No Big Changes To Corporate Travel Spending In 2017

05/23/2017
No Big Changes To Corporate Travel Spending In 2017

Summary

In 2017, corporate travel spending is expected to be flat or up slightly year-to-year. Despite heightened global security concerns, travel policies are not changing for most, while a few cited investments in duty of care risk-management programs.

Interviews with travel industry representatives in the US revealed that slightly less than half expect corporate travel spending to remain flat in 2017 vs. 2016, while slightly more than one-third expect it to increase due to corporate expansion or increased hotel pricing, and a few expect it to decrease – up an average 1% overall. In addition, two-thirds of sources expect the number of employees traveling to meetings and conventions to remain flat in 2017 vs. 2016, generally due to budgetary constraints, while a few expect it to increase, and a couple expect it to decrease – flat overall.

Most have not made any specific policy changes due to heightened global security concerns.

Meanwhile, slightly less than three-fourths of sources have not adjusted their travel policies this year, while one-fourth said policies are more restrictive, and one said less restrictive. Most have not made any specific policy changes due to heightened global security concerns, either because they primarily travel domestically or already altered policies, while a few said duty of care programs (a company's obligation to take care of traveling employees' safety) were being considered or adopted.

Almost none expects any shifts regarding preferred hotel classes/types in 2017 vs. 2016.

As to the top two preferred hotel chains, sources most frequently cited Marriott (Marriott International) and Hilton (Hilton Worldwide). Looking ahead, almost none expects any shifts regarding preferred hotel classes/types in 2017 vs. 2016. Regarding hotel prices, two-thirds of sources expect an increase in 2017 vs. 2016 – most often slightly – due to consolidation and previous years' increases, while one-fifth expect them to remain flat, and a few said decrease – up an average 2% overall.


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China Is Fuelling Consumption with Consumer Lending

Joey Wong | 11/10/2017
Great Wall

Summary

Although China is in the midst of a broad financial deleveraging effort, consumer credit has grown more than 20% year over year. Our Grassroots℠ Research team looked into what’s driving this trend and found widespread use of personal loans for personal consumption.

Key takeaways

  • The rapid growth of consumer loans in China shows policymakers may be having success shifting from exports to consumption
  • A bank branch manager in China told our Grassroots team that “we have been ordered” to help cool the real estate market
  • Our online survey of Chinese consumers showed that more than three-quarters carry some kind of personal loan debt
  • 71% of our 500+ respondents in China said they were using their consumer loans for personal consumption

Short-term consumer loans in China have shown rapid growth in 2017, and a new study from GrassrootsSM Research – Allianz Global Investors’ proprietary investigative research division – found that these loans are not only widely available, but are being used largely for personal-consumption purposes. This supports the idea that China’s policymakers are succeeding in their goal of moving China from an export-led economy to a consumption-driven one.

To better understand the level of consumer indebtedness in China and the change in attitudes towards taking consumer loans, we recently conducted a two-tier study:

  • Interviews with 20 bank branch managers in first- and second-tier cities
  • Online surveys with 526 consumers throughout China

What bank branch managers told us

More than three-quarters of the bank branch managers we spoke with reported that non-mortgage consumer loan growth had recently moved higher – in part because China is hoping to tighten up its mortgage loan and corporate loan businesses. As one source explained, “We have been ordered to decrease our mortgage loan business in order to cool the overheated real estate market. However, [interest in] non-mortgage consumer loans is growing fast and receiving more support from all constituents.”

The branch managers also told us that these loans typically have durations of two to five years and are primarily used for household expenses (such as home renovations), travel, weddings, car purchases, education and medical expenses. This aligns with China’s efforts to strictly regulate these loans so they can be used only for household spending.

What we learned from consumers

When we asked our online respondents about their attitudes towards taking short-term consumer loans, several findings stood out:

  • Consumer loans are becoming more widely available: Almost three-quarters of our respondents noted a slight to significant increase in the availability of consumer loans in the last year – including credit cards, personal loans from banks and other channels such as peer-to-peer (P2P) lending.
  • Most people have consumer loans: 76% of all respondents revealed that they carry some kind of personal loan debt.
  • Most use these loans for personal consumption: In an echo of what bank branch managers told us, 71% of our online respondents said that in the last 12 months, they used their consumer loans for personal consumption.

Clear evidence of rising consumer credit levels

Financials Research Analyst Helen Ye finds these results to be insightful when viewed in the context of China’s concerted effort to reduce the country’s high debt levels: “While broad credit growth has declined in China in the big financial deleveraging trend this year, consumer credit has grown more than 20% year over year – far exceeding the economy’s total credit growth of 12-14%. This increased appetite for consumer loans reflects a strong demand for upgraded auto purchases and for increased spending on tourism, health care and education.”

Consumer Credit Is Getting Easier to Find

Question: Have you seen a change in the availability of consumer credit (credit cards, consumer loans from banks and credit from other channels) vs. 12 months ago?

Chart

Source: GrassrootsSM Research. Data as at May 2017.

Consumers Are Using Their Personal Loans for Consumption

Question: What are the major uses of the credit card loans or personal loans that you obtained in the past 12 months?

Chart

Source: GrassrootsSM Research. Data as at May 2017.




GrassrootsSM Research is a division of Allianz Global Investors that commissions investigative research for asset-management professionals. Research data used to generate GrassrootsSM Research reports are received from reporters and Field Force investigators who work as independent, third-party research providers, supplying research that is paid for by commissions generated by trades executed on behalf of clients.

The material contains the current opinions of the author, which are subject to change without notice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Forecasts and estimates have certain inherent limitations, and are not intended to be relied upon as advice or interpreted as a recommendation.

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Expert-Image

Joey Wong

Research Analyst
Hong Kong
Ms. Wong is a research analyst with Allianz Global Investors, which she joined in 2010. She is a member of the Asia Pacific research team and a member of the GrassrootsSM Research team. She was previously a research manager at the Nielsen Company in Hong Kong. Ms. Wong has a B.S. in commerce, with a double major in finance and marketing, from the University of Auckland, New Zealand.
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