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As Asia Leads, Business Travel Follows

Brought to You by Korean Air

Asia is leading the world out of the global recession. As economies in China, India, South Korea and Indonesia outpace recovery in the United States and the Eurozone, so too will the growth of their business travel volumes. Are companies prepared to manage that travel? Egencia has partnered with Korean Air to provide an overview of the corporate travel landscape in APAC.

Asia is in hypergrowth. Its key economies - in particular China and India, but South Korea and Indonesia as well - have easily eclipsed economic growth rates in both the United States and the Eurozone over the past 10 years, and there does not seem to be an end in sight. Moreover, the "Great Recession" of 2008 and 2009, which brought Western economies to their knees, seems only to have slowed growth rates temporarily in these economies, and they are rebounding from setbacks with considerable growth projections over the next several years. Poised for business and economic dominance, these economies will drive global business travel recovery as well. Travel managers need to be ready - and that's easier said than done.

An August 2010 report issued by the National Business Travel Association Foundation and sponsored by Visa details several of the factors driving economic and business travel growth in the region. China is clearly the dominant economy here and proved it with 11.9 percent growth in the first quarter of 2010, the country's strongest in two years. According to researchers at Vantage Strategy, the firm commissioned to execute the study, China, India, Japan and perhaps South Korea are expected to regain their pre-recession gross national product peaks as soon as this year. Business travel volume is expected to follow - and will likely surpass pre-recession levels, growing at four times the rate of U.S. business travel.

One reason for this is that Asian economies as a whole have become less dependent on fiscal stimulus packages and instead are supported by a growing middle class. That also means these countries can, and some already have,  diversified their industry portfolios. They are less reliant on their manufacturing strengths and exporting goods to other countries to maintain economic growth. These dynamics will play out in the business travel arena as a surge in domestic demand.

For companies that are now investing in the region - and perhaps especially for those who are already enjoying its dizzying growth - the challenges of managing both domestic and international business travel in Asia are quickly coming to a head.

A 2009 study conducted by the Association of Corporate Travel Executives and AirPlus International revealed that among 1,000 survey respondents, 72 percent believed travel managers outside of Asia have poor knowledge of how to manage travel in the region. It is, indeed, a complex proposition that can require a country-by-country approach and can easily defy what Western travel managers have come to consider "best practice."

The ACTE/AirPlus study identified several major challenges to managing travel in Asia, including:

1. Cultural & Language Diversity Cultural diversity between countries is more pronounced in Asia than in Europe, making service standards difficult to streamline across the region. Language diversity poses a major challenge as well. Not only do different countries speak different languages, they also maintain different linguistic characters, making it very difficult to rationalize data fields across the region for consolidated reporting.

2. Distribution Challenges
Homegrown distribution systems in China, Japan and South Korea have stymied online booking efforts. China's TravelSky, for example, is the only GDS authorized to provide air ticketing, but its functionality can be limited, resulting in content displays that show the lowest fare on the day, even if the fare is ultimately unavailable. While hotels can often be booked through international GDS-powered tools, most locally owned hotels do not participate, making full access to content a continued frustration. Travel management companies have begun to create workarounds for such issues, making considerable strides in the last two years.

3. Payment Solutions
Manual invoicing persists throughout much of Asia, where a cultural resistance to credit card payment endures. Business organizations also tend to be much more hierarchical in Asia when compared to the U.S. or Europe, and corporate credit cards are generally reserved for employees of a certain status. Payment may become an area of innovation for Asia, however, where mobile phone adoption in the consumer space has encouraged payment via SMS or text messages. While managed travel has yet to adopt such a practice, a new generation of travelers would likely be ready for it.

4. Lack of Transparency
Many Asian markets are dominated by net fares and grey market fares, making it hard to assess the true cost of travel. Japan is an interesting example. It is a mature business travel market, but because most airlines and Japan Railways maintain their own distribution systems, negotiated preferred rates are few. Internet bookings are very common and, again, the mobile phone is often the booking tool of choice.

There are several additional challenges in the region, including government regulations, logistical issues such as obtaining visas, and cheap labor that make traditional travel management best practices either more difficult or the arguments for them less compelling. Still, companies are achieving success. Given the market diversity, as well as cultural expectations for personalized service, perhaps the most important factor in that success is the ability to approach the region from a posture of education and to engage local experts who can provide both cultural and industry insights. Travel managers and senior corporate executives should expect much more extensive human intervention in the travel booking and fulfillment process, at least for now.

Leading Travel Management Companies, such as Egencia, have forged important local partnerships in these key regions and have customized their service offerings, technology and data capabilities for the Asian market. Clearly, the region demands considerable innovation and efforts will not transform travel management practices overnight. As travel managers and suppliers build a track record of success, however, it will be exciting to watch how Western travel management concepts influence regional practices - and perhaps even more interesting to observe how Asian travel management solutions are exported to the West.

Korean Air and Egencia are poised to deliver the innovation, service and solutions to help your global travel program succeed. To learn more about how Egencia's local expertise in APAC or the Korean Air Program can help your travel program, please contact your Egencia Account Manager.

Sources
Successful Travel Management in Asia Pacific, Association of Corporate Travel Executives/AirPlus International, August 2009
Business Travel Market Metrics: A Global Analysis of Business Travel Activity, National Business Travel Association, Visa and Vantage Strategies, August 2010