Will the Internet – and online travel in particular – end up being dominated by juggernauts? Do online travel agencies (OTAs) stand a chance in a world where search engines offer e-commerce facilities, and giant retailers get into travel?
From left, Timothy Hughes, Agoda, Oliver Hua, Booking.com, Paul Whiteway, Skyscanner and Robin Harries, Trivago
These were the key questions debated at a panel discussion at WIT Japan, held in Tokyo last week. Moderated by WIT founder Yeoh Siew Hoon, the panel featured Oliver Hua, Managing Director, APAC, booking.com; Timothy Hughes, Vice President, Marketing, Agoda; Robin Harries, Head of APAC, trivago and Paul Whiteway, Commercial Director, APAC, Skyscanner.
Online retailers have their challenges in launching travel options in Asia, although there have been some successes, speakers noted. Alitrip, under Alibaba, consolidates existing domestic and overseas bookings for planes, hotels, cruises, package tours and more and is already the third biggest OTA in China after Ctrip and Qunar.
In Japan, Rakuten’s travel division leads the market with 4.6 million room nights per month of bookings (April 2015 figures) and in 2014, achieved 37.2b of revenues according to numbers shared by Rakuten Travel’s Takanobu Yamamoto at another panel featuring Japanese OTAs. In South Korea, travel is already Interpark’s biggest vertical with Gross Merchandise Value (GMV) of US$894 million revenues recorded in 2103 and Chris Lee, managing director, hotel business for South Korea’s largest ecommerce platform, said its tour division has been logging strong growth in recent months.
These successes are certainly not being ignored by the leading OTAs and meta-searches in the region and on top of that, there are also companies like Google to watch out for, noted the panel.
At Phocuswright Dublin, RyanAir’s chief marketing officer, Kenny Jacobs, had said that he’d be worried if he was in the middle and meta-searches from KAYAK, Skyscanner and Trivago are undoubtedly watching what Google is doing with its search and particularly with the shift to mobile where Google Now is featuring strongly in the in-destination piece.
Google’s expansion plans should be a cause for concern, Trivago’s Harries said, because they place their products in preferred positions in search results. “It is important to find strategies that are not so dependent on Google,” he added.
This explains why Trivago has built up a successful brand using TV advertising. The Expedia-owned meta-search has become the gold standard for others to look up to for brand building and its success in Asia – scaling and executing – has become the most-talked-about topic at conferences.
Hua, who came to Booking.com from eBay, however, reminded the audience that Google is “just like anybody else….they go into markets and sometimes they succeed and sometimes they fail,” citing Google’s failed attempt at e-commerce in 2006.
Nevertheless, Booking.com has made strides in diversifying its customer acquisition channels and when asked which was his biggest channel currently, Hua said, “Direct,” clearly a sign that Booking.com’s mobile initiatives are paying off. Its apps now generate substantial direct business for the hotel booking site.
Skyscanner is also trying to build a brand using TV advertising, said Whiteway while Agoda’s Hughes said SEM was still its biggest channel.
This is where an area of sensitivity arises. With meta-searches offering assisted booking, Hughes said that meta-searches should be careful that the lines do not blur too much between search and transaction. OTAs spend money on meta-searches to acquire traffic and thus do not take too kindly when meta-searches encourage customers to book directly with the supplier.
Harries and Whiteway argue that what comes first is customer needs and if customers want to book where they search, then there should be that facility offered to them.
The good news is, the complexity of the travel business might prove to be a strategic defense against the encroachment of non-travel players. Now over 20 years old, the online travel industry has been successful in employing smart technology and creativity, with deep market knowledge, to adapt to changing consumer expectations, according to panelists.
Hughes said, “We all thought travel was going to get simpler but it hasn’t. It’s become more complex, more fragmented and it will take those who truly understand the travel business to execute well.”
Hughes (left) and Hua: “We all thought travel was going to get simpler but it hasn’t.”
Consumer psychology, it seems, may be another trump card in the battle for online consumers. Speakers at WIT Japan noted consumers generally adopt a different mindset when purchasing travel – they don’t think about whether they’re booking on an OTA or a meta or a platform, the decision is made less on impulse, appears more considered and is backed by lots of online research.
When it comes to owning the customer journey, will the specialised OTA or the all-encompassing e-commerce platform triumph?
Customers often don’t offer their undivided attention to one platform or provider. While it may be possible to own a “sliver” of the journey – for example the market for flight or hotel or restaurant bookings – it is “too early and too huge for one company to own it all,” Harries concluded.
For now, it seems there is enough space in the market for everyone to co-exist and find their place in the sun.
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