Buzz
Mr. Brett Henry, Vice President of Commerce at Abacus Travel Solutions, with over 12 years of experience in the online travel sector in Asia, shares insights with Ms. Yeoh Siew Hoon, Editor and Co-founder of Web In Travel, regarding the development trends of the OTA (Online Travel Agent) wave, one of the 10 topics to be discussed at the Web in Travel 2014 conference.
'This marks a marathon, encompassing scale, investment potential, and brand construction.' Image: iStock
'What are your thoughts on the most significant changes over the past decade?'
Consider India and China. If someone had predicted 10 years ago that India would surge from zero to 48% in online transactions, it would have been met with skepticism. This market, with its low Internet penetration and moderate affluence, has surprisingly facilitated online business development.
Conversely, Hong Kong, despite its modern technology and superior infrastructure, encounters greater challenges in online travel services, a fact that seems incredulous. In Hong Kong, locating a travel agent is not overly burdensome for customers, where service providers are accountable for their transactions. Once again, the pivotal issue lies in customer experiences, and in Hong Kong, procuring services from a travel agent is more convenient than online travel.
Therefore, do you believe that Hong Kong serves as a prime example of how travel agents are effectively safeguarding their territories?
Absolutely, in any market where customers haven't adopted the habit of purchasing services online, brands and accompanying services become even more crucial. Concurrently, the investment levels in OTAs in Hong Kong remain moderate, unlike in India, where significant investments have been made in OTAs such as MakeMyTrip, Cleartrip, and Yatra. In Hong Kong, we mainly have Priceline, Expedia, and Zuji, with relatively lesser investment, although this might change in the future.
In Taiwan and South Korea, the most prominent contenders in the 'race' are travel agents, underscoring once again the importance of customer experience and brand issues. In these markets, local companies are taking the lead.
Is there a significant gap between the first and second positions in local markets?
Indeed, it seems that frontrunners have a much greater opportunity to capture a larger market share compared to followers - so anyone pioneering in this field tends to be highly successful.
In India, it's MakeMyTrip, and Ctrip is evidently dominating the market in China. Thus, in Indonesia, the winners will be those who lead and have significant scale, engaging in a 'race' between emerging OTAs like Nusatrip, Tiket, and Traveloka. And perhaps Rocket Internet is actively expanding Traveloka's scale with that perspective.
Australia is an intriguing market where local businesses once reigned, but now it seems there's been a shift?
Indeed so, this market was once dominated by names like Wotif and Webjet, but global contenders have entered with meticulous investment strategies. They've built services based on customer experience and bolstered their brand presence over the past 7 – 8 years, with Expedia suddenly emerging as a prominent name here, even before its acquisition of Wotif.
Mr. Brett Henry, Vice President of Commerce at Abacus Travel Group. Image: webintravel
So, do you think there could be a similar shake-up in India?
I believe it could be different in India. At this point, the Indian market scale is immense, and it seems local businesses are overlooking Expedia's efforts. But you never know what might happen. I recall Dara Khosrowshahi, CEO of Expedia Inc., saying, “We'll lose a lot of money in Asia, it's not about making money, it's about building brand, customer trust, and user experience.”
This isn't what local mid-tier rivals are pondering. This is a long game, not just about scale but also about investment and brand building. Expedia is a name synonymous with top-notch experiences in Australia, and I wager it's now a leading online brand in Singapore, Malaysia, and Hong Kong. Expedia is also heavily investing in Thailand, and you'll see its name everywhere in Bangkok. They've been consistent in pursuing their aspects and have long-term commitments to customers.
I suppose you'd say the same about Priceline's two brands, Booking and Agoda?
Priceline is quite savvy. Their first strength lies in having a far-reaching vision when acquiring these two brands; secondly, it's their humility in letting their 'team' be themselves, along with their investment in Ctrip. Here, it's not about ego, it's about smart business.
What are your thoughts on the upcoming OTA wave?
I believe we'll see even more aggressive moves from two global brands as they penetrate the Asian markets. The interesting stuff is just beginning, with players like Skiddo, Jetabroad (Australia), or Tiket.com (Indonesia) all racing on the same track, driven by super-smart individuals who think they can conquer the world. These are third-generation OTAs – and the growth knows no bounds.
Looking at Singapore, how do you think a brand like airfares.com.sg can defend their turf?
I think Kenny Chew, the founder of MISA Travel, has done an extraordinary job in building a robust online business model. They have a distinct strategy, and they'll execute it well. They know they can't outmuscle Expedia, so they'll focus on services, delivering a positive message based on their relationships with airlines. It's a unique enterprise, and customers recognize it as such.
Another wave involves local brands like MakeMyTrip and Ctrip expanding beyond their domestic market. Do you think they'll succeed?
It's unlikely if they continue using the same model as for their domestic market. But they still have the opportunity to expand globally and regionally, why not? They could learn to approach it like Expedia and have a long-term vision. Or they could adopt Priceline's method of acquiring major brands, operated by a strong team, and let it develop organically.
Ctrip seems to strike a balance of both. They've acquired the best businesses in the market like ezTravel, an online/offline tour operating platform in Taiwan – and they have Ctrip in Hong Kong.
What about Qunar, wanting to expand beyond China's borders?
This remains unclear. Qunar has an excellent leadership team, and history has shown that great teams always win. But I wonder, the market opportunity in China is enormous for both brands, they might focus on their own market and not necessarily strive to conquer others.
By Phong Chau (according to Web In Travel)
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Reference: Travel guide by Mytour
MytourSeptember 30, 2016
