Online Travel Industry - APAC, Trends and Shifts

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Key Online travel trends and differentiators for OTA players in Asia. Strategic questions that OTA players should address to succeed in Asia

Published in: Internet, Travel, Business

Online Travel Industry - APAC, Trends and Shifts

  1. 1. APAC ONLINE TRAVEL MARKET – QUEST FOR THE “SUPERCONSUMERS” SUSHANT SHARMA E: SUSHANT.MAILS@GMAIL.COM M: +852 6571 1590
  2. 2. APAC MARKET REVIEW – ONE REGION, MANY DIFFERENT MARKETS
  3. 3. CHINA, S. KOREA, JAPAN, INDIA AND MALAYSIA WILL POWER THE OUTBOUND TRAVEL MARKET IN APAC BY 2020 Country Trip Type 2011 2012 2013 2014 2020 CAGR (2014-20) China LPO (ex. Same-day trip to HK/Macau) 42.6 50.5 61.1 71.2 134 11.1% China (ex. HK/Macau) LPO (ex. all HK/Macau) 21.7 27.3 34.3 40 84.8 13.3% S. Korea AP 12.7 13.7 15 15.5 19.2 3.7% Japan AP 17 18.5 17.1 7.9 18.4 1.1% India LPO 5.8 6.4 7.2 10.9 16.5 13.0% Malaysia AP (ex. Cross-border overland to SG) 8.9 9.6 10.4 10.6 15.2 5.7% Taiwan AP 8.8 9.4 10.4 8.7 14.2 5.1% Singapore AP (ex. Cross-border overland to MY) 7.8 8 8.5 8.7 11.9 5.3% HK AP (ex. Non-air travel to China/Macau) 7.1 7.8 8.6 6.8 11.6 4.9% Indonesia LPO (ex. SG/MY same-day) 4.9 5.4 6.1 8.1 10.6 7.6% Australia LPO 6.5 6.9 7.4 6.2 10 3.7% Thailand AP (ex. MY/Laos same-day) 5.4 5.7 6 4.3 8.7 5.9% Vietnam AP (ex. Overland crossing to China) 2.8 3.4 3.9 3.8 6.4 6.7% Philippines LPO 3 3.2 3.5 1.9 6.2 8.7% New Zealand LPO 1.7 1.7 1.8 181.7 2.3 3.3% Total - 14 markets Using China LPO (ex. Same- day trip to HK/Macau) 134.9 150.3 166.8 181.7 286.3 7.9% APAC Developed 61.5 66.1 68.6 70.6 88.7 3.9% APAC Emerging 73.4 84.1 98.1 111.1 197.5 10.1% LPO – Leisure purpose trips; AP – All purpose trips Source: MasterCard Intelligence Outbound Trips (Mn.)
  4. 4. US$10,000 HH INCOME IS THE INFLECTION POINT FOR INTERNATIONAL OUTBOUND LEISURE TRAVEL IN DEVELOPING APAC MARKETS Source: MasterCard Intelligence The Big Question, therefore, is “How to reach and attract the Households in this income range”?
  5. 5. WHILE INTERNATIONAL TRAVEL CAPTURES MINDSHARE ACROSS APAC, THERE IS A PENT- UP DEMAND FOR DOMESTIC TRAVEL IN SOME MARKETS 1 Paris 8.5% 11 London 1.7% 2 New York 7.0% 12 LA, USA 1.7% 3 London 6.7% 13 Hong Kong 1.7% 4 Japan 4.1% 14 France 1.6% 5 USA 3.1% 15 Sydney 1.6% 6 Rome 3.0% 16 Italy 1.5% 7 Tokyo 2.9% 17 Switzerland 1.5% 8 Australia 2.4% 18 S. Korea 1.5% 9 UK 1.8% 19 Maldives 1.2% 10 Hawaii 1.8% 20 Canada 1.1% 1 Paris 8.4% 11 Seoul 1.8% 2 Singapore 6.0% 12 Rome 1.8% 3 London 5.7% 13 Maldives 1.8% 4 New York 4.3% 14 France 1.6% 5 Tokyo 4.1% 15 Switzerland 1.6% 6 USA 3.3% 16 S. Korea 1.5% 7 Japan 3.1% 17 New Zealand 1.3% 8 Hong Kong 3.0% 18 Bangkok 1.3% 9 Australia 2.9% 19 Malaysia 1.2% 10 Sydney 2.2% 20 Canada 1.2% Top 20 Aspirations destinations among travellers in developed markets in APAC Top 20 Aspirations destinations among travellers in emerging markets in APAC Source: MasterCard Intelligence Top 20 account for 56.3% of total of which APAC destinations are 14.1% Top 20 account for 58.2% of total of which APAC destinations are 28.5% Japan and India have the lowest propensity to travel internationally among the developed and developing Asia/Pacific markets respectively
