As the mature economies of the United States and Europe
brace for another year of minimal or negative gross domestic product growth,
Asia remains home to some of the world's most enviable GDP forecasts, according
to an International Monetary Fund 2013 outlook updated in January.
[Please click here to view the digital edition of the 2013 Corporate Travel Index, featuring all per
diem listings, downloadable as a pdf. Click here for the 2013 Corporate Travel Index methodology.]
Noting that "business travel often follows GDP growth,"
Carlson Wagonlit Travel Asia/Pacific president Kelly Kuhn said corporate travel
demand in key Asian markets remains on the upswing, albeit at a slower pace in
some areas than in prior years.
"China is looking around 8 percent or so, which is not
in the double digits that it had been, but it's still a pretty healthy number,"
Kuhn said of the GDP outlook. "India is slightly below that, at 6 percent
to 7 percent. Then our mature markets in Asia are growing in the 3 percent to 5
percent range. It's still pretty good growth overall."
Of course, demand is just one factor in an equation that
produces the costs business travelers incur on the ground. When mixed with
supply trends within various Asian business travel markets, the result is a
wide range of cost fluctuations captured in Business
Travel News' 2013 Corporate Travel Index.
Average hotel and dining expenses across select Asian cities
show a modest 2 percent year-over-year increase. That growth has moderated from
last year's study, when per diems—driven by hotel expenses—grew by more than 5
percent year over year.
"The hotel market in the Asia/Pacific region has
displayed resilience over the past months," according to a January report
from HRG. "However, with the uncertainty in the global economy and the
slowdown in business, the hotel market in Asia/Pacific is slated for a period
of slow growth as organizations become more cost-aware."
Per diem fluctuations in key Asian markets range from a 10 percent
increase in Taipei to a decrease of more than 9 percent in Mumbai, according to
BTN's Corporate Travel Index.
Taipei this year cracked BTN's
list of the 10 most costly Asian cities, rising from its 11th place ranking in last year's Index. Other data sources, including a recent STR Global report on
January and analysis from hotel consultancy HVS, point to strong hotel rate
growth in the Taiwanese capital.
According to HVS, loosening travel restrictions from
Mainland China have meant an influx of Chinese tourists that crowd the city's
already-constrained hotel supply, competing with corporate travelers for
limited space and putting upward pressure on rates. It's not clear how long the
seller's market will persist. HVS noted that "supply growth is imminent as
tourist arrivals increase at the fast pace" it has been observing. "We
are finally seeing a robust energy in the Taiwan hotel market."
On the other end of the spectrum are major business travel
destinations in India. While CWT and others see both travel demand and economic
growth continuing, supply is growing more quickly. Of the four Asian markets in
this year's Index that showed year-over-year per-diem declines, three are in
India, where abundant supply in the hotel market coupled with slowing GDP
growth have lessened pressure on hotel rates.
"Bangalore, Mumbai and New Delhi have all been impacted
by the slowdown in the Indian economy," according to HRG. "Investment
in hotel capacity during the boom years has led to an oversupply of hotels.
Many corporates are also moving out of hotels to long-stay serviced apartments
in these cities."
CWT's Kuhn expected the hotel environment this year in key
Indian cities to again favor buyers. "More than 50,000 rooms were opened
this past year in India," she said. "Prices may in fact come down a
little bit because there's so much supply there versus a place like Singapore
or Hong Kong where there's nowhere to build."
Indeed, it is the relatively mature Asian markets—the
aforementioned Singapore and Hong Kong, as well as Japanese cities—that are the
most expensive in the region, in terms of on-the-ground business travel costs.
Tokyo, for example, continues to be the most costly Asian market for a business
traveler to spend a day, according to BTN.
While news reports ponder recessionary signals in the
country, IMF in January forecast Japan's economy this year to grow by a modest 1
percent.
The country and its capital, Tokyo, continue to recover from
the 2011 earthquake and tsunami. "The city saw a 30 percent fall in demand
in the three quarters following the tsunami," according to HRG analysis. "Reconstruction
and recovery efforts have led to even more corporate activity in the city,
which will continue to be a springboard for revitalization in 2013. A gradual
upturn in confidence across the banking sector has driven an increase in
business travel to the city."
Meanwhile, the significance of China continues to grow for
multinational corporate travel buyers, according to CWT's Kuhn, who noted that
the size of the business travel market there is on track to surpass the United
States in the coming years.
The largest Chinese markets, including Beijing and Shanghai,
saw low-single-digit rate growth for per diems in this year's Corporate Travel
Index. The cost of doing business there is rising but supply and demand are
more balanced than in the past.
BTN's Index shows
per-diem costs in Beijing up nearly 5 percent.
"Beijing is now a relatively well-served and mature
business travel destination," according to HRG. "Hotel rates in the
city continue to rise at an above average rate, but not at the levels seen in previous
years."
On-the-ground business travel costs in Shanghai declined in
last year's Corporate Travel Index from the prior year, but this year rebounded
by 3 percent, according to the Index. The hotel boom there is quieting.
"Shanghai has seen a marked decline in average room
rates from the craziness of 2010 and the World Expo when many new hotels were
built," according to HRG, which noted that "it could take several years
before demand once again matches supply."
This report
originally appeared in the March 18, 2013, issue of Business Travel News.