China’s business travel market recorded a total GMV of 192.8 billion yuan in 2017, up 19.5% over the previous year, which is estimated to exceed 230 billion yuan (US$35.9 bn) in 2018, according to the whitepaper published by GZ Meiya and Jinlu Consulting.
China had already surpassed the USA to have the highest business travel spending in 2016 and totaled 344.6 billion yuan in 2017. However, the penetration rate of China’s business travel management is only 7%-8%, which is well off the Euramerican Market (40%), according to GBTA.
62% enterprise staffs are troubled by fussy reimbursement process. Some enterprises applied the managed travel platform mostly for the airline ticket and hotel reservation, still at low-level cooperation.
Currently, the gross margin of the managed business travel market was only 4%-6%. In particular, small and medium-sized companies had only 3%-4% gross margin and 0.3%-0.4% net profit margin, all below the average, according to Analysys.
This attributed mainly to travel management companies’ traditionally simplistic method of generating revenues. In most cases, travel management companies took the advantage of the price difference of airline ticket. The GMV of airline ticket accounted for 81.3% of the total in 2016. However, the profit derived from airline ticket become less and less.
Within this market, online travel agency continued to steal the share of traditional travel management companies, especially of small and medium-sized travel management market.
Between 2013 and 2016, the share of airline ticket declined by 4.2% in managed travel market while hotel saw a 3.2% increase in share. Online car-hailing also entered this market.
Over 6 million Chinese traveled to Europe in 2017; check out insights on custom Europe tourism