Amex: Cost-Control Measures Ebb In China

Several cost-control measures that had been on the upswing for the past several years in China have declined, according to American Express Business Travel's 2008 China Business Travel Survey, released today.

Meanwhile, the travel management company announced that it today is introducing its pre-trip reporting, Ticket Trax unused ticket tracking and ECO carbon emissions measurement tools and a new version of the Trackpoint traveler tracking system to the Chinese market.

Last year, 79 percent of respondents reported the use of post-trip spending analysis tools, whereas this year, 55 percent did. This year, about half of respondents are using pre-trip analysis tools, while two-thirds reported doing so in 2007. There also was a reduction in contractual adherence control from about one-quarter of respondents in 2007 to one-fifth this year. The survey also showed reductions in the use of specific methods for controlling expenditures, such as annual reporting.

Despite rising costs and declines in passenger traffic and economic growth, 58 percent of 265 responding "executives with relevant responsibilites" reported that their travel and entertainment budgets did not increase from July 2007 through July 2008. While 37 percent of Chinese companies reported an increase in spending, 51 percent of foreign-owned organizations said their budgets rose during the 12-month period. Respondents said, on average, Chinese domestic airfares increased 5 percent, hotel expenditures rose 4.8 percent and international airfares increased 3.3 percent.

In this year's fifth annual survey, only 70 percent of the Chinese and foreign-owned company respondents said they have a formal T&E policy, a significant decrease from the 81 percent that last year said had a formal policy. Respondents worked for companies that have at least 100 employees, had offices in the three main Chinese economic regions of Beijing, Guangzhou and Shanghai and were from across six industry sectors. Ninety-eight respondents had at least some foreign ownership.

Overall, the companies reported an increase of their use of travel managers with responsibility for China business travel. Eighty-seven percent of the 69 respondents that worked for companies with more than 500 employees had a dedicated travel manager. Meanwhile, there was a 6 percentage-point rise in the use of travel agency services, but an 8 percentage-point decrease to 58 percent that held travel management company contracts. Twenty-two percent now have TMC services consolidated with one agency.

Amex attributed an increase in the use of business and first class fares to the "slight increase in budget spend overseas and Hong Kong destinations." Use of negotiated airfares declined from 70 percent of respondents last year to 64 percent this year.

Travel manager usage is on the rise and there is a proliferation of online booking, but policy compliance has remained relatively stable with just over half of responding companies achieving compliance rates of more than 50 percent. Last year, 47 percent reported surpassing that benchmark. Compliance rates among foreign-owned companies averaged 62 percent, up from 45 percent in 2007. Chinese-owned company average compliance was down 6 percentage points to 44 percent.