  6. 6. APAC TRAVELLERS IN EMERGING COUNTRIES STILL RELY ON TRADITIONAL TRAVEL AGENTS, WHILE THE MOBILE BOOKINGS ARE RISING AT LEAST IN THE BUSINESS SEGMENT Proportion of travellers, that use a travel agent, by country Proportions of travellers who use Mobile for travel related bookings Source: Amadeus, Frost & Sullivan Leisure Business Travel agents make booking easier, particularly for complicated itineraries, is the main reason that travellers mainly use agents Ease of payment and lack of local payment options are the key barriers to enabling mobile bookings in emerging markets
  7. 7. FEMALE TRAVELLERS, WILL EMERGE AS A BIG SEGMENT, DRIVEN BY THE BUSINESS TRAVELLERS Source: Amadeus, Frost & Sullivan Business travellers by gender International business departures by women, 2011 – 30 “Women make most travel decisions anyway and are more likely to make decisions based on social media reviews. So the social media channel will become increasingly important for travel” - Yeoh Siew Hoon, Editor & Founder, Web-in-Travel
  8. 8. SELECTED APAC MARKETS – CAPTURING THE SIZE AND SCALE VIA JAPAN, CHINA, INDIA
  9. 9. Urban destinations, such as Hong Kong, Macau and Korea are on the rise; Business travel to Mainland China is increasing too JAPAN – SOLO TRAVELLERS RULE, WHILE GENERATION “S” IS THE KEY CUSTOMER SEGMENT Leisure Business Source: Amadeus, Frost & Sullivan Typical format of leisure travel by country Proportion of travellers over 65 years of age Outbound Japanese travellers by destination, 2000 - 2011
  10. 10. JAPAN – OUTBOUND TRAVEL IS ON THE DECLINE WHILE DOMESTIC TRAVEL IS STILL AN ATTRACTIVE AREA OF GROWTH 1Paris-France 2NY-USA 3Rome-Italy 4Hawaii Okinawa (#7), Kyoto (#12) and Hokkaido (#18) are the 3 top domestic aspirations destinations Declining and ageing population, stagnant economy, natural disasters abroad are the main cited reasons for low motivation for outbound travel Source: MasterCard Intelligence Top Aspirational destinations among Japanese outbound travellers
  11. 11. CHINA – MAJORITY OF THE OUTBOUND TRAVELLERS COME FROM A QUARTER OF ALL HOUSEHOLDS Households earning above US$10,000 per annum constitute 93% of all outbound international leisure trips and make up only 26% of all households 1Paris-France 3NY-USA 2Sydney-Australia China is the largest source market for Maldives, the number two ranked city location, and the number of Chinese tourists to Maldives has grown by more than five times in the five-year period between 2007 and 2012 Source: MasterCard Intelligence Top Aspirational destinations among Chinese outbound travellers
  12. 12. CHINA – THE NEXT WAVE OF GROWTH WILL COME FROM TIER – 2 AND TIER – 3 PROVINCES AND CITIES
  13. 13. CHINA – HOME-GROWN TRAVEL SERVICES ARE MOST POPULAR. SEARCH, GROUP BUY AND RECOMMENDATIONS ARE THE MOST COMMON ACTIVITIES ON MOBILE 0% 10% 20% 30% 40% 50% 60% Baidu Map Ctrip Qunar Hotel Autonavi Hotel 17u Bong Mangocity Kuxun LvMaMa trip.taobao mapbar Barely used hotel app Other 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Search Information Group Buy Comment and Recommendation Phone booking Online booking Mobile payment Other Source: China Internet Watch Most used travel related Mobile App Reasons for using travel Mobile App
  14. 14. INDIA – IN THE LONG-TERM OUTBOUND TRAVEL WILL FUEL THE GROWTH, HOWEVER, DOMESTIC TRAVEL IS THE SHORT-TERM GROWTH ENGINE Among the 14 Asia/Pacific markets, India has the lowest ratio of outbound trips to households. The propensity to travel by household income exhibits a point of inflection at the US$7,500 household income Of the top 50 destinations, 21 are domestic and account for 17% of aspirational mindshare Source: MasterCard Intelligence 1NY-USA 2Singapore 4 Malaysia 3London-UK 5Australia 6Japan
