A recent study commissioned by the Singapore Tourism Board (STB) lifts the veil on the travel habits of Asian business travelers (ABTs), who, it turns out, are granted more leeway by their employers when it comes to planning their trips. ABTs, the study found, have greater autonomy than their Western counterparts, since the former have a say in details such as which carrier they will take, which hotel they will stay in, and even how long their trip will last. More than half of the travelers surveyed in July view the purpose of business trips as a combination of work and leisure.
“There’s actually relatively little research on the Asian business travelers (ABTs), much of the research out there today are much focused on the North American and well-established European markets,” said Cheryl Lim, associate principal at US-based multinational management consulting firm McKinsey & Co., which conducted the survey, during report’s launch on Oct. 22 at the Marina Bay Sands Convention Center in Singapore.
The study on the Asian business traveler lists five insights into the market, as culled from the responses of 2,565 individuals from China, Indonesia, India, Singapore and Japan — key Asian markets representing 78.8% of Asia’s business travel spend. Aside from an online consumer survey, 19 travel managers “representing a wide spread of geographies and industries” were also interviewed.
The insights include the considerable freedom employees experience when traveling; how these travellers seek convenience and crave personal experiences even at the expense of not complying with their travel policies; the different preferences evident among each country surveyed; the four kinds of ABTs; and how business travel is also subject to the same disruptive forces as leisure.
Other data came from Amadeus, a Spanish IT provider for the global travel and tourism industry, which analyzed more than 15 million bookings over the course of three years; and from VISA, which provided 12 months of spending data.
Andrew Phua, director of exhibitions and conferences of the STB, said in a statement that the study was born out of the fact that Asia “is the largest business travel market in the world today, commanding 38% of the global business travel spend worth $1 trillion.”
EMPLOYEE EMPOWERMENT IS RISING
According to the report, “a vast majority of ABTs have some degree of flexibility in choosing how they travel,” with 69% being able to choose their preferred airlines for business trips “either from a pre-approved list of carriers or with no policy restrictions on carriers at all,” while 11% of all respondents are free to choose their flight without restrictions on either provider or budget.
Similarly, most of the respondents enjoy certain freedoms when choosing their own hotels, with 74% saying that they have “some flexibility in choosing their hotel” — again, either from a pre-approved list or no list at all — and 9% are free choose without any restrictions at all.
Meanwhile, 35% of travelers subject to company travel policies have stated that they “do not always strictly adhere to them (policies),” though it is important to note that only 6% of the overall respondents indicated that they travel frequently outside of policy.
Non-compliance is most evident when selecting hotels, as 40% of travelers said that their most recent breach of company’s travel guidelines was “staying at a more expensive hotel.”
The study also noted that Indians are “most likely to not adhere to travel policy all of the time” as 41% of the Indians surveyed said that they frequently travel outside of their company’s travel policy. Other segments that most likely do not adhere to policies are those who travel more than six times a year (44%), those who travel for more than three days (39%), senior personnel (40%), and those who place “utmost importance on convenience and little else” at (39%).
What these numbers say, according to Ms. Lim, is that “employees really have a lot of autonomy and, more importantly, they are not satisfied and want even more (freedom).” Employers, she continued, have recognized this trend and are moving away from the “‘command-and-control’ method.” A few companies, for example, encourage frugality by using tracking apps and rewarding employees who book cost-conscious options. Ms. Lim noted that employees who use the app still have the freedom to choose, leading to “higher compliance rates and higher employee satisfaction.”
FOR ABTs,
‘CONVENIENCE IS KING’
“There are two universal preferences that we found that are common across countries, age and industry sectors and the first is that, ‘convenience is king’… and Asian business travelers like to marry work and play,” Ms. Lim said.
“Consistently, convenience-related factors like convenient flight times, direct flights, proximity of hotel to work, efficiency of facilities (in-flight wifi, high-speed Internet, etc.) are picked as the top priorities travelers are looking for,” she explained.
Meanwhile, 56% percent of the respondents agreed or strongly agreed that business travel is a job perk, with the sentiment being particularly strong among Indonesians (76%), Indians (61%) and Chinese (59%).
