Guest Comment: Roger Westwood, Hogg Robinson

Hogg Robinson overseas investment director, Roger Westwood, says countries such as China will be the growth markets for the travel industry in the coming years.

“Throughout the 20th Century, travel and tourism was driven by 30 of the world’s richest economies. As these Western markets mature and reach a plateau in terms of propensity to travel, the main source of growth in 21st Century is likely to be the emerging economies, of which arguably one of the most important is China.

“At the recent Asia Business Travel Market which took place in Shanghai, Hogg Robinson plc, managing partner and major shareholder of Business Travel International (BTI), signed a ‘Letter of Intent’ to establish a joint venture (JV) with Jin Jiang International Holdings Co. Ltd.

“The significant signing is testimony to the new resurgence in business travel following the upheavals of Sars and September 11.

“In terms of its significance for both inbound and outbound travellers, the rapid development of the business travel market in China has been, and will continue to be, driven by economic fundamentals. These include the major inflow of Foreign Direct Investments (FDI) to the country over recent years, which saw China surpass the US to become the world’s major recipient in 2002. This was largely due to the country’s very positive and accelerated approach to deregulation. Indeed, 60% of the Fortune 500 are now established in Shanghai.

“Business, in general terms and consequently business travel, was severely impacted by what has been dubbed the ‘perfect storm’ – a succession of geopolitical ‘events’, the ensuing effects of which caused an economic tsunami which disrupted business travel activity in all economies worldwide.

“It was China that bore the brunt of Sars, with the epidemic putting a dent in both consumption and investment. But airlines such as Lufthansa have lifted their flight restrictions to the country and are now returning to pre-Sars levels. Beijing International Airport reported continuous peak passenger flow for late July and August with total landing and take-off figures standing at 720 – just nine fewer than their previous record.

“The country has emerged from the crisis stronger than ever and the outlook for ongoing economic growth is very positive. Across the Asia Pacific region, the corporate travel management market is expanding.

“Compared with the more mature economies (USA and Europe), China’s domestic agencies are typically large in number but small in size and offer limited capabilities. To an extent, they lack modern travel management expertise and technology. Domestic travel agencies are starting to recognise however, that business travel decisions of major corporate clients are increasingly global ones and that they need to evolve to meet the needs of the multi-national corporations which they will increasingly be servicing.”