Pacific based FCm Travel Solutions.

E-ticketing, industry deregulation, traveller security and dynamic hotel pricing will be among the key challenges.

Suyin Lee, general manager for FCm Travel Solutions Greater China, said,
“FCm believes demand for corporate travel management will grow even more strongly in 2007/08 than in recent years, particularly as more companies consolidate their procurement categories throughout Asia Pacific.

“I believe we will see a growing shift among local businesses that presently use traditional travel agencies, towards corporate travel management companies (TMCs) offering more sophisticated capabilities and reach. This has already become a trend over recent years.”

Lee said the key challenges for corporate travel managers during the next two years would be:

– The move to a full electronic ticketing environment in China, which is likely to create further adjustment challenges for some companies during the year.

– Further deregulation of the travel industry in China, which will bring even more suppliers and products to the market during 2007 and 2008. This means corporates need to stay focused on consolidating their travel management and data capture as best possible.

– Traveller security and tracking, which is expected to remain a priority for corporates.

– Dynamic pricing and growing demand for hotel rooms in major cities around China, which will be a primary focus for many businesses in structuring their hotel programs and aiming to balance travel needs with costs.

According to Lee, travel agencies and TMCs will be challenged by a number of other issues in the short term. These include:

– Recruitment and retention of quality, skilled people. The labour market became increasingly competitive during 2006, and FCm believes the shortage of bi-lingual and knowledgeable travel consultants will remain an issue in 2007/08.

– Deregulation of the travel industry in China will force travel agencies and TMCs to keep abreast of latest policy developments to optimise business development opportunities for their clients.

– Aggressive discounting of travel management fees is likely to remain this year, as the procurement decision is still largely left to office administrators or personal assistants whose primary focus is on the price of a ticket, transactional fees or purchasing incentives.

– Decentralised travel management is also likely to improve this year, but is expected to remain an issue as companies large and small continue to manage their travel inefficiently. Education of the local corporate market on the advantages of travel management and compliance with company travel policies will be essential for driving long-term savings for companies.

“The lead-up to the Beijing Olympics and World Expo Shanghai 2010 will help spur overall growth in business travel; Meetings, Incentive, Conferences and Events (MICE) requirements; and infrastructure development within the travel sector in China,” Lee said.

FCm China expects the strongest areas of growth to come from increasing demand for ‘one-stop shop’ corporate travel and MICE services, demand for inbound travel services, good quality executive leisure product and maturing SMEs requiring more sophisticated services.