The study also pointed out that ABTs were much more likely to cite experiential reasons rather than material reasons for their enjoyment, suggesting that these kinds of travelers “often view business travel as a travel experience, not just work, and an enjoyable one at that.”
“Asian business travelers are twice as likely as their European counterparts to actually extend their business travel over weekends so they can have that combination of work and play,” Ms. Lim said.
According to the study, ABTs were “almost twice as likely to make a booking that includes a weekend (12%), compared with Europeans (7%),” a pattern that holds true across Asian countries, with Chinese travelers (19%) and Indian travellers (17%) most likely to include weekends.
CLEAR DIFFERENCES
AMONG COUNTRIES
“Singapore business travelers were the most likely to prioritize comfort-related attributes compared to any other country surveyed,” said Ms. Lim.
The report indicated that Singaporeans ranked in-flight comfort as their most valued attribute, “even above convenience,” with travelers from this country flying premium class more than twice as often as any other nationality. According to the travel managers interviewed, 52% of business traveler bookings from Singaporeans were premium class — though they are unwilling to pay for premium services personally, therefore suggesting a mindset of “it should all be on the company.”
“This may also be linked to the comparatively generous travel policies of Singaporean companies, supported by the fact that Singaporean spending on corporate cards far exceeds other countries’ at an average of $677 per night,” the report said.
Indians, meanwhile, are more “digital” than any of the nationalities surveyed and, as a consequence, are the most willing to use and pay for online booking services: 85% indicated a preference for booking their flights online while 64% said the same for hotel accommodations. They are also the most willing to spend on ancillary services, even personally, as 96% said they are willing to spend for flight ancillary services; 97%, for hotels; and 75%, for digital processes.
“An additional factor, however, may be that Indian business travellers have a lower proportion of expenses covered by their company and so have to dip into their own pockets,” said the report, with corporate card spending data revealing that these travellers charge the least amount ($66) to their corporate cards on a per-night basis compared with any country in the study.
The Chinese, meanwhile, are “heavily service oriented” and “concerned about prestige,” as the report said that they are the only travellers who ranked “award-winning service” among their top three factors for selecting either a flight or hotel. They are also the only ones to emphasize prestige in choosing between different types of accommodations.
“Concerns about appearing ‘low-class,’ encountering ‘low-quality guests,’ and ‘not fulfilling the company image’ were also cited frequently by Chinese business travelers as reasons for rejecting low-cost carriers and shared economy accommodations,” the report noted.
Indonesians are considered “the most buoyant travellers among all the countries surveyed,” having reported the most positive attitude towards business travel, with 76% of them agreeing or strongly agreeing that business travel is a perk of their job compared to an overall average of 56%.
These travelers were also likely to “bring a family member or significant other along, a clear reflection of the family-oriented nature of the Indonesian consumer,” the report said.
Finally, the Japanese are the most policy- and price-conscious of all the nationalities surveyed as they “were the least likely to consider business travel a perk of the job,” with just 39% agreeing compared to the overall average of 56%. They are also more prone to have the mindset of “work is work” as only 22% said that they wish to mix business travel with leisure compared to an overall average of 46%.
“Generally speaking, mixing up public and private matters is frowned upon in Japanese society — it’s perceived to be a question of values,” the report said, quoting a Japanese travel manager.
They were also the most policy-conscious and the least likely to spend personally as 52% of Japanese travellers have their business trip expenses covered by the company — “vastly higher than the survey average of 26%,” said the report.
THE FOUR ABT ARCHETYPES
The fourth insight into the report listed the four ABT archetypes, “each with clear differences in their travel preferences and behaviors with variations between the different countries,” the report said.
The first archetype is the “Stereotypical Suit,” which makes up 32% of the ABT population. This archetype embodies the conventional image of a business traveler who places utmost importance on convenience.
“When Stereotypical Suits bend policy guidelines, it’s typically because they want to travel more conveniently: 62% of those who deviated from policy cited added convenience as the reason for non-compliance, compared with the average response of 53%,” the report noted.
