Why Business Travel in

Asia Matters …

…more than ever

Oxford Economics

www.oxfordeconomics.com

www.tourismeconomics.com

The situation

Global business travel is under scrutiny.

■ Companies remain cautious about travel budgets

■ Virtual meeting technology offers alternatives

■ Environmental concerns

This raises a fundamental question: What role (if any) does

business travel play in driving corporate performance and

in the development of the global economy?

A second question for today: is this more or less true in

Asia than in the rest of the world?

An approach to answering this question

Two separate research channels were used to inform the

study.

1. A survey of global business travellers and executives in the

United States, United Kingdom, Germany, Brazil, and

China. Goal: identify any links between business travel and

company performance.

2. An econometric analysis covering 190 countries. Goal:

Identify any causality between business travel and

economic performance.

Key areas of impact

The surveys and econometric analysis identified five areas

that business travel impacts performance

1. Generating sales

2. Keeping customers

3. Developing partnerships

4. Spurring innovation

5. Driving exports

Business travel as a sales generator

49%

30%

57%

33%

50%

27%

45%

30%

49%

32%

% of prospects turning into

sales WITH in-person

meeting

% of prospects turning into

sales WITHOUT in-person

meeting

Brazil China Germany UK USA

Average = 50%

Average = 31%

Odds of converting the sale: 19 points higher with meeting (24 points higher in China)

Sales rely on travel

Share of Sales Dependent on Business Travel

32%

38%

24%

28%

21%

Brazil

China

Germany

UK

USA

On average,

executives report

that 29% of their

company’s new

sales depend on

business travel

China reports the

largest proportion of

sales which are

dependent on

business travel at

38%

Cut travel, lose customers

Share of Customers That Would Defect

Without an In-Person Meeting

36%

41%

37%

35%

39%

Brazil

China

Germany

UK

USA

On average, business

travellers estimate that

38% of their customers

would switch to a

competitor without in-

person meetings.

These responses were

remarkably stable across

the different countries

surveyed but personal

meetings seem most

important in China

Business travel: a driver of innovation

74%

70%

70%

70%

63%

61%

55%

47%

74%

Increased profits

Increased sales

Developing partnerships with suppliers

General innovation

Added productivity / efficiency

Investing in local markets

Increased international sales

Investing in foreign markets

Ability to hire additional employees

Business Travel is “very important” or “extremely important” to…

Over two thirds of executive travellers (70%) believe that business

travel is “extremely” or “very” important to innovation and to “added

productivity/efficiency.”

Business travel: a driver of international trade

Why international trade matters

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

3% 5% 7% 9% 11% 13% 15%

Trade

Pe

r C

ap

ita

GD

PTrade and Per Capita GDPCAGR 1980-2010

Source: Oxford Economics

China

Singapore

MexicoCanada

Chile

UK

Korea

Taiwan

India

Thailand

Travel and trade move together

0.20%

0.25%

0.30%

1995 1997 1999 2001 2003 2005 2007 2009

15%

20%

25%

30%

Business travel intensity (lhs)

Trade intensity (rhs)

Business Travel and World Trade Intensity

Intensity is calculated as

relative to GDP

Travel and Trade: key results

Approximately one third of the growth in international trade

over the past decade can be attributed to business travel.

One additional dollar invested in international business

travel would, on average, generate 17 dollars in trade.

A 10% increase in international business travel would

increase world trade on average by 3%, which is consistent

with the analysis of corporate return on investment

presented later in this report.

Business travel and exports: Singapore

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

1990 1994 1998 2002 2006 2010

$-

$1

$2

$3

$4

$5

$6

$7

$8

$9

Total Exports (left)

Total Busines Travel(inbound + outbound)

Singapore Business Travel and ExportsBillion $US

Correlation = .96

Business travel and exports: India

$-

$50

$100

$150

$200

$250

$300

$350

$400

1990 1994 1998 2002 2006 2010

$-

$2

$4

$6

$8

$10

$12

$14

$16

Total Exports (left)

Total Busines Travel(inbound + outbound)

India Business Travel and ExportsBillion $US

Correlation = .97

Business travel and exports: China

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

1990 1994 1998 2002 2006 2010

$-

$5

$10

$15

$20

$25

$30

Total Exports (left)

Total Busines Travel(inbound + outbound)

China Business Travel and ExportsBillion $US

Correlation = .97

Business travel and exports: Malaysia

$-

$50

$100

$150

$200

$250

1990 1994 1998 2002 2006 2010

$-

$5

$10

$15

$20

$25

Total Exports (left)

Total Busines Travel(inbound + outbound)

Malaysia Business Travel and ExportsBillion $US

Correlation = .96

The bottom line ROI of business travel

Business travel: total ROI

Business travel improves global corporate productivity,

yielding an overall return on investment of 10:1. In other

words, one unit of new business travel spending produces

incremental industry sales of ten units.

Growth in business travel from 2000 to 2007 facilitated the

creation of over 40 million jobs through related increases in

trade and productivity. This represented almost 20% of the

growth in global employment over the same period.

Business travel ROI by type

0

2

4

6

8

10

12

14

16

18

20

Total International Domestic

Return on Investment of Business Travel

Source : Oxford Economics

Business travel ROI by region: Asia

0

2

4

6

8

10

12

14

16

18

20

Asia

Pacific

N.E. Asia S.E. Asia S. Asia Oceania World

Range

Average

ROI of business travel

Source : Oxford Economics

Business travel ROI by select countries

0

5

10

15

20

25

China Hong

Kong

India Indonesia Malaysia Singapore

Range

Average

ROI of business travel

Source : Oxford Economics

A business travel economic impact scenario

If business travel were cut by 25% for two consecutive

years, global GDP would be 5% lower than would

otherwise be the case after a five-year period.

This would mean 30 million fewer jobs than forecast

under baseline assumptions for the same period – an

average loss of 1% of global employment.

Scenario: 25% cut for two years

GDP losses

-6%

-5%

-4%

-3%

-2%

-1%

0%

Americas Europe Asia

Pacific

Middle

East

Africa World

GDP loss if 25% drop in business travel

Scenario of 25%

drop in business

travel spending for

two years - average

five-year impact

% difference from baseline

Conclusions

Conclusions

Business travel and economic performance are interlinked

Sales, customer retention, partnerships, and innovation all

benefit from investments in business travel

Business travel is particularly effective at driving

international trade, which yields broad economic benefits

Among world regions, Asian companies and economies

generate the highest ROI per dollar invested in business

travel

And Asia is most susceptible to reductions in business

travel

Business Travel in

Asia Matters …

…more than ever

Oxford Economics

www.oxfordeconomics.com

www.tourismeconomics.com