China set to overtake US as world’s top business travel market
Spending on business travel in China tipped to grow 12 per cent this year
This is the year to take stock of the corporate travel sector and the current trends in the Asia-Pacific as the region’s economic outlook continues to dominate global growth.
In line with growth, spending on corporate travel in the Asia-Pacific region remains buoyant. The corporate travel spend in the region reached US$459 billion in 2014, with projected growth of 7.7 per cent in over the next five years.
The China market is of particular interest. Despite lower oil prices and a shift away from public sector consumption towards individual consumption, China remains set to overtake the United States as the top business travel market in the world, with business travel spend estimated to grow 12 per cent this year alone.
As organisations deal with the varying economic conditions in the Asia-Pacific’s increasingly connected marketplace, they must show dynamic leadership and mobilise employees both internationally and regionally in order to stay competitive.
A number of corporate travel trends have emerged.
Short-term assignments are increasing, with the PwC Talent and Mobility: 2020 and Beyond report showing that 20 per cent of assignments now last less than 12 months, compared with 10 per cent in 2002. This can largely be attributed to organisations looking to plug skills gaps. Indeed, in the Brookfield 2015 Global Mobility Trends Survey, 47 per cent of respondents cited the reason for international assignments was to fill either a technical or managerial skills gap.
The utilisation of cost containment tools for international assignments is also on the rise. Cost containment has become a priority for many mobility managers as they seek new ways both to improve profit margins following the global economic slowdown in 2008 and to justify internally the value of corporate travel. According to the Brookfield survey, 46 per cent of organisations require a cost benefit analysis as part of the justification for an international assignment. In addition, 62 per cent of respondents indicated they tracked costs during an assignment.
Mobility patterns are becoming increasingly complex both regionally and globally. Demand for home-grown talent, particularly in the Asia-Pacific region, is the greatest cause of this. Employers are recognising the need for local talent to gain international experience in order to secure their future in the global marketplace. Organisations are also increasing the share of regional roles and consolidating roles in Asia-Pacific businesses. This is a direct result of a relative shortage of experienced and skilled domestic talent at senior levels, as well as pressure on organisations to have a regional footprint to ensure business success.
As these trends take hold, mobile opportunities are becoming a fundamental element in attracting, retaining, developing and engaging talent; and organisations need to become more flexible in their approach to talent mobility. With the arrival of the millennial generation in the workplace and their demand for international exposure – 71 per cent of millennials expect to hold an overseas assignment during their career – organisations are facing pressure to open up their talent mobility programmes.
Tailoring corporate mobility programmes to millennials must be a central part of any organisation’s wider business strategy. Relocating millennial employees early on in their career and for shorter periods can help plug immediate skills gaps, and increase local knowledge and insight into an overseas market.
Following a series of well-publicised international incidents in recent years, organisations have a greater responsibility towards duty of care to their employees. In the 2013 Global Mobility Effectiveness Survey, which collated 1,273 responses from participants across a range of industries in more than 70 countries, 45 per cent of mobility professionals had concerns about the personal safety and security of employees.
As duty of care now extends outside the workplace to accommodation and on-the-ground support, organisations are having to extend their offerings. Oakwood Worldwide has a comprehensive, proactive crisis management plan and has developed an approach to duty of care that seeks to mitigate potential risks and minimise the impact of unanticipated events on its guests and clients. In markets like China, where there is greater demand for on-the-ground support, Oakwood Worldwide has a team in place at each of its properties.
As corporate travel across the Asia-Pacific continues to evolve, Oakwood is positioned at the forefront of the mobility industry to accommodate growth and the trends shaping the future of the industry.
T.J. Spencer is vice-president of sales and managing director of Oakwood worldwide APAC