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    Filter in or out as many as 200 cities, as well as hotel and car rental class and meals of the day and watch as the per-diem calculator automatically adjusts per diems to your program. Drill down into cost breakdowns and export the results.

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Global 2013 Corporate Travel Index

Per Diems Grow Moderately in Asia, Decline in India

By Jay Boehmer / March 18, 2013 / Contact Reporter
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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.

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