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Booking.com forges ahead with laser-sharp focus in China

06/23/2016| 10:38:30 AM| ChinaTravelNews 中文

China continues to witness lot of action in the distribution space, but Booking.com intends to chart its course for organic growth in an assiduous manner.

ChinaTravelNews, Ritesh Gupta - There is no single formula that can describe the extent to which a travel supplier needs to count on indirect transactional platforms for their distribution.

As seen over the years in relatively mature markets, there are key factors such as the extent to which one needs to leverage OTAs for their sizable incremental value that shape up the association. Also, it wouldn’t be pragmatic for a supplier to label the role of OTAs in the same manner for all markets at any given point of time. So in general lower the awareness, higher the tendency to count on OTAs. 

But China never fails to surprise one.

After heavy consolidation in the OTA space in 2015, the market is also witnessing strategic alliances between travel suppliers and OTAs (Ctrip has added to its roster of deals by agreeing to invest RMB3 billion in China Eastern; HNA Group being associated with NH Hotel, Tuniu etc.).  

“It (the current status of the travel e-commerce business in China) is a sign of this market moving on. One has to respond to customer requirements, and in this context, (one could deem) strengthening of inventory and getting the product ready (for instance, travel insurance along with core travel products) are the requirements,” mentioned Oliver Hua, Managing Director, Asia Pacific at Booking.com. 


Oliver Hua, Managing Director, Asia Pacific at Booking.com

Of course, in any market, partnerships are a major opportunity to cross-pair offers to relevant customers and grow them into loyal customers for each of the brands. Also, second party data, essentially first party data that one gains access directly from that source, is a major benefit from such collaborations. Referring to suppliers, Hua said there is always a balance that needs to be attained considering incremental reach as well as keeping the distribution cost as low as possible. They have to look at channel economics as well as ensure the customer experience is optimized as travellers tend to buy from a mix of direct and indirect channels. 

Being ready  

Under such scenario, foreign OTA groups need to devise their next move even better.

We have seen of late there has been a tendency on the part of foreign OTAs with strong inventory/ content to power a strong brand in China, at least till the point one can’t own and operate a powerful brand. But, as an established organization, the priceline group asserts that it has enough firepower to firmly control its presence whether or not it ends up cannibalizing the pie for which other OTAs are also competing.

“We, as a group, stand out for several aspects. Global reach is one. No other OTA group can match the diversity of our offering – for instance, the type of accommodation and the geographical presence spanning across 224 countries,” asserted Hua. He also referred to the group’s ability to offer instant booking and confirmation as another potent weapon. “There are intermediaries that may take 6-8 hours to confirm a reservation. But not with us as we offer instant confirmation. Also, we offer book now, pay later option, and we offer flexibility in terms of changes that can be done or cancellation. So all these factors ensure our proposition stands out in the marketplace. Plus, our 24/7 customer service is another major asset.” Hua added that facilitating payments in China is one area that calls for constant improvement as alternative form of payments especially Alipay and WeChat are integral part of this so-called cashless society.

Being in a position to aid foreign suppliers definitely put priceline as a group in a strong position. Whether a hotel company is looking to set up in China, or any other market in the world that may be foreign to where the business launched, it’s critical to make sure the experience is highly localized.  For hotels specifically, it’s a deviation from their day-to-day business operations to think about having to build a transactional platform for China, and how to optimize the same for conversion. As a U. S-based senior hotel distribution executive told me: “It’s not an easy task for a Western company to let a Chinese user fill a form or share information in Chinese during the course of a booking process. And this has to be achieved for nearly 4000 hotels!” On the other hand, a site like booking.com is constantly reviewing and testing its user experience in all languages and all markets, including China, for both consumers and hotel partners.  

Organic growth

Till last year priceline had 10 offices across the country, with over 500 employees in China including a new customer service facility investment for Booking.com in Shanghai with a team of 400 agents. 

“We don’t have an estimated number to share at current stage but we believe that our business in China market will grow fast in this year,” shared Hua.  

Booking.com is clearly looking at organic growth in the foreseeable future. As we highlighted during one of our earlier reports, the OTA has been stepping up its own inventory by dealing directly with local hotels. As we checked in early February, Ctrip had around 10050 for Beijing, whereas Booking.com featured nearly 1400 hotels for the same city, for one night. It seemed that booking.com is using their own inventory and not partnering with any OTA in China.

“We are relatively young here, officially announced our presence in 2012. Ctrip and Qunar have lot more offices, they have bigger teams and their presence is much more widespread, even moving into tier-3 and tier-4 cities,” said Hua, who added that booking.com is selective in terms of expansion. “Our hotel content acquisition strategy is about following customer demand at destination level and hotel level. We are looking at smaller subsets of destinations in China.” The Booking.com hotel contracting team started with 8000 properties or so in 2015, and ended up with around four times of this in 12 months. Currently, the figure stands at 40000 and the pace of acquisition going forward would be demand-driven, said Hua. The OTA is looking at an assorted listing – foreign brands/ international chains, local chains, independent properties etc. across all accommodation categories.

“For us, building business here is about incremental process. It’s about taking multiple steps, moving on gradually rather than one big step. Our development philosophy is focus on the core product, localize it as we go along. For instance, instead of Google Maps we are working with multiple map providers here. We assess pros and cons and look at the merit of each option,” shared Hua. He also shared that the team looks at their marketing mix from a holistic perspective – in order to step up the awareness of the brand, the mix is diverse right now ranging from paid search, affiliate partners, meta-search sites, review sites as well as unconventional marketing partnerships, including ones with China Mobile (for those who are travelling internationally can avail booking options from booking.com) and China Merchant Bank (a promotion for multi-currency credit card holders).

Resources are even being swelled on the technology side in order to cater to the platform needs, for instance, a wide variety of Android devices that are used in China.  Of course, a core advantage that this group has is their robust digital asset. The sites’ architecture was built to be able to turn on new languages, add localized features, promote relevant content and provide a targeted user experience. And this is just one of the many advantages that booking.com is counting on as it goes forward.

Oliver Hua, Managing Director, Asia Pacific at Booking.com is scheduled to speak at the upcoming 2016 TravelDaily Conference, slated to take place in Shanghai (August 31-September 1).

TAGS: Booking.com | OTA | travel distribution | Priceline
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