ASIA Travel Tips.com

Travel Management Companies Face Uphill Task in China

Search ASIA Travel Tips .com Latest Travel News Send to Friend Monday, 18 May 2009

The travel management companies (TMC) sector in China is set for explosive growth if the industry can overcome challenges in China’s regulatory environment and in technology infrastructure. This is according to a report commissioned by Amadeus and conducted by travel research authority PhoCusWright.

Entitled Corporate Travel Management and Practices in China, the report found that less than 20% of 112 corporate executives in China interviewed use TMCs to manage their corporate bookings. With the scale of the Chinese corporate travel market, this figure is considerably low compared to smaller markets in other parts of the world.

Peter Smith, Vice President, Business Solutions Group, Amadeus Asia Pacific, said, “There are currently several MNCs in China with a US$100 million annual travel spend, but TMCs in China remain highly underutilised. It is obvious that there is still huge potential for TMCs in China to grow their business and for corporations to improve efficiency and cost savings with the use of TMCs. If TMCs want to fully maximise the vast opportunities in China, it is critical that they understand the complexity of the market and overcome the challenges that exist.”

The report identified two major challenges for TMCs operating in China:

China’s Regulatory Environment

Most industries in China operate under a strict regulatory environment and the airline and travel industry is no exception.

 To operate in China, TMCs must have a strong working relationship as well as the ability to interface with TravelSky, the government-approved computer reservation system (CRS) that plays a critical role in air ticket distribution. As part of this relationship, TMCs have to build local technology systems that are compatible with TravelSky, but not with their global platforms, making it difficult for TMCs to integrate data worldwide for reporting and traveller tracking.

At the same time, this also means that multinational companies (MNCs) are unable to deploy their own self-booking tools. If MNCs work with TMCs in China, they have to wait for almost a month to integrate China data with the rest of their global travel management data.

Finally, current Chinese regulations increase complexities for foreign companies that want to set up offices or branches in other cities in China other than Shanghai, Beijing, Guangzhou and Shenzhen. This is a huge setback for TMCs looking to expand their business nationwide.

Limited Use of IT for Travel Management

Ram Badrinathan, General Manager of PhoCusWright Asia Pacific said, “There is a widespread perception in China that centralising travel management will not yield the lowest air or hotel rates for companies, and that having travellers comply with travel policies is helpful enough. However, corporations working with the right TMCs that deploy cutting-edge technologies will in fact be able to better automate travel processes, administer travel policies as well as cut costs.”

The need to raise awareness of the benefits of using centralised IT travel management systems is most pressing for private domestic companies (PDC) and state-owned enterprises (SOEs). This is because MNCs accounted for the lion’s share of corporations that use TMCs – about half of the MNCs interviewed used a TMC compared with only 5% of the PDCs, and fewer than 5% of the SOEs.

Challenges Not Insurmountable

The report suggests that change is forthcoming. China’s commitment to the World Trade Organisation presents huge incentives for the market to relax its regulations. Deregulation of airline commission payments by China Aviation Administration of China (CAAC) earlier this year could also move the industry toward a zero-commission environment, forcing significant change in the market.

Furthermore, IT penetration will proliferate, further driving corporations in China to consider centralised IT travel management. This will be driven by the growth of corporate credit card adoption, the spread of broadband infrastructure into the regions, as well as the rapid enlargement of the technologically savvy under-35 generation.

Peter Smith, Vice President of the Business Solutions Group at Amadeus Asia Pacific, concluded that these changes are encouraging despite the scale of challenges.

 “As the signs of change continue to emerge and progress is achieved one step at a time, Amadeus is committed to pursuing a stronger understanding of the Chinese travel market in order to ensure that our clients, including corporations and TMCs, have the knowledge required to succeed,” Smith said.

See other recent news regarding: Airlines, Aviation, Flights, First Class, Business Class, GDS, Miles, Hotels, Promotions, New Hotels, Visitor Arrivals, Cruises, Free Deals, Amadeus, Research, MasterIndex, PhoCusWright

Subscribe to our Latest Travel News Daily Email Free of Charge by simply entering your email address above, or return to the Latest Travel News Asia main page to see all the latest headlines. You can also stay updated with our RSS Feed Free Travel News RSS Feed and even add the travel news to your website. Have questions? Please read our travel news FAQ.
     
Exclusive HD video interview with the General Manager of The Ritz-Carlton, Bali, Mr. Karim Tayach. In this HD video interview, filmed on the side lines of the AAPA Assembly of Presidents at  The Ritz-Carlton, Bali, we sat down with Ilya Gutlin President, Asia Pacific of SITA to learn more about the company and the future of air travel. Exclusive HD video interview with Mr. Luc Bollen, General Manager of The Park Lane Hong Kong, a Pullman Hotel.
The Ritz-Carlton, Bali Future of Aviation The Park Lane Hong Kong
Aviation Industry Update at AAPA 2015 in Bali.  Andrew Herdman is the Director General of the Association of Asia Pacific Airlines (AAPA) and this is the presentation he gave to a few select aviation journalists at The Ritz-Carlton, Bali on 12 November the day before the General Assembly of Presidents. Exclusive HD video interview with Air Macau's Chairman of the Board and President of Executive Committee, Mr. Zheng Yan Exclusive HD video interview with the General Manager of the JW Marriott Hotel Macau, Mr. Brian Tong.
Aviation Industry Update Air Macau's Chairman JW Marriott Macau
Exclusive HD video interview with Mr. James Mabey, Senior Vice President Development Asia Pacific for the Jumeirah Group Exclusive HD video interview with Ms. Titiya Chooto, General Manager of Anantara Siam Hotel (formerly the Four Seasons Hotel Bangkok). Exclusive HD video interview with Mr. Jonathan Wigley, Founder and CEO of one of Thailand's most successful hotel management and ownership companies.
Jumeirah Group Anantara Siam Bangkok Absolute Hotel Services
This HD video tour of Thai AirAsia X's brand new 337-seat Airbus A330-300 aircraft was filmed at Don Mueang Airport in Bangkok, Thailand on 14 May 2014 Exclusive HD video interview with Mr Wayne Mak, Managing Director of Rhombus International Hotels Group HD video of the interior and exterior of a Thai Vietjet Airbus A320-200.
Thai AirAsia X A330-300 Rhombus Int. Hotels Group Thai Vietjet A320-200
An exclusive HD video interview about the elegant Airbus A350 XWB with David Velupillai, Marketing Director for Airbus Corporate Jets at Singapore Airshow 2014 A very brief glimpse into one woman's amazing journey sailing from California to Terengganu in Malaysia ATR Demonstrates 72-600 Flight Simulator During Singapore Airshow 2014
Airbus A350 Sailing from California to Malaysia ATR Simulator
Inside Qatar Airways Boeing 787-8 Dreamliner - HD Video It takes 800 workers between 65 and 80 days to assemble, install, test, paint, furnish and deliver an Emirates Airbus A380. Showers, Bars, Lounge - The Emirates Airbus A380 Has Them All - HD Video Tour Thai Airways International Takes Delivery of Brand New Boeing 777-300ER
Qatar Airways B787 Emirates A380 Thai Airways B777-300ER
Latest Travel News
Advertising
Advertising
Copyright © 1997-2016 ASIATravelTips.com/TravelNewsAsia.com