Business travel slowly is recovering in China under tight government control and mostly at a domestic level. The country's strategy, which will attempt to restart what previously was the biggest business travel market in the world, could offer a glimpse of how business travel will recover in the future, despite clear differences in how the travel market—particularly airlines—operates.
Importing infection from abroad remains a major concern. To that end, the Chinese government heavily is restricting travel in and out of China. International flights directly into China's capital city of Beijing currently are not allowed, according to International SOS Americas regional security director Matt Bradley. The country's Civil Aviation Administration currently allows each airline under its jurisdiction to maintain a single route to any specific country with no more than one flight per week. The airlines this applies to are Air China, Capital Airlines, China Eastern, China Southern, GX Airlines, Hainan Airlines, Juneyao Airlines, Shanghai Airlines, Shandong Airlines, Sichuan Airlines and XiamenAir.
"Every day there is a limit to 4,000 passengers coming into China. This is a 97 percent drop compared to pre-Covid levels," said BCD Travel Greater China managing director Jonathan Kao. In addition, visa restrictions have been put in place by China or other countries, making foreign entry very difficult, he said.
When a city abroad experiences a flare-up in cases, the government temporarily suspends the route there, said WorldAware founder Bruce McIndoe. At major airports, a traveler may go through three temperature checking stations and a visual inspection before he or she boards, McIndoe said. Social distancing and masks also are required.
Travelers arriving from abroad are mandated to be quarantined for 14 days, according to Kao. "They'll take you to a hotel or a facility where there is a medical staff, and everyone has their own room. You'll stay there for 14 days, and they'll do a nucleic acid test on you to limit imported cases from overseas," Kao said.
Some companies based in China still are focused on repatriating travelers stranded in other countries. "The challenge right now is to get our people back home," said a travel manager for a Beijing-based technology company who spoke to BTN on condition of anonymity. "We still have people stuck in India."
Airlines are charging higher prices for international flights, the travel manager added. "They are really hiking up the price right now. [To] bring people back you have to pay 10 times the regular price."
Bradley said some companies interested in resuming international travel to China have changed their mind once they understand the requirements. "You have to ask yourself," he said. "Is it worth it? What's the purpose of your visit if it requires 14 days when you arrive and 14 days when you return? What's so important that you needed to go there for that?'"
BCD corporate clients seek up-to-date flight information, advice on ensuring duty of care and assistance with gathering refunds from airlines to replenish their own company cash flows, Kao said. His team has cleared 60,000 tickets on all carriers for refunds in a month in case the airlines change their refund rules or collapse financially, noting carriers elsewhere like Germanwings and Flybe haven't survived the pandemic.
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The Beijing-based travel manager expects large air carriers will weather this storm. "I don't have too much concerns over the liquidity of these airlines because they have government help. For the past six or seven years, the mindset of CAAC has been to cultivate large airlines." He expects airfares to be high for the rest of the year.
Domestic Travel Gets Back on Its Feet
While international travel is basically frozen, domestic travel in the past six weeks has seen an uptick, according to Kao. "We're processing a lot more domestic transactions," he said. "In Shanghai and Beijing, a lot of the sentiments from our corporate clients are that things are getting back to normal."
"Domestic travel has been picking up already. The country is opening up. Cities are opening up. Beijing has opened up for domestic travelers," said the Beijing-based travel manager. "It's mostly business, because people are very cautious in terms of traveling [and will] reduce that as much as possible."
People are traveling around China by car, train and air, according to McIndoe. To contain the virus, people are tracked via a mobile health tracking system, which uses QR codes based on data from cell phone, immigration, hospital and police records to indicate their health status, according to Kao. As travelers enter public places like offices in major cities, guards may request to check the traveler's QR code to allow or deny entry based on that information.
"When you go outside of your city, you have to show a pass from the community you live in, [which] everybody has," the Beijing-based travel manager said. "You get your temperature taken and have the QR code out on your phone. I know for a fact people who come to Beijing for business travel have to bring that code with them."
Compared with earlier this year, hotel occupancy levels are higher. At the beginning of February, absolute hotel occupancy hit single-digit percentages and has been hovering around 30 percent since late March, STR North Asia regional manager Christine Liu said in a webinar. Among the country's key hotel markets, Hangzhou has the highest absolute occupancy level, near 50 percent as of April 11. However, STR doesn't expect occupancy, average daily rate and revenue per available room to return to pre-2019 levels until 2022.
According to the Chinese travel manager who spoke to BTN, "The hotels are opening up, especially to take business travelers, but hotels have to check your health status before they take you."
As part of its duty of care, the Beijing-based company now requires all employees to report health status to the company on a daily basis. If they don't, they will be fined with a deduction from their pay.
Only Essential Corporate Travel
"Some clients are heading back to a normal position where domestic travel is allowed, even to Wuhan," said Kao, referring to the original infection epicenter in China's Hubei province.
Corporates are opting for very small-scale meetings with clients and going to their offices for internal meetings, according to Kao. Large conferences and events at China's hotels are largely nonexistent. Key Beijing destinations like its central business district, Haidian and the Financial Street, all of which are usually "very busy" for business travel, conferences and events, are "still very quiet," according to Liu.
"People don't see any large event or conference happening. They don't want to plan for a big event when Covid-19 is still prevalent," Kao said. "Most companies are taking a cautionary stance."
Kao said sales reps, account managers and senior executives have been the primary business travelers so far. "We're seeing people going on-site to get new business [and] signed contracts, and who are chasing for their money," he said. "There are businesses that are going under right now because of cash-flow problems, so people are also quite active in chasing payments. These are the conversations [happening] in person."
A U.S.-based travel manager said their company is allowing sales representatives from their Beijing office to meet with clients under strict conditions. Department executives must approve the meeting, and the traveler only can drive or take a taxi or rideshare service to the location and must follow their client's rules around meeting in-person. "Our sales guys get paid with commission," said the travel manager. "They are more afraid of losing income than getting sick."
Does China Offer Hope for Other Markets?
The Beijing-based travel manager thinks their travel will be end up being around 60 to 70 percent of what it was last year. Before the pandemic, the company's global travel and expense spend was "growing almost double year by year." As of now, the company will continue to rely on their virtual meetings tool as an alternative to travel.
McIndoe expects global business travel to be hamstrung past 2020. "Until we get a vaccine, people are going to be very cautious," McIndoe said. "A person with a lower risk profile is still considering if [the trip] is worth it. Is it still important? McIndoe said. "I think it's going to stay that way … into 2021. Companies are going to be reticent about spending money on travel unless it's really important."
Bradley is optimistic about international business travel. He expects airlines to figure out ways to accommodate travelers in order to survive financially. There will continue to be fear of coronavirus infection, but there are a lot of business travelers who will endure the risk of catching it, Bradley said.
"Some businesses will think that's an advantage if they can get someone on the ground, whereas others don't. That will speed up business travel," Bradley said. "It's going to crank up as soon as people feel like they can go with reasonable precautions, which is going to be three to six months, most likely."
—Elizabeth West contributed to this report.