Business travel spending in Singapore to grow faster than world average

Singapore

BUSINESS travel spending for Singapore is projected to grow by 4.3 per cent this year - slightly above the global average - to S$17.2 billion, according to a report.

The report by the World Travel and Tourism Council (WTTC) and Travelport estimates that worldwide business travel spending would rise by 4 per cent to about US$1.2 trillion, driven by the Asia-Pacific, and will increase by 3.7 per cent per year to US$1.72 trillion in 2027.

"The fastest growth for the business travel sector is expected in the emerging markets, with Asia-Pacific leading the way at a predicted rate of 6.2 per cent each year to 2027," said WTTC research director Rochelle Turner, adding that the Asia-Pacific was expected to overtake the Americas by then.

The report defines business travel spending within a country as spending by both residents and international visitors.

The strongest performing market in the Asia-Pacific is expected to be China, with 9.5 per cent annual growth till 2027, followed by Myanmar (8.7 per cent), Hong Kong (8 per cent), Cambodia (7.4 per cent) and India (7.2 per cent).

Overall business travel receipts in the Asia-Pacific is expected to jump to US$645 billion from US$334 billion now, partly due to the proliferation of low-cost carriers in the region as well as the importance placed on face-to-face meetings in Asia to build and maintain relationships. Over the next 10 years, Singapore's corporate travel spending will increase by 2.4 per cent per annum to S$21.7 billion in 2027.

In the first half of this year, business travel demand in Singapore has been robust, with traffic growing by 15 per cent year on year, according to Carlson Wagonlit Travel (CWT) general manager (Southeast Asia) Sim Kian Peng.

"We expect to see similar growth for the second half of 2017," said Mr Sim, citing growing airline options and new routes as factors underpinning this expansion.

But even as the average ticket price in Singapore dipped 3 per cent year on year in 1H17, cost-conscious business travellers are turning to low cost carriers (LCCs) to stretch their dollar. "While legacy carriers can cut down on their food & beverage and other ancillaries on short-haul routes to compete with LCCs, LCCs are also planning to expand on medium to long-haul routes to Europe," Mr Sim continued.

For instance, Norweigian UK is launching direct flights to London from September using its Boeing 787 aircraft, while Scoot has plans to add more long-haul points to its network. Last month, the Singapore Airlines' (SIA) subsidiary started operating direct flights to Athens.

Sanghamitra Bose, general manager of American Express Global Business Travel (GBT), said that business travel demand varies across industry, with lower demand for the marine and financial services sectors, while other sectors such as technology, retail, and healthcare remain solid.

"Where travel demand has decreased, companies (are) taking a closer look at their travel spend, and global organisations are looking to consolidate their travel programmes with a single travel management company," said Ms Bose. "Many companies are now also looking at benchmarking their travel policies and fares against their peers. Compliance is another area of focus and many companies are looking at adopting tools such as pre-trip approval to support compliance."

According to travel solutions provider Travelport, Kuala Lumpur, Bangkok and Jakarta remained the top Asia-Pacific destinations for Singapore business travellers in the first five months of this year. Meanwhile, outside of the region, the top destinations for Singapore corporate travellers were London, Dubai and San Francisco.

San Francisco displaced New York, potentially due to the launch of direct flights between Singapore and the West Coast city by SIA and United Airlines, as well as the high costs of living associated with New York, Travelport highlighted.

Meanwhile, CWT's data showed that while business travel to China, India and Thailand increased, trips to Indonesia have declined in 1H17 vis-a-vis the first half of 2016.

"For Indonesia, recent changes in the regulatory environment have opened up the market for wealth management growth, and it's possible that we'll see increased traffic from financial services clients in the near future," added Ms Bose.

London remains a popular destination, despite the various terrorist attacks, with Travelport's data showing a slight increase in business travel from Singapore to London this year. "We have also noticed an increased awareness in the accountability for duty-of-care and corporate guidelines on business travel for many organisations in the Asia-Pacific," said Mark Meehan, managing director (Asia Pacific) of Travelport.

"We don't believe that business travel to the United Kingdom, and London, will be significantly impacted by recent terrorist attacks," said Ms Turner, sharing a similar view. "Resilient tourist destinations like London see a small immediate response by travellers weary to make their booking right after the attack has happened, but overall we expect that there will be very little impact on the inbound travel figures."

On the other hand, growth in inbound travel as a whole to the United States may slow down this year due to the stronger greenback, she added.