FCM Travel Solutions, and KPMG have released a white paper titled, Business Travel in India – Merging Trends & Opportunities. With the evolution of business travel, and travel emerging as the second-largest area of controllable business spend for corporates, the paper delivers a comprehensive look at where and how business travellers in India are spending. The report also details business travel spending in top 15 countries across multiple sectors over a period of five years. India is poised to lead this growth and accordingly by 2030, business travel spending in India will have trebled from the present levels.
Listed below are key insights from the paper including research findings.
India: The next big frontier for business travel
India is now a US$ 30 billion business travel market and is expected to more than triple to US$ 93 billion by 2030. In 2015, India saw a 15 per cent increase in business travel spending, which will grow by a compound annual growth rate (CAGR) of 12 per cent through 2020 to six per cent by 2030. This increase is expected to be greater than the increases in business travel growth in the next three largest countries combined, including South Korea, Italy and Brazil. By 2030, India will likely be amongst the top five in business travel spending.
The mix of sectors contributing to this phenomenal growth is diverse, with IT and pharmaceuticals topping the list as two of the fastest-growing sectors further complemented by natural resources, auto and construction sectors.
Technology: The major change driver and disruptor
Mobile technology is having a profound impact on business travel in India as travellers now expect information to be at their fingertips. Business travellers in India have identified mobile and social media as a way to connect with colleagues, clients and other contacts. The data in the paper indicates 300 per cent growth in usage from Rs 34 billion worth of transactions in 2009 to Rs 109 billion worth of transactions in 2014. With nearly 25 per cent of mobile phone users in India owning a smartphone/ tablet, the use of these devices to manage travel needs including destination research and booking management is expected to increase.
Greater autonomy to business travellers
Corporates now wish to offer their employees more flexibility in managing their travel needs. As a result, employees can adopt mobile tools for research and booking and will no longer have to go to a fixed internet location to manage their travel. On their part corporates will use data at their end to understand traveller behaviour and also encourage the use of user generated content to improve the overall experience.
Three distinct business traveller profiles
The paper also presents three distinct business traveller profiles in the Indian context – hi-fliers, the compliant, budget travellers. These three personas transform data and numbers into real, relatable, and understandable characters, with varied business travel styles, needs, and expectations. Jaideep Ghosh, partner and head – transport, leisure and sports, KPMG India, said, “Despite some recent economic speedbumps, the business travel market remains incredibly robust and dynamic with a number of countries such as India, China, Germany and Canada, growing at a remarkable rate. The report predicts that India will emerge as a leader in business travel spending over the next decade or so. In fact when one looks at India, one sees one of the highest growth rates in business travel in the entire world. If India continues on that trend, in another 15-20 years, it will surpass the US as well and be second only to China. India is statistically where China was close to 15 years ago. It is clearly a story that no one is talking about yet, but it bears watching.”
Responding on the significance of the Regional Connectivity Scheme (RCS), Rakshit Desai, managing director, Flight Centre Travel Group – India, added, “We are seeing demand in Tier II and Tier III cities stronger than the major metros. For the last 15-20 years, all of the demand was concentrated in the major metros, but now we are seeing quite a lot of activities in places like Madurai, Chennai, Vadodara, Jaipur, Indore and Raipur among others; so the scenario is changing substantially. The role RCS is absolutely critical for socio-economic development of the people in Tier II and Tier III cities. We need a much better network of transport, as regions can be important markets in themselves. Tier II and Tier III cities will definitely play a much bigger role than they play today. Manufacturing and export oriented activities ar now largely in these cities, but the services market – which contributes a big chunk of travel – still lies in major metros.”
According to the paper, in 2015 India was ranked the 10th largest business travel market in the world. Moreover it is projected to be the most robust business travel market in Asia Pacific over the next five years and is estimated to grow at 12 per cent CAGR over that
period.
Overall the white paper revealed that global business travel spending will hit US$ 1.3 trillion in 2017, with a five per cent growth over 2016. Growth is expected to remain strong through 2020, with business travel projected to grow at five per cent from 2016 to 2020.
The Asia Pacific region continues to be the largest business travel region in the world, comprising 37 per cent of global business travel. Business travel spending in Asia Pacific totalled US$ 458 billion in 2015, and is expected to grow at 7.8 per cent CAGR over the next five years; 6.5 per cent of this total spend came from India, while China, Japan and South Korea accounted for nearly 90 per cent of the remaining spends.
The methodology used by KPMG includes analysing business travel booking and expense reporting data from its database of more than 100 corporates and small businesses and 20 users, representing nearly five per cent of business travel spend in India.