How China’s economic slowdown is affecting corporate travel

BCD Travel’s Emerging Travel Trends in China Report 2024 examines the latest developments of corporate travel in China. We highlight some of its findings:

Air travel

The prospects for domestic air travel are encouraging. By 2025, IATA expects airline traffic to be one third higher than in 2019. Airlines have been offering 16% more seats than before the start of the pandemic.

However, for international travel, IATA does not forecast a full recovery until 2025, but international traffic could then move 11% higher than its pre-pandemic level. In January 2024, international airline seats available in the Chinese market were still 33% below 2020 levels. The shortfall was even deeper in South and Southeast Asian markets, and capacity to North America is at less than 20% of its pre-pandemic level. But airlines are restoring international services, and more will be reinstated in the summer 2024 schedule.

Corporate travel in the midst of economic slowdown

China’s economic underperformance will affect corporate travel as travel budgets come under pressure to lower their costs. Planners will need to demonstrate their resourcefulness, if they are to successfully reduce costs whilst ensuring that business travel remains effective and supportive of company goals.

Rather than indiscriminately cutting the number of trips taken by employees, travel planners can be expected to be more rigorous in establishing a trip’s return on investment. One way would be to shift air travel to lower cost airlines or to encourage employees to combine business trips with some leisure time, leveraging the benefits (for both the company and employee) of each trip as managers are looking for benefits beyond simple cost reduction.

They recognise travel not just as an expense, but as an investment in employees, with productivity improvements and extra source of cost savings for the company. Providing a quality travel experience for employees within a constrained budget has become an vital part of a travel manager’s role.

Virtual meetings

Virtual meetings have now become a mainstay with the adoption of local platforms like Tencent Meeting and global offerings such as Microsoft Teams. This has curtailed the necessity for extensive travel and also reduced operational costs and ushered in flexibility in collaborative work, both within and across teams. Such meetings are now widely recognised as a transformative force in shaping internal business communications and training protocols in China.

The widespread move to online meetings heralds a larger cultural transition towards digital adeptness.

Bleisure travel

Bleisure is now gaining traction among Chinese employees, who aspire to a greater balance between work and recreation in their lives. As many travelers face an arduous process obtaining visas, when presented with the opportunity to travel abroad for business, Chinese employees are seizing the chance to combine the trip with some international leisure travel.

Recognising the importance of employee wellbeing, progressive Chinese companies are revising travel policies to accommodate extra days for leisure. They realise the contribution this makes to job satisfaction and employee retention.

The government’s anti-corruption drive

This has affected life sciences companies, in particular. The government’s vigorous anticorruption measures have instigated sweeping changes, permeating throughout corporate travel practices.

Under such circumstances, companies across the life sciences industry (ranging from pharmaceutical to medical device manufacturers) are reviewing their corporate travel policies to conform to stricter oversight.

Life sciences companies are less inclined to use luxury hotels for meetings, and are using more modestly-priced alternatives. With the reduction of travel activity, this also signals a refinement in satisfying a trip’s purpose. Such meetings now emphasise content-rich programmes, delivering clear and tangible benefits to healthcare professionals.

The drive for greater integrity has also indirectly inspired a broader adoption of digital platforms that support virtual interactions. This trend aligns with the underlying shift among Chinese companies towards greater transparency and accountability.

Sustainable travel

The continued expansion of the high-speed rail network, offering fast and convenient connections to city centres, has increasingly made it a compelling alternative to air travel. Rail has become an attractive option for domestic business trips, particularly for companies looking to reduce their costs and carbon footprint, and improve employee productivity.

Chinese corporate travel policies require each trip’s specific needs to be scrutinised to determine whether air or rail is more appropriate. Consideration is given to distance, time constraints and on-trip employee productivity. Given its convenience, rail usually proves the better choice for trips of 800-1,200 km. For longer distances, air tends to prevail.