The scale and dynamism of Asia/Pacific economies make the region a vital component of many corporate travel programs. As China opens more connections with the world and India has become the fastest-growing G20 economy, 2019 looks to be an interesting year.
According to American Express Global Business Travel's Hotel Monitor 2019, APAC will represent nearly two-thirds of global economic growth in 2019. Even as India and China are set to grow at slower paces, travel in these countries is strong. Average room rates in India have grown 8 percent since 2008, and occupancy has reached 65 percent, the highest in a decade. China's powerful outbound travel segment is key to growth in other regions: Canada is openly courting Chinese travelers to Vancouver and Toronto, while China's downtick in economic growth has impacted hotel rate projections in Latin America.
APAC's travel segment has been bullish in meeting the demand. Partnerships between legacy and low-cost carriers are more common, as are joint ventures like Delta and Korean Airlines and entry by Asian airlines into more competitive countries and hubs. China has outlined a plan for its aircraft production to account for 20 percent of the global marketplace by 2025, and the country is building out its hotel infrastructure.
While its economy stands solid, APAC's role in the geopolitical arena is in flux. Its most powerful players have pushed for greater roles on the world stage and are exhibiting their business superpower. China's most transformative initiative is an open skies agreement with the U.S. that could be signed this year. As Chinese airports plan to offer more international destinations, an open skies deal with the U.S. could further shift the center of business to the East.
This possible agreement comes as trade tensions escalate between the U.S. and China, causing worldwide economic uncertainty and impacting growth expectations for the travel industry. Amex GBT's Air Monitor 2019 found that, even with its economic gains, the U.S. may experience softer growth in air travel as a result of these trade tensions. Fares between North America and APAC are expected to increase only as much as 3.9 percent, compared with higher increases for U.S. routes to Africa, Europe and Central America.
Opportunities & Challenges
APAC's efforts to shape the global economy present opportunities for travel managers to add value to their programs. They can identify savings opportunities by following APAC economic and infrastructural policies like China's proposed open skies and infrastructure investments that are broadening travel supply. Travel managers also can guide customers to a wider variety of travel experiences. For instance, regional hotel bookings are skewing toward the luxury market, and midscale properties in India are filling the need for premium-style accommodations. Travel managers can ensure their travelers not only are cost-effective but also have positive experiences that encourage more business travel and stimulate company growth.
As companies increase activity in APAC, travel managers must offer comprehensive support. There are cultural nuances, legal concerns and risk. For instance, the industry has grappled with China as a corporate events destination due to fraud, which has led travel managers to implement compliance solutions. What matters most for travel programs is ensuring compliance and duty of care, which requires more effort when dealing with a region as dynamic as APAC.