China Business Travel Spend to Outpace U.S.

A report predicts China will become the largest business travel market in the world next year, passing a significant milestone.
Katie Kuehner-HebertOctober 21, 2015

Business travel spending within China will soon outpace U.S. travel spending, and India’s growth is quickly accelerating, “a clear indication of the resiliency and strength of both economies,” the Global Business Travel Association said Wednesday.

Despite recent economic turmoil, China business travel spending is projected to grow 10.7%, to $322 billion, in 2016, exceeding U.S. travel spending of $303 billion, the association said in a report.

Business travel growth in India is projected to be 11.1% in 2016 a reflection of an improving business climate under Prime Minister Narendra Modi as well as high levels of domestic economic activity.

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India, currently the 10th-largest business travel market in the world, is poised for breakout growth, the report said, with spending growing by a compound annual growth rate of 11.5% through 2019, to $45 billion. Fifteen years from now, India will likely be a top-five market in business travel spending.

“China and India continue to be business travel juggernauts, a reflection of the underlying strength of both economies even in a tough global economic environment,” GBTA’s executive director Michael W. McCormick said in a news release.

China’s business travel market represents roughly 20% of global business travel spending, up from 5.1% in 2000. By mid-2016, China will become the largest business travel market in the world, with spending increasing by 61% over the next five years, from $262 billion in 2014 to $420 billion in 2019.

“Ultimately, long-term growth possibilities for China in the business travel market are really almost underdeveloped, especially when you look at the international and domestic split,” McCormick told Bloomberg. “As a country, the United States is so used to being number one in volume in every way. This is a significant milestone, and certainly a reflection of the changing global economic landscape.”

In contrast, the business travel spending outlook for Brazil and Russia is not that rosy, the group said. GBTA expects total business travel spending in Brazil will decline by 1.5% in 2015, a significant downgrade from GBTA’s projection of 1.8% growth earlier this year. However, the group expects improvement in 2016 as spending growth is poised to bounce back to 1.2% growth, to $31.7 billion.

Domestic business travel in Brazil continues to weaken as unemployment hits a five-year low, consumer spending continues to slow, and the Brazilian currency has been devalued.

Russian business travel growth faces serious headwinds. In total, the GBTA expects spending in Russia to fall 17% in 2015 to $17.5 billion, and another 10.1%, to $13.7 billion in 2016. The decline in Russian growth reflects the collapse of oil prices, international sanctions and overall weakness in the global economy, the GBTA said.