The second archetype is the “Service Seeker,” the largest segment at 34%, with “services” defined as “attentive staff and additional facilities” whether for work (such as in-flight power outlets) or for leisure (such as personal trainers at hotel gyms).
“In contrast to [the Suits], members of this group are looking for a distinctive travel experience, one where they feel recognized and valued,” said the report. It added that this segment is also the most lucrative in terms of potential for additional spending, since Service Seekers are usually frequent flyers (62% make more than three trips a year) who are most likely to fly in first or business class (43% compared to the average of 29%). They are also the most open to considering shared economy accommodation for business travel (38% compared to the 28% average).
The “Belt Tighteners” are the most price-conscious and are a comparatively smaller segment, making up only 17% of the ABTs surveyed.
“This segment appreciates the lowest-available price and value for money approximately twice as much as the average business traveler. They would rather spend time to save money than vice versa,” said the report.
Finally, there are the “Points Maximizers,” who also make up 17% of those surveyed. They view travel as “a way to collect loyalty rewards.”
“While they are not overly enthused about business travel (only 49% view travel as a job perk), those that do enjoy business travel attributed it to the point they can earn (15% compared with the average of 6%),” said the report.
This is also the segment that occasionally evades travel policies in order to earn loyalty points (35% against the 21% average). The report noted that they “do not appear as lucrative as Service Seekers, in terms of additional individual spending” as they rarely spend personally on hotel add-ons — for example, only 32% are willing to pay for better meal options compared with 55% of the Seekers.
DISRUPTION
Much like leisure travel, the business travel segment is shifting to digital booking as “it’s what the ABTs want.” Face-to-face interaction was ranked as the least-popular option against online and mobile, except for hotel check-ins where it was ranked first.
“Our survey showed digital booking channels… are overall 28% more popular than offline channels,” said the report (singling out mobile as the digital platform which is “clearly on the rise” as it enables ABTs to book, change and view real-time travel information on the go).
Although there is a preference for digital, the study also showed that these travelers aren’t necessarily ready to pay for this kind of service, with Indians being more ready to pay for digital services (40%) while the Japanese were the least likely to pay (6%).
Age is also a factor as 33% of travelers aged 20-29 were willing to pay for digital processes compared with just 18% of travellers over the age of 50.
When it comes to transportation, low-cost carriers (LCCs) for business travel are gaining ground in Asia as they comprise 29% of all business travel expenditure on flights. (In contrast, LCC penetration in North America is only at 16%.)
Forty-one percent of the ABTs said that they are willing or very willing to fly LCCs for business, with India and Indonesia being the biggest supporters. The travel managers interviewed also reported that they use LCCs for reasons beyond cost, such as convenient schedules, networks, and products on-par with full-service carriers, although these factors were highly country-dependent, according to the study.
Finally, sharing economy accommodations such as Airbnb are described by the study as being “nascent and gaining attention.” While these only accounted for 0.1% of expenditures in business travel accommodations globally, “North America (the market leader in sharing economy business travel) spend has tripled over the past year to $99 million” and thus Asia should take note.
For Asia, the barrier these kinds of accommodations is mostly due to travel policies as all travel managers interviewed either “flatly ruled out using sharing economy accommodation or are taking a ‘wait-and-see’ attitude.’” Lack of security was their overriding concern.
“Duty of care is one of the key elements of any corporate travel program,” one travel manager was quoted as saying in the study.
The ABTs themselves seem to be much more open to the idea of sharing economy accommodations, as the majority (70%) were familiar with this kind of accommodation. Of the 70%, 40% were open to considering it as an option for business travel, citing “greater value-for-money,” though other also stated that experience of local culture and previous positive stays as reasons to consider these services.
Reiterating the importance of the report and its findings, Mr. Phua said in a statement that Asia is expected to grow four times faster than North America, to gain a further 5% of the global pie when it comes to travel spend. “Research on this region has been lacking, this report on Asian business travelers is extremely timely; we hope it will help travel managers to better understand Asian business travelers and maximize the opportunities of this dynamic and burgeoning segment of travelers.”
