Indian companies spent Rs 1.93 lakh crore on business travel in 2015

Highlights 

- Top 100 Indian companies spent Rs 20,000 crore on business travel in FY15

- India to be one of the fastest growing countries in business travel spends in the world. 

- Indian business travel market to touch Rs 3 lakh crore by 2019

- Indian companies spent Rs 12,300 crore on bookings through online aggregators 

- Air travel made up 77% spends of business travel in 2015 

Indian companies spent a massive Rs 1.93 lakh crore on business travel in 2015, a report by KPMG released on Wednesday said.

In FY15, India, which featured amongst the top 10 countries in the business travel market, spent Rs 1.783 lakh crore. Out of this, top 100 companies alone spent Rs 20,000 crore on business travel in the year. 

“The top 100 companies spent approximately Rs 200 billion (Rs 20,000 crore) in FY15 up 38.3% from Rs 145 billion (Rs 14,500 crore) in FY13,” Jaideep Ghosh, Head of transport, leisure and sports at KPMG and Rakshit Desai, Managing Director at FCM Travels said in the report – Business travel in India.

Image Source: KPMG report

The report also pointed out that during the FY15 period, overall business travel spends increased by 21.2% indicating that larger companies led higher growth in travel spends.

The report said that by 2019, the Indian business travel market could reach Rs 3 lakh crore, citing a study by Global Business Travel Association (GBTA).

"Indian business travel spends to grow at a CAGR of 12.9%. Considering this growth rate, the Indian business travel market is expected to reach Rs 3,000 billion (Rs 3 lakh crore) by 2019,” it said.

Companies would be spending more on business travel costs as part of their growth and expansion plans.

In 2015, due to increased internet penetration and with online booking companies cropping up, India spent Rs 12,300 crore on business travel via online travel aggregators.

Image Source: KPMG report

“Indian business travellers are increasingly using the online route to book their travel needs whether air, rail, hotel or taxi,” the report added.

Specifying that increasing internet penetration and ease of online travel bookings that boosted this growth in spends, the report said that ‘air travel dominated spends followed by hotel spends.’

Air travel by businesses comprised 77% of the total business travel spends (Rs 1.926 lakh crore) in 2015, the report said.

Image Source: KPMG report

Demonetisation

Demonetisation left its impact on business class spenders, SME travellers and on business and leisure trips, the report said. Even forex purchases through unorganised players took a hit in November after the government's move to de-legalise the use of high-denomination notes. 

“Some of the key business travel segments which have been impacted due to this development include business class spenders, SME travellers, Bleisure spends (Business and leisure trips) and forex purchases through unorganized players,” the report said.

However, the organised sector, mainly the online travel aggregators didnt face much brunt.

Desai, who is the MD at FCM travels which is a part of the Flight Centre Travel Group, Australia, told Zeebiz, “So far we have not seen an impact of demonetisation and there could be two reasons for that one is that maybe there was no impact (on travel and tourism) and two – there was an impact but people have moved from an unorganised sector that mainly dealt in cash to an organised sector, to organisations like ours.”

Global business travel spends

The report by GBTA said the global business travel market was highly skewed with top 15 countries accounting for about 82% of the total spends.

The top 15 countries include – China, USA, Germany, Japan, UK, France, South Korea, Italy, Brazil, India, Canada Australia, Spain, Netherlands and Russia.

In 2015, China replaced US to become the world’s largest travel market and spent $291.3 billion on business travel.

Global business travel spends amounted to $1236.8 billion in 2015 has been growing at 5%, the GBTA report said.

“…India (12%) and China (8%) are expected to be the fastest growing business travel markets in the world driven by increasing business activities and investments,” the KPMG report added.