  15. 15. KEY DIFFERENTIATORS IN THE EVER-CROWDING OTA SPACE – WINNING THE HEARTS AND MINDS OF THE CONSUMER
  16. 16. LOCALIZATION OF PRODUCTS AND OFFERINGS WILL BE THE KEY DIFFERENTIATOR Language .. check Customer support .. check What’s the next frontier in localization? 1. Content - Integration to Facebook, Weibo, RenRen, Line - Link to Hotels’ YouTube videos 2. UI/UX 1. Payment options, specially over Mobile Country Power Distance Individualistic vs. Collectivist society Uncertainty avoidance Long term vs. Short term orientation Masculanity vs. Femininity Index UK 35 89 66 35 25 US 40 91 62 46 29 Brazil 69 38 49 76 65 Japan 54 46 95 92 80 Canada 39 80 52 48 23 China 80 20 66 30 118 Australia 36 90 66 51 31 e.g. Geert Hofstede’s “5 dimensions of culture” may reflect how consumers in each country engage with the product Social Recommendations, from family, friends, friends of friends, trending on Twitter, Line, WeChat
  17. 17. MOBILE IS INDEED BIG IN ASIA BUT IS ASIA READY FOR MOBILE PAYMENTS? Source: TechInAsia, Quartz Willingness and familiarity with:- China’s central bank considering placing limits on how much consumers can spend via their Mobile. Use of virtual credit cards and QR codes, used for online shopping was also halted - Quartz, Mar’14 Credit Card penetration in SEA Increase 3rd party payment and off-line payment options, e.g. payment counters in shopping malls, pre-paid cards …
  18. 18. UNDER THE DELUGE OF BIG DATA AND TOOLS, STARTING AT AVAILABLE DATA WILL CONSTRAINT THE RESULTS. BIG DATA JOURNEY ANALYSIS SHOULD BEGIN WITH THE KEY RESULTS What Results do we want to achieve? What Decisions each department needs to take? What Insights are required to make those decisions What data points need to be collected to deliver those insights Execute, Measure, Optimize e.g. to achiever personalized and enhanced customer experience, a number of data points are required to be collected and analyzed, such as purchase history, social media, ancillary sales, which “micro-segment” the customer falls in, data across all touch points, location, weather forecasts of the destination, local tourism promotions at the destination
  19. 19. IN THE MIDST OF CROWDED ONLINE TRAVEL INDUSTRY, SEVERAL NIMBLE AND NICHE PLAYERS ARE EMERGING ACROSS ASIA SUITABLE FOR PARTNERSHIPS AND ACQUISITIONS Last minute rooms booking Activity based planner Share travel experiences 117go.com
  20. 20. Demand Supply Products and Offerings Strategy and Operations Operations:- - Customer Experience (POS, Customer Service and Customer Management systems) - Payment mechanisms - Scalable technology and Infrastructure Website and Mobile Apps - Content - Ease of Use - Payment - Localization - Search, Discovery and Recommendations - Loyalty & Reward programs Merchants Agencies Strategy (Regional and Per-country) - Marketing (PPC, Display, SEO, and Off-line marketing) - Partnerships and acquisitions - Competitive analysis - Analytics (Consumer behavior, emerging segments) Inventory fulfillment and optimization LOCALIZATION, ANALYTICS AND PARTNERSHIPS WILL BE THE DETERMINANT OF DIFFERENTIATION ACROSS THE VALUE CHAIN Partners
  21. 21. THANK YOU Prepared By:- Sushant Sharma Contact Information:- sushant.mails@gmail.com +852 6571 1590 http://hk.linkedin.com/in/sushantsharmalinkedin/

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