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Spotlight on the Asia Pacific Online Market
The Asia Pacific region contains nearly one-third of the world’s population. Within 10 years, regional travel spend in Asia Pacific will exceed both that of the U.S. and Western Europe. In fact, current Internet users already exceed those of Western nations. Given the growing importance of online distribution in Asia Pacific, a “Thought Leaders in Interactive Distribution” roundtable was held in Singapore in January 2008. This inaugural gathering was sponsored by leading educational, industry and technology organizations. Participants were segmented into groups based on themes. Each group was charged with identifying key trends, players and regional issues. Several key findings for the region, as identified by the Business & Event Travel group, are summarized below:
• While businesses and their travelers want to reduce travel costs, they also want simplicity, convenience and assurance that they are receiving the “best deal.” Suppliers and intermediaries will have to address these sometimes conflicting demands to be successful in an online environment, knowing that increased transparency in pricing can challenge local and regional business relationships.
• The penetration of business travel planning and management tools, including interactive applications, is in the early stages of implementation.
• Travel information content is fragmented, particularly for lodging. It will become increasingly so as more properties open, merge and/or re-flag. International chain properties will implement Western approaches to distribution, but smaller independent properties will lag behind such trends and rely more on aggregators and more traditional distribution methods.
• Significant outbound travel growth for travel originating from China and India is presenting both a challenge and an opportunity for large international intermediaries and suppliers. Customers from these markets are much less experienced and reliant on interactive distribution. The importance of these key markets will require modifications to distribution methods. These modifications must take into consideration: (1) English is not the sole language of business; (2) interactive distribution is far less developed and accepted in Asian countries; and (3) the significance of culture and regulation is more extensive than in other source markets.
Admittedly, these findings are a bit daunting: There are many challenges ahead for organizations that wish to drive business travel online in this region. Everyone agrees it will happen, but they believe the evolution of online travel in Asia Pacific will differ from what we have seen in the U.S. and Europe. This region will adopt many systems and processes that are already a part of the Western European and North American travel markets, but there will be some level of distinction required for Asia Pacific sub-regions. Another point of agreement is that online business travel transactions will trail behind leisure bookings for some time, with the only exception being the largest corporations mandating online behavior (note that small to medium-sized enterprises account for the majority of businesses in many Asian countries). Lastly, there is acknowledgment that the larger travel management organizations are much more likely to implement and help their customers drive online transactions than the smaller, more regional agencies.
How best to determine the “differences” or “levels of distinction” required to evolve all aspects of this market is still very much unknown, but is certainly a work in progress. Content is critical to online success in any market, but the complexity of language sets, cultures, service expectations, and the addition of government owned or proprietary GDS systems that have traditionally not allowed for their content to be aggregated (TravelSky in China and Topas in Korea), present more complex challenges than the Latin American or European marketplace.
Are Any Markets Achieving Success?
It is important to put Asia Pacific online success in perspective. Just as we saw in the European marketplace, individual markets perform differently. Although statistics are hard to come by, and those compiling statistics do not all use identical measures, here are a few to gauge both success and disparity:
• BCD Travel numbers suggest a 7 percent (business) adoption average in the market. Extreme lows and few highs constitute this low overall average.
• In China, BCD Travel reports a 15 percent (business travel) adoption statistic. In Australia, BCD Travel has seen a 72 percent (business travel) adoption rate.
• PhoCusWright research says the online travel market in Asia Pacific currently stands between 15 percent and 20 percent online (leisure and business transactions).
Where are there more economies at opposite ends of the development spectrum than in Asia Pacific? Australia, Japan and South Korea have advanced digital infrastructures and mature e-commerce and online travel markets, whereas Vietnam, Indonesia and Malaysia are less developed – but growing fast. Even market readiness carries its caveats: for example, Japanese culture, while technologically market ready, prides itself on service. The philosophy of kaizen, or continuous improvement, permeates every aspect of Japanese society, commerce and industry. Self-service thus presents a considerable cultural conflict.
It is the massive travel markets of China and India, however, which are of interest to many. It is estimated that online travel bookings (leisure and business transactions) in China will be close to US$15.4 billion in 2011, says eMarketer, a market research and trend analysis organization focused on Internet, e-business and emerging technologies. In India, they predict US$4 billion will be spent in 2011. While some online success has been achieved, particularly in India, it is worth noting that some of the technologies being used are not classically complete online solutions. Rather, they mix aggregators with online customer interfaces supported by online real time and manual processes, largely to support payment obstacles. These processes will need to evolve before we can consider all of these transactions truly online.
As the Asia Pacific market continues to evolve, Apple, a global BCD Travel customer, is laying the groundwork for future success. Kathleen Ramsay, global travel manager for Apple, has charged BCD Travel with rolling out GetThere in eight of the ten Asia Pacific countries serviced by BCD Travel. Ramsay says: “It was always our intention to roll out GetThere in Asia. The U.S. and Europe are onboard and achieving success, so this is a natural progression. Our initial objective is global profile management, but by using GetThere as our provider, and enabling the booking component, we are providing the appropriate infrastructure for travelers and arrangers to book online when they are comfortable. Aggressive online marketing and adoption goals will be worked into a second phase approach. Until then we will be using the profiling component with robotic feeds to promote enhanced data richness for global data consolidation and management.”
