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Destination: China

By Liu Jie (China Daily)
Updated: 2008-11-24 08:12

Tourism in China could benefit compared to some other markets amid the global economic slowdown, forecasts Jeff Clarke, CEO of Travelport, one of the world's largest networks of travel brands and content, and a provider of travel technologies, solutions and services.

Its headquarters are in New York, with sales, service and support offices located in more than 40 countries. Travelport is a privately held company with 5,500 employees and 2007 revenues of $2.6 billion. The Blackstone Group, One Equity Partners, Technology Crossover Ventures and Travelport management own it.

But while it has a far-flung global presence it does not have a very large stake in China.

"That's why China is so important to us, and that's the reason for my visit here," explains Clarke, whose business trip involves promoting Travelport's investment plans, negotiating with current and potential partners, as well as holding discussions with government officials about further opening China's inbound travel market.

Travelport has three pillar businesses: a global distribution GDS system, the on-line travel website Orbitz, and group travel wholesaler GTA. As the Chinese government still sets limitations on the first two sectors, the company's primary business in China is GTA, which brings foreign travelers, both consumers and corporate clients, to China and cooperates with local partners to offer inbound tour services for them.

It has two offices one in Beijing and one in Shanghai with over 130 employees. A new office will be launched next year in Hangzhou, Zhejiang province.

China is currently the fourth largest destination for Travelport GTA, while Japan is No 1. The annual growth rate of GTA's business to China exceeds 20 percent over the last few years. "It's still a relatively small business for us, compared to other markets, but it's growing quite well and increasing quickly," says Clarke.

The company says that its group travel to China increased by 32 percent last year, while individual tours rose by 50 percent. GTA growth for China in the coming years is expected to be 20 percent overall - with individual travel growing faster.

Tourism slowdown

Around the world, the travel business was down about 15 percent last year, but China was an exception where travel sales, as in India, are modestly growing, albeit at a slower rate than previously, according to Clarke.

"What we have seen (under the global economic slowdown) are people focusing on very special trips. In other words, if they were planning two or three trips a year, they might focus on one trip and make it a very special one," he says.

And China is still as it is a relatively new destination for many foreign travelers, especially those from developed economies. Take outbound Japanese tourists as an example, which is a large part of Travelport's GTA business. Many of them have already been to continental Europe, the United States, but have yet to tour China.

According to the UN World Tourism Organization, China had nearly 50 million international tourist arrivals in 2006, making it the 4th most popular destination behind France, Spain and the US. It was predicted in 2006 that China will become the world's top tourism destination by 2020, while the forecast was adjusted at the end of last year to 2015.

According to the latest Travelport GTA's survey covering customers in Europe and Japan, the primary destination is China. If asked 10 years ago, China would have been third or fourth in the list, Clarke says.

At the same time, in terms of corporate business, insiders say most western companies view China as an exciting growth market and believe it will develop faster than any other economy in the world.

"Whereas a lot of corporate travel has been frozen or reduced because of the slowdown, corporations are still traveling to markets like China, because growth is here," Clarke says.

Ambitious development

Travelport GTA brings about 12 million people across the world to various destinations with 22 trillion bed/nights annually and has partnership with 23,000-plus hotels and an inventory of over 30 million rooms. It also boasts close collaborations with airlines, car rental companies, restaurants and travel agencies.

Correspondingly, in China, it has built up sound relations with Chinese travel agencies, such as China Youth Travel Services, as well as local tourism-related service suppliers.

Usually, the company brings both group travelers and professionals to China, and the professionals assist the local hotels, agencies and other travel suppliers in serving the foreign tourists.

Clarke notes that he believes the travel firm's professional services and China's promising market will support Travelport GTA's growth here.

Travelport's global results in the second quarter of 2008 continue to show the resiliency of its business even during a difficult operating environment, with growth of adjusted net revenue at 1 percent and adjusted earnings before interest, taxes, depreciation and amortization at 8 percent.

The great contribution was from GTA, which continued to perform well with a net revenue growth of 26 percent in the second quarter, while the softness in the first quarter accelerated into the second quarter with total GDS segments declining 9 percent year-over-year.