Business travel booming in Asia-Pacific

Business travel booming in Asia-Pacific

By Prapti Widinugraheni

SINGAPORE (JP): Business travel, according to a recent survey by the American Express' Travel Management Services, is becoming an increasingly important sub-sector of the world's travel and tourism market.

With the world's economy booming, particularly in certain regions such as the Asia-Pacific, and with mankind's constant need for personal contacts, observers are convinced that business travel is bound to continue flourishing.

Kim Lewis, from the American Express' travel management consulting services, said during a media conference here on "Asia Business Travel" earlier this month that worldwide business travel presently represents about 12 percent, or US$400 billion, of travel and tourism expenditures.

She said this amount represents over 75 million business trips all over the world and includes everything from airline tickets, hotel rooms, business lunches to rental cars.

"It is an expense that is incurred as employees do their jobs. It is a cost of doing business," she said.

For the economically-booming Asia-Pacific, the trend is even clearer. According to Lewis, the region currently accounts for between 20 percent and 25 percent of the world's total business travel spending of $400 billion and the figure will keep growing.

Tracey Bowra, director of travel management services for American Express-Australia, predicted that the Asian airline and hotel industries would -- like the economies of their countries -- also be running in the fast lane.

Until the year 2010, she said, Vietnam is expected to experience a 17.3 percent annual increase in the number of its international air passengers. The figure for China is estimated at 12.6 percent, Indonesia at nine percent, Taiwan at 8.8 percent and Thailand at 8.6 percent.

In comparison, North American, Latin American and European countries are expected to grow only by four percent to six percent.

Strong growth in the region is also expected in the hotel sector, although only 12 percent of the world's 12 million hotel rooms are located in East Asia and the Pacific, the average occupancy rate of hotels in the Asia-Pacific is 70 percent -- as compared to 62 percent in Europe and 69 percent in the United States.

Another important part of business travel is the entertainment side. While entertainment spending in New Zealand accounts for only 14 percent of a company's travel budget, they can reach 22 percent in Malaysia and a high of 48 percent in Japan.

Management

What do all these figures account for?

For individual companies, Lewis said, business travel is the third controllable expense behind data processing and salaries.

"In order to manage and control business travel, companies need to know and use the tools of travel policy, travel arrangements, payment methods and expense processing," she said.

Costs can be cut back or managed better if a company establishes sound travel policies for its employees.

American Express' survey discovered that not all companies develop travel policies. In Hong Kong, for example, only 31 percent of companies have a written travel policy. The figure for New Zealand was 38 percent and for Australia 47 percent.

Another opportunity to control expenses, Lewis said, is at the point when travel arrangements are made, or when the actual prices for airline tickets, hotel rooms and car rentals, for example, are determined.

"One of the key steps is to designate a single travel agency that employees must use to make travel arrangements," Lewis said.

This allows a company to receive complete information about its travel patterns and expenditures, which can be used to evaluate policy compliance, analyze traveler needs and negotiate corporate rates.

The third opportunity to control business travel expenses, Lewis said, is at the point of payment. "When it comes to paying for business expenses, companies should try to balance the needs of their travelers with the objectives of the company," she said.

A company can take control of payment methods by reducing cash advances, eliminating central billing and limited-use cards as well as issuing multi-purpose corporate cards.

Cash advances, Lewis said, represent a negative float because cash is dispersed before expenses are incurred.

"Central billing", which is an arrangement where a company receives a single invoice from a vendor -- such as an airline or travel agency -- for all corporate activities should also be eliminated to cut back a company's administrative burden.

Similarly, limited-use cards, which also add to the company's paperwork, should also be eliminated and replaced by multi- purpose corporate cards, which allow employees to charge all types of travel purchases.

The final opportunity to control business travel is by improving the company's efficiency in reporting, processing and recording travel expenses.

"Many companies are turning their attention to the costs associated with expense processing... Many firms are automating some of these processes," Lewis said.

She pointed out that effective business travel can, in the end, have a significant impact on a company's overall performance, "and there's a lot more to it than just getting a cheap airline ticket to a meeting".