Travel Mgmt. Firms Expand Into Ripe Chinese Market

Rosenbluth-Comfort Business Travel Service last month announced further expansion into China through a new client, Rockwell Automation China. Like some of its competitors, Rosenbluth sees substantial opportunity in what it, and American Express, called the $4.2 billion Chinese business travel market.

Joining a client base for Rosenbluth in China that includes relatively new additions ChevronTexaco, Bank of America and R.R. Donnelly, Rockwell Automation is taking advantage of the agency's year-old joint venture with China Comfort, one of the nation's largest travel management firms. Rosenbluth's full-service offices in Beijing and Shanghai, five onsite locations and 54 joint venture partner locations set the stage for "aggressive plans for continued growth," the company said.

"China is growing like gangbusters," said chairman and CEO Hal Rosenbluth in a recent interview with BTN. "They opened the territory and there really was never any travel management there, so we went in and very quickly picked up a huge part of the marketplace. We're in 26 provinces, so we cover the country. We picked up General Motors and a whole bunch of other people who won't let us use their names."

An American Express spokesperson also cited client confidentiality for difficulty in offering account names. However, she said, "We have signed some significant multinational clients for servicing in China through AE CITS."

China International Travel Service—the country's largest agency—and Amex in May opened their first office, following the announcement in January of a joint venture between the two. The firms began operations in Beijing with 60 employees, whose goals include helping China "develop a corporate travel management culture."

Since then, Amex and its partner also secured licensing approvals to open a Business Travel Center in Shanghai, and by next quarter, Amex will open another in Guangzhou. The pair expects to have 30 franchisees throughout the country by early 2003.

"We are proud to be the first joint venture in China to be fully licensed," said Charles Petruccelli, president of global travel services at American Express, which has had a presence in China for more than 85 years. Amex estimated that annual business travel expenses in China will reach $4.2 billion, or 17 percent of the total Asian market.

WorldTravel BTI, TQ3 Travel Solutions and Carlson Wagonlit Travel also said they or their affiliates have a presence in the ripe Chinese market.

Asked about his competition, Rosenbluth said: "We don't really see much, because people were taking a different perspective on what they want to do. The way business travel is transacted in China is very antiquated, but as in a lot of emerging markets, you can leapfrog a lot of that. It's like how third-world countries have better mobile technologies because they didn't first lay the lines. That's what China's like."

"Business travel is an increasingly critical component of China's overall economy," added Pieter Rieder, vice president of strategic markets for Rosenbluth. "We have been able to tap into both the rapidly growing segment of global companies with Chinese operations, as well as the internal Chinese market, which also is experiencing strong growth as the country continues its economic liberalization."

Rosenbluth said "a lot of the Asia/Pacific countries we're in are growing," and noted his company is using the Galileo global distribution system in China.

Cendant Corp.'s Galileo International subsidiary claims to be the GDS market leader in Asia/Pacific, with corporate agency subscribers in the region that include Carlson Wagonlit, Hogg Robinson and TQ3 Travel Solutions. The company said it also is Amex's leading GDS in the region.

Galileo, which owns its Chinese affiliate, expects to generate 13 percent of its segments and revenues in 2003 from the Asia/Pacific region. The company also recently launched a corporate booking tool in Hong Kong, Malaysia and Singapore.

In June, Madrid-based Amadeus announced an agreement that provides the 7,000 agency users of TravelSky Technology Ltd., China's only computer reservation system, access to the Amadeus global system.

"We will move quickly to the next phase, accelerating our development of a host of new-generation electronic distribution and travel e-commerce solutions appropriate for the China market," said José Antonio Tazón, president and CEO of Amadeus.

"It is the first time that Chinese travel agencies will officially be able to access a global distribution system providing hotels, car rentals, as well as other related products worldwide," said TravelSky president Zhu Yong. TravelSky, in which Amadeus holds a minority stake, completed its initial public offering in February 2001.

According to Al Lenza, vice president of distribution planning at Northwest Airlines, the top U.S. carrier to China, "The market is growing but still small. TravelSky dominates and we participate in it."