With China emerging as the biggest travel spending country and around 1,800 hotels in the construction pipeline in the wider region alone for 2013, Asia is a key focus market for many global travel companies.
Couple this with growth in the number of travel tech startups in Asia, especially from India, China, Singapore, Indonesia, Vietnam, and you have an exciting scene.
So how is the travel tech scene looking in Asia? What are the growth opportunities for a global/local players? Does the rate parity issue exist in Asia?
These are few of the questions discussed by a panel in the recent EyeForTravel Travel Distribution Summit Asia in Singapore.
Panel Members
Moderator
Tnooz covered the panel discussion, below are questions by Saberwal and answers by panel members.
There are many emerging OTAs coming in Indonesia, whats your view?
Andy: I don’t see many local OTA in Indonesia. But for a global player like booking.com it will take a lot of time to stabilise in Indonesia. Indonesia is a country where 70% of travel payments are done in bank-account-transfer mode.
Ricky, your company is in busness for 39 years, hows the business shaping in Malaysia?
Ricky: Relationship is up and down with OTAs, there are love cycles, hate cycles and neutral cycles. We take away the "O" in OTA and treat them as just TAs, that’s all. At the same time, I don’t think it’s a wise decision to have antagonistic relationship with OTAs.
Ross, you have Wego rolled out in 20 websites, 30 languaes, hows the business model shaping up?
Ross: We are growing in Asia and middle east, we are also adding new talent there. Our plan is to build a foundation to scale in the next couple of years, with the COO and CMO joining us from Wotif. We are also mining the past 7-8 years of data and building an advertsing capability platform.
Whats your view on local OTA vs global OTA? There are mindboggling local OTAs in Japan.
Amit: We at MakeMyTrip have a good Japanese website. When we showed it to our Japanese counterparts, they felt that it wasn't local enough for the market. So we are still in the learning phase, though we are big in India.
52% of our hotel business in India are booked on the same day or day before. Our approach towards hotel differs from region to region, for example in India there are lot of new approaches like mobile bookings, last minute bookings.
In Indonesia, you offer different rates for different channels?
Andy: Yes, with a difference of 1 or 2 dollars. But, we do have a minium selling rate.
Ross: Rate parity in Asia is a myth, I would like you to spend five minutes in Wego and you will kow what I am talking about.
Amit: In India, RateParity is very well enforced, we are one of the guardians of it.
Ricky: A lot of OTAs that approach us (hoteliers) always give us avenues to bend the rules, for example in form of store front promotion. But, from our corporate office perspective – we believe in rate parity for the simple reason of managing and controlling.
Can you tell us about your successful mobile app (booking.com)?
Adrian: We did 3 billion mobile transactions in 2012, compared to 1 billion in 2011. Mobile is an important channel for us and it is fast growing. We have a separate mobile technology team. We ensure that a lot of information gets shared across teams (marketing, mobile etc), teams work and learn together. We are looking at mobile as an end to end customer experience channel.
Ross: We at Wego have invested heavily on mobile web, 15-20% of visits are from mobile. Currently, there are few apps in our pipeline. There are some interesting things that we can do in mobile meta search.
Technology is changing rapidly. In Indonesia, Blackberry is still ruling, how do you keep up with all these, do you plan to leverage OTA for these business activity?
Ricky: There are device specific issues that we face, we still aren’t able to ensure that all functionalities work 100% on all devices. We have our own frustration on that. We have OTAs coming to us asking us to give special prices for mobile devices, this in essence breaks the rate parity.
Andy: For smaller hotel groups, mobile websites work effective than a mobile app. Th question is - how many users will install a native app of a smaller hotelier.
Which business model is going to be disruptive in the APAC market? All small players are existing for a long time and they are well established. Do you think Airbnb in India will be disruptive?
Adrian: Yes, Airbnb and HotelTonight are good business models. They have grown from small to large, building these businesses with lot of hard work. I think the most disruptive things in future will be mobile and pricing.
How do you think Kayak acquisition is going to affect APAC region?
Adrian: Priceline announced its Kayak acquisition in November 2012. I think the main reason for buying Kayak is their great business. We buy businesses that have great management team, and we want them to stay. Kayak has got great technology in terms of user experience and mobile technology. Kayak is U.S centric and flight centric, but in the next 5 to 10 years, with Priceline and Kayak together we will have huge valuation in APAC market.
Do you think Tripadvisor moving towards meta-search market is good?
Ross: Tripadvisor has done an excellent job on displaying rates. The dashboard and tools they provide is a good idea and we might also adopt. Tripadvisor is the place where consumers go finally to do a reality check. I don’t think most people start their trip planning process with Tripadvisor. Wego benefits being on the initial trip planning stage with flight and hotel search.
The cost of acquiring traffic is increasing? Do you think you are going to increase commission for OTAs? What do you think it’s a fair commission for OTAs?
Ricky: If you see in few Vietnam OTAs, the first few pages are occupied by hotels with $25 price, where as our standard/normal hotel price would be $125.
The commission that we pay to OTA is equivalent to the commission OTA gets from a number of small hotels put together.
We still don’t know why those small hotels are displayed in the first few pages. We want to see this scenario changed.
Twenty years ago, we were paying commission in the range of 10 to 20%. Now, we think a 10% commission to OTA would be good.
Amit: It is an interesting idea to have a fixed commission rate regardless of the room type.
Booking.com has evolved and grown in APAC, what are the five things that you did differently to capture pulse of Asian market?
Adrian: We took things in steps. We opened an office in Singapore to learn about the region.
We served our existing customers who wanted to travel to APAC. Based on our customer need, we setup a local office in Tokyo.
Its still an evolving strategy - put people on the ground, and then learn the market.
Also, we ensured that we hired the right people, so it’s a step by step process for us.
Do you think hotels can yield better with or without rate parity?
Ricky: If its within our control to switch on/off rate parity, then that would be better. The reality is that its not in our control.
Ricky, how are you planning to grow your hotel website traffic?
Ricky: We discovered that a lot of people opted out when they are about to enter credit card details. Its due to various reasons like non-refundable booking amount. We took this restriction off and saw much better conversion rate.
NB:Asia image via Shutterstock.