China's Opening Markets Spur Growth

N ew business-oriented hotels, expanding exhibition space and a recent international corporate travel agency partnership support statistics that indicate business travel to China is on the rise.

Some trade issues still need to be sorted out between the United States and the People's Republic of China, but business travel to the world's most populated country boomed in 2002. While severe acute respiratory syndrome brought traffic to a virtual halt this year, travel is recovering, and it is estimated that 2002 levels will return in mid-2004, given there are no unforeseen events.

"Compared with the world average level of 4 percent, China's business travel market is expected to grow at 10 percent in the next 10 years," said Tom Nutley, chairman of Reed Travel Exhibitions. By 2020, China is expected to attract more than 137 million business travelers, accounting for 8.6 percent of the world's international travel market. It is expected to overtake the United States and France as the world's top destination, Nutley said.

Statistics from PRC's State Tourism Bureau indicate business travelers to China in 2002 contributed US$4.2 billion to China's economy, and the amount is likely to increase by 20 percent each year. Of the more than 2.7 million international travelers to Shanghai last year, home to a large number of Fortune 500 companies, 60 percent came for business purposes.

Shanghai-based Jinjiang International Holding Co. recently announced plans for a joint venture with Business Travel International, an initiative that will integrate China's flagship tourism service company with one of the world's largest corporate travel management groups in an effort to tap into the country's surging business travel market.

The opening in October of Marriott International's newest property in China, the 342-room JW Marriott Shanghai—which also is the newest hotel in Mainland China—as well as the Tomorrow Square 255-unit Marriott Executive Apartments Shanghai further reiterates the importance of the vibrant metropolis of this reforming communist nation. To date, Shanghai is the city outside of the United States with the largest number of Marriott brands represented, with more chains increasing their presence here.

"A robust economy, a strong influx of foreign direct investment and the increasing establishment of multinationals in China have ensured the rapid growth of China's business travel market for years to come," said BTI CEO David Radcliffe.

The Boeing Co. at the opening of the 2003 China Aviation Exposition in September, predicted China's demand for aircraft would continue to expand for the next 20 years, a sign of a progressive economy. "According to our current 20-year forecast, Chinese airlines will order 2,400 new aircraft worth $197 billion over the next two decades," said Boeing China president David Wang.

"I think China's objective of quadrupling its economy by 2020, with its GDP four times as much as it is today, is very realistic," he said. "Typically, air traffic grows quite a bit faster than GDP. For example, this year we expect GDP growth to be more than 8 percent. Air traffic in August this year was 21 percent higher than in August of last year."

As China opens up more sectors in line with its World Trade Organization commitments, investment opportunities already are being seen in a wide range of industries, including tourism, retail, insurance, pharmaceuticals and publishing.

China's entry into WTO and the 2008 Olympic Games in Beijing have raised the republic's profile as a country for large events. The biggest beneficiary, Beijing, is on the fast track to becoming a city with exhibition facilities expected to bring varied international business opportunities to the city.

With the meetings, incentives, conventions and exhibitions industries a vital segment of business and a new economic growth sector in China, Beijing is tapping its potential to nab a share of the market. Getting ready to face competition, the Hong Kong Convention and Exhibition Center has signed an agreement with Beijing's Exhibition Services to develop its convention and exhibition business, planning, design, management and personnel exchange and training.

By the start of the Olympic Games, Beijing's exhibition facilities will be extended to include a total space of 4.3 million square feet, according to Yao Wang, director of the China Council for Promotion of International Trade in Beijing.

Beijing presently has 12 convention and exhibition buildings with 1.9 million square feet. Those properties have hosted 1,250 exhibitions in the past five years, including more than 800 international exhibitions, half of the nation's total. The growth in the sector is apparent, with the Beijing Association of International Exhibition Industry employing 17,600 people and yielding a per capita GDP of $31,000 a year, compared with the city's average per capita GDP of $2,700 last year.

New hotels also are springing up in Beijing following the establishment of the Central Business District near Beijing Airport. CBD properties due to open in the next few years include an InterContinental (part of a new 7.5 million-sq.-ft. Fortune Plaza complex), Park Hyatt, Shangri-La and Ritz-Carlton, which is expected to operate a large complex next to the Kempinski Hotel Beijing Lufthansa Center. A 530-room Peninsula Palace Hotel recently unveiled 158 renovated rooms and suites. According to an industry analyst, the addition of the top-end rooms will influence rates in the city with existing luxury brands, including the St. Regis, the Grand Hyatt and Shangri-La's China World Hotel.

Beijing also is experiencing a rapid extension of its full-service portfolio. The Accor group is developing Novotel and Mercure brands in collaboration with the Beijing Tourism Group, while Best Western Hotels is in the process of opening several hotels in Beijing and pursuing aggressive development throughout China.

Recently, a trade delegation to Beijing from Nevada made a bid to revive direct passenger service to Las Vegas and begin air cargo routes to Reno. Lieutenant Governor Lorraine Hunt, who chairs both the Nevada Commission on Tourism and the Nevada Commission on Economic Development, said: "We were able to point out the excellent opportunities for both tourism and trade between our state and the People's Republic of China."