Online Vendor Initiatives
With such large potential in the region, you can bet the online vendors are hard at work trying to entice the corporate traveler and corporate travel buyer. We reached out to a few of our online partners to ask them what the future holds:
• Amadeus’ language set is the most comprehensive for this market, touting Japanese, Traditional and Mandarin Chinese. Additional development is in the works on a feature called “Single View.” Single View allows content to be brought back to the end user in one display regardless of GDS or source to accommodate shopping and reservation purchasing of mixed content in one reservation. Delivered in varying degrees across Europe and the Americas, this tool will be honed for the Asia Pacific market. Amadeus has also invested in a portal, specific to the Japanese market, which taps into Japan Rail, All Nippon and Japan Airlines. By using this portal travelers can gain full access to content that is otherwise inaccessible via the traditional GDS method. Lastly, by using Amadeus’s “On Request Hotels,” companies can upload hotels for travelers to request online which are then serviced by traditional travel counselors. Amadeus also mentioned a big push in India to establish direct connects with low cost carriers and rail providers.
• Concur’s focus includes enhancing their flex-faring (one-way shopping and faring) in the Australian market to include Tasmania Airlines. Concur has also committed to multi-source reservation functionality. This feature, similar to Amadeus’ Single View, allows the mixing of carriers, GDS, and content types in one reservation, promoting enhanced traveler ease. Today travelers are often required to make multiple online reservations if content types are not combinable (i.e., GDS air and direct connect air). Concur also plans on adding wait-listing capabilities in Europe and Asia Pacific.
• GetThere is focused on enhancing their air shopping with flexible one-way fares. Virgin Blue and Qantas content are high on the list, but other markets will follow as many carriers move from a roundtrip to a one-way fare structure. Language is also a focus. Korean language was delivered in 2008, and Mandarin Chinese is ear-marked for delivery in 2009. Lastly, while it is too early in the planning and development stages for exact details, we were told “India specific” content is on their roadmap.
BCD Travel’s Proprietary Online Initiatives
BCD Travel has committed to two proprietary tools branded under the “BCD Travel Business Online” brand in the Asia Pacific region. These solutions are suited to the China and India markets and complement the 13 market leading online booking tools that BCD Travel supports globally.
Jim Song, deputy general manager for BCD Travel in China, says: “The Chinese tool offers a direct interface with the TravelSky GDS system, China’s dominant provider of information technology solutions for air travel. BCD Travel Business Online for China accommodates both domestic and international air bookings via TravelSky and links to the Abacus GDS to offer hotel and car rental reservations. This is a critical differentiator, as TravelSky has a monopoly on domestic inventory and ticketing in the China market. In 2009, we hope to release a mobile version of this offering so that customers can book reservations online using their mobile phone.”
BCD Travel in India offers a similar fit for the local market, using the Amadeus programming interface as its content aggregator. Amit Raichada, who leads the Information and Communication Technology team for BCD Travel in India, says: “Software development has been a collaborative effort between BCD Travel and a private technology partner. We have just completed Beta testing and will begin implementing in early 2009.”
Thought for Action
Things to Consider Before Going Online in Asia Pacific
Roger Pfund, general manager & vice president for BCD Travel in Asia Pacific, sees three factors key to achieving online success in the region: (1) market readiness, (2) a comprehensive online solution, and (3) a committed customer. Pfund says: “The first two factors are coming together in Australia and New Zealand, and we are seeing some traction in China and Singapore, but the criticality of the third factor, customer commitment, can not be overemphasized. We need to feel confident that our customer has a strong IT infrastructure and culture, a willingness to mandate usage, and readiness to review current policies and processes for optimization in the online environment.”
The list of questions that companies should ask themselves, compiled by Online Channel for the Latin American market overview, provides a good foundation for the Asia Pacific market as well.
• What is my overall objective? Is it a consistent application of global travel technology or a significant return on investment?
• Travel program maturity
Does a managed, well-communicated travel program exist?
Are end-users aware of the policy?
What is the level of compliance?
• Program size
Spend and transaction volumes within a given country
• Travel Profile
Usage of non-GDS content
Ratio of complex vs. point-to-point trips
Re-book or change trip percentage
Trip approval
• Viability of acceptance
Organizational support
Technical infrastructure
Executive sponsorship
• Existing cost structure in comparison to incremental financial benefits
• Online strategy
What are the goals of the online program? Direct cost savings? Streamlining of processes? Indirect cost savings? Security and risk management? Others?
We also encourage you to talk to your BCD Travel account management team and our Online Technology Solutions representatives to validate the next logical steps in your program.