Business travel is slowly recovering in China under tight
government control and mostly at a domestic level. The country's strategy,
which will attempt to restart what previously was the biggest business travel
market in the world, could offer a glimpse of how business travel will recover
in the future, despite clear differences in how the travel market – particularly
airlines – operates.
Importing infection from abroad remains a major concern. To
that end, the Chinese government is heavily restricting travel in and out of
China. International flights directly into China's capital city of Beijing are currently
not allowed, according to International SOS Americas regional security director
Matt Bradley. The country's Civil Aviation Administration currently allows each
airline under its jurisdiction to maintain a single route to any specific
country with no more than one flight per week. The airlines this applies to are
Air China, Capital Airlines, China Eastern, China Southern, GX Airlines, Hainan
Airlines, Juneyao Airlines, Shanghai Airlines, Shandong Airlines, Sichuan
Airlines and XiamenAir.
"Every day there is a limit to 4,000 passengers coming
into China. This is a 97 per cent drop compared to pre-Covid levels," said
BCD Travel Greater China managing director Jonathan Kao. In addition, visa
restrictions have been put in place by China or other countries, making foreign
entry very difficult, he said.
When a city abroad experiences a flare-up in cases, the
government temporarily suspends the route there, said WorldAware founder Bruce
McIndoe. At major airports, a traveller may go through three temperature
checking stations and a visual inspection before he or she boards, McIndoe
said. Social distancing and masks also are required.
Travellers arriving from abroad are mandated to be
quarantined for 14 days, according to Kao. "They'll take you to a hotel or
a facility where there is a medical staff, and everyone has their own room.
You'll stay there for 14 days, and they'll do a nucleic acid test on you to
limit imported cases from overseas," Kao said.
Some companies based in China still are focused on
repatriating travellers stranded in other countries. "The challenge right
now is to get our people back home," said a travel manager for a
Beijing-based technology company who spoke to BTN on condition of
anonymity. "We still have people stuck in India."
Airlines are charging higher prices for international
flights, the travel manager added. "They are really hiking up the price
right now. [To] bring people back you have to pay ten times the regular price."
Bradley said some companies interested in resuming
international travel to China have changed their mind once they understand the
requirements. "You have to ask yourself," he said. "Is it worth
it? What's the purpose of your visit if it requires 14 days when you arrive and
14 days when you return? What's so important that you needed to go there for
that?'"
BCD corporate clients seek up-to-date flight information,
advice on ensuring duty of care and assistance with gathering refunds from
airlines to replenish their own company cash flows, Kao said. His team has
cleared 60,000 tickets on all carriers for refunds in a month in case the
airlines change their refund rules or collapse financially, noting carriers
elsewhere like Germanwings and Flybe haven't survived the pandemic.
The Beijing-based travel manager expects large air carriers
will weather this storm. "I don't have too much concerns over the
liquidity of these airlines because they have government help. For the past six
or seven years, the mindset of CAAC has been to cultivate large airlines."
He expects airfares to be high for the rest of the year.
Domestic travel gets back on its feet
While international travel is basically frozen, domestic travel in the past six
weeks has seen an uptick, according to Kao. "We're processing a lot more
domestic transactions," he said. "In Shanghai and Beijing, a lot of
the sentiments from our corporate clients are that things are getting back to
normal."
"Domestic travel has been picking up already. The
country is opening up. Cities are opening up. Beijing has opened up for
domestic travellers," said the Beijing-based travel manager. "It's
mostly business, because people are very cautious in terms of travelling [and
will] reduce that as much as possible."
People are travelling around China by car, train and air,
according to McIndoe. To contain the virus, people are tracked via a mobile
health tracking system, which uses QR codes based on data from cell phone,
immigration, hospital and police records to indicate their health status,
according to Kao. As travellers enter public places like offices in major
cities, guards may request to check the traveller's QR code to allow or deny
entry based on that information.
"When you go outside of your city, you have to show a
pass from the community you live in, [which] everybody has," the
Beijing-based travel manager said. "You get your temperature taken and
have the QR code out on your phone. I know for a fact people who come to
Beijing for business travel have to bring that code with them."
Compared with earlier this year, hotel occupancy levels are
higher. At the beginning of February, absolute hotel occupancy hit single-digit
percentages and has been hovering around 30 per cent since late March, STR
North Asia regional manager Christine Liu said in a webinar. Among the country's
key hotel markets, Hangzhou has the highest absolute occupancy level, near 50
per cent as of 11 April. However, STR doesn't expect occupancy, average daily
rate and revenue per available room to return to pre-2019 levels until 2022.
According to the Chinese travel manager who spoke to BTN:
"The hotels are opening up, especially to take business travellers, but
hotels have to check your health status before they take you."
As part of its duty of care, the Beijing-based company now
requires all employees to report health status to the company on a daily basis.
If they don't, they will be fined with a deduction from their pay.
Only essential corporate travel
"Some clients are heading back to a normal position where domestic travel
is allowed, even to Wuhan," said Kao, referring to the original infection
epicentre in China's Hubei province.
Corporates are opting for very small-scale meetings with
clients and going to their offices for internal meetings, according to Kao.
Large conferences and events at China's hotels are largely non-existent. Key
Beijing destinations like its central business district, Haidian and the
Financial Street, all of which are usually "very busy" for business
travel, conferences and events, are "still very quiet," according to Liu.
"People don't see any large event or conference
happening. They don't want to plan for a big event when Covid-19 is still
prevalent," Kao said. "Most companies are taking a cautionary
stance."
Kao said sales reps, account managers and senior executives
have been the primary business travellers so far. "We're seeing people
going on-site to get new business [and] signed contracts, and who are chasing
for their money," he said. "There are businesses that are going under
right now because of cash-flow problems, so people are also quite active in
chasing payments. These are the conversations [happening] in person."
A US-based travel manager said their company is allowing
sales representatives from their Beijing office to meet with clients under
strict conditions. Department executives must approve the meeting, and the
traveller can only drive or take a taxi or rideshare service to the location
and must follow their client's rules around meeting in-person. "Our sales
guys get paid with commission," said the travel manager. "They are
more afraid of losing income than getting sick."
Does China offer hope for other markets?
The Beijing-based travel manager thinks their travel will be end up being
around 60 to 70 per cent of what it was last year. Before the pandemic, the
company's global travel and expense spend was "growing almost double year
by year." As of now, the company will continue to rely on its virtual
meetings tool as an alternative to travel.
McIndoe expects global business travel to be hamstrung past
2020. "Until we get a vaccine, people are going to be very cautious,"
McIndoe said. "A person with a lower risk profile is still considering if
[the trip] is worth it. Is it still important? I think it's going to stay that
way … into 2021. Companies are going to be reticent about spending money on
travel unless it's really important."
Bradley is optimistic about international business travel.
He expects airlines to figure out ways to accommodate travellers in order to
survive financially. There will continue to be fear of coronavirus infection,
but there are a lot of business travellers who will endure the risk of catching
it, Bradley said.
"Some businesses will think that's an advantage if they
can get someone on the ground, whereas others don't. That will speed up
business travel," Bradley said. "It's going to crank up as soon as
people feel like they can go with reasonable precautions, which is going to be
three to six months, most likely."
—Elizabeth West contributed to this report.