China Online Agency Round Up


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Mr Brett Henry, Vice-President, Abacus International shares about online travel distribution in China at China Travel Distribution Summit. 3Dec2009

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  • Abacus is the largest travel facilitator in Asia with more than 18 years’ experience in the region with an unrivalled network : Abacus has more than 300 employees in Singapore and with another 700 spread among its National Marketing companies (NMCs) in Asia Pacific. Abacus is established in the Asian growth markets of tomorrow. We draw our strength in mature markets to help emerging markets realise their potential Abacus has local presence across its 60 sales and marketing offices
  • Abacus enjoys the best of both worlds as Abacus shareholder airlines reflect its Asian heritage and coupled with an international outlook and expertise from Sabre ~ a world leader in travel commerce, retailing travel products and providing distribution and technology solutions for the travel industry.
  • Online travel agency market is sizeable; market leader Ctrip is bigger than the entire Australia agency market Traditional offline travel agencies still control over 80% share of travel spend, aided by government regulations requiring outbound travel to be sold through approved offline agents
  • Online market growth will accelerate in 2010; intermediaries have stronger marketing and distribution capabilities, and will maintain share (64%) versus supplier direct
  • Unlike it’s high-growth Asian counterpart India, online transaction automation is at least 3-5 years out, as cash remains the preferred payment mode and labor costs stay low
  • dentifying a market niche and being ‘first through the door’ are key to many returnee entrepreneurs’ success. Another example of this is, a Beijing-based travel and lifestyle search engine. Founded in 2005 by American Fritz Demopoulos (CEO), Chinese Zhuang Chenchao, a former World Bank systems architect in Washington, DC, and Malaysian Douglas Khoo, Qunar (which means ‘where are you going?’ in Mandarin) brought a new tool to the Chinese traveler, allowing consumers to compare prices for air tickets, hotels, car rental and tour packages in real time. The venture is capitalizing on a burgeoning middle class in China with newfound purchasing power. “Travel is relative to people’s purchasing,” Qunar CEO Demopoulos explains. Bucking the trend in the global economic crisis, he mentions that the third quarter has seen a significant boom in leisure travel, driven primarily by China. “Approximately one-third of all online leisure-travel business in the region is coming from China now." Qunar has no plans yet to diversify into a bilingual travel search engine. Demopoulos believes the focus on the Chinese market will make Qunar avoid the errors committed by other players in the industry, who tried to widen their focus too much and therefore lost it entirely.
  • Some point about Expedia stetment
  • and Agoda are now leading pure-play hotel sites leveraging daodao traffic and eLong for fulfillment Agoda aggressively contracting hotels and has partnered with local hotel aggregator Derbysoft
  • China Online Agency Round Up

    1. 1. China Online Agency Round-up China Travel Distribution Summit December 3 rd , 2009 Experience. Insight. Advantage. TM
    2. 2. <ul><li>Hi. I’m Brett Henry. </li></ul><ul><li>@BrettHenry </li></ul>
    3. 3. You Already Have a Social Media Strategy Travel, Communication and Marketing
    4. 6. <ul><li>Who is Abacus? </li></ul>
    5. 7. We bring to the industry an unrivalled network : About Abacus Asia-Pacific’s leading travel & leisure facilitator with more than 15,000 agency locations in 24 markets <ul><li>More than1,200 employees region wide </li></ul><ul><li>24 markets with more than 100 sales and marketing offices with local support. </li></ul>
    6. 8. <ul><li>Our partners include Sabre Holdings, a world leader in </li></ul><ul><li>travel commerce, retailing travel products and providing </li></ul><ul><li>distribution and technology solutions for the travel industry </li></ul><ul><li>and 11 of the world’s leading airlines serving Asia. </li></ul>Our Partnership
    7. 9. <ul><li>Amadeus had YOY decrease of 2+M </li></ul><ul><li>Galileo had YOY decrease of 4+ M </li></ul><ul><li>Worldspan affected by decline of 5+ M </li></ul>Page *Source: MIDT, <ul><ul><li>YOY Air bkgs change by GDS </li></ul></ul>Abacus and Sabre #1 GDS with the top 4 OTA’s
    8. 10. <ul><li>I am going to talk about online travel distribution in China </li></ul>
    9. 11. Everything I am about to say could be wrong
    10. 12. 1. China’s online travel market is experiencing substantial tailwinds
    11. 13. Online travel market has grown through the Global Financial Crisis to $8B in 2009
    12. 14. 2. Online travel agencies are capitalizing on weak supplier direct capabilities and hotel market fragmentation
    13. 15. Online Agencies are and will continue to be the dominant force in the online market
    14. 16. 3. Significant efficiency gains are still available – and could turbo charge OTA growth business advantages in the medium term
    15. 17. Marketing and acquisition are automated but operation still largely manual Traveller Website Call Center Airline / Hotel 25% 75% Phone & fax Manual Automated
    16. 18. 4. MetaSearch is working – managing the marketing and acquisition without the operational complexities
    17. 19. <ul><li>Something here about size of metasearch market </li></ul>
    18. 21. <ul><li>Something here about size of metasearch market </li></ul>
    19. 23. 5. Ctrip is an investors dream
    20. 24. Ctrip downturn performance... For internal use only Revenue Net Income +47% Marketshare +80% ~60%
    21. 25. … Valuation shows strong investor growth confidence For internal use only +$7B +$5B Market Cap Revenues (2008) +$2.9B +$217M
    22. 26. 6. Expedia is focusing… leading in travel UGC…and positions in metaseach and full service online
    23. 27. Major travel brands unique visitors per month TRANSACTION INTERMEDIARY SUPPLIER-DIRECT MEDIA INTERMEDIARY
    24. 28. Expedia downturn performance... For internal use only Revenue Net Income $852M Asia Hotel Growth +80% 60+% 酷讯,旅游搜索引擎
    25. 29. What to expect in China <ul><ul><li>Investment focus in China over the next 2 years ($50M USD) </li></ul></ul><ul><ul><li>Media - DowDow + Kuxun target to be the largest user review site in China with 10 mil users </li></ul></ul><ul><ul><li>Booking - “eLong is Expedia in China and will continue to be our only transactional play”, CEO </li></ul></ul>
    26. 30. 7. Don’t try to be Ctrip
    27. 31. Are hotel focused sites trying to emulate Ctrip? Local hotel-focused sites have expanded their offering Global hotel-only players are pushing into China Non-Hotel LOBs Hotel-Focused Sites Flights Car Tickets 24-Hotel      SinoHotel       Cmbtrip  
    28. 32. 8. Ctrip (or Qunar, or Dao Dao) is unstoppable
    29. 33. Abacus on Social Media Connect to us on Facebook!
    30. 35. Thank You Experience. Insight. Advantage. TM