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Time for travel agencies in North Asia to consider a symbiotic relationship

12/31/2008| 10:59:00 AM| 中文

Lai further added, “Generally, travel agents in North Asian countries are showing similar travel sentiments across the board during the current crisis. One difference though is that in markets like Hong Kong where the financial sector is significantly affected by the downturn some international TMCs have to resort to more drastic cost saving measures like no-pay leave and staff lay-offs.”

It may be one continent, but considering its diversity and structure geographically, Asia is aptly categorized into many territories with striking differences be it for various cultures or languages or infrastructure or even other factors.

This obviously has surfaced as a major hurdle for any organization in the travel distribution business, offline or online, to expand their business in more than one territory.

Within the region, are there any signs of clubbing various markets in North Asia into one as a whole? Should one start looking at China and its neighboring markets as one virtual market?

As a travel facilitator, Abacus backs the same and that, too, with certain statistics and trends.

“It is interesting to see how interdependent the travel industry in China and its neighboring markets have become. The total number of inbound travelers into mainland China in 2007 was 26 million (+18%), with the top 5 markets all being its neighbors (Hong Kong, Macau, Korea, Taiwan and Japan). What is amazing is that these 5 markets as a group account for a very high 87% of the total inbound into China. You can’t have more integrated markets than these, and as a result, when China sneezes, all its neighbors will catch a cold,” says Abacus International VP North Asia Patrick Lai.

To stress on his observation, Lai referred to the historic direct weekend charter flights between mainland China and Taiwan since July just as one example. “As a result, airlines from these two markets as well as those in Hong Kong and Macau have to juggle their network to accommodate the changes in travel patterns. While the travel industry in Taiwan rejoices over the prospect of a large influx of mainland Chinese tourists (up to 3,000 per day) those in Hong Kong and Macau have to prepare for the loss of the lucrative transit traffic between Taiwan and the mainland. These direct flights will drive some significant structural changes in all these markets.”

Agents, too, show similar sentiments across North Asia

Abacus International surveyed more than 40 leading travel agents from China, Hong Kong, Korea and Taiwan markets in the second half of 2008.

It was found that 30% of the companies surveyed saw automation as a key way to survive the financial crisis.

“Based on a recent survey we did with our key agency customers in mainland China, we found that most of them have expressed strong interest in streamlining their back-end operations to see how they can manage their business more efficiently and cost effectively. The other measures that they are considering to put in place are, in terms of priority, cost management and increasing productivity through using business automation tools, business diversification, down-sizing, review existing contracts with suppliers for better value, sourcing for new suppliers and accelerating the online presence,” shared Lai. 

Lai further added, “Generally, travel agents in North Asian countries are showing similar travel sentiments across the board during the current crisis. One difference though is that in markets like Hong Kong where the financial sector is significantly affected by the downturn some international TMCs have to resort to more drastic cost saving measures like no-pay leave and staff lay-offs.”

Abacus found that travel agents in mainland China are very open to new ideas and new ways of doing things.

“Internet penetration was at 15.9% and stood at 210 million users in 2007 (Travel Distribution China Report).  The number of online travel agencies is increasing in mainland China. Although Ctrip and eLong are the leading OTAs in China, others such as Mangocity, Yoee etc have made their presence felt,” said Lai. “Having said that, these OTAs’ adoption of new technologies is still at a relatively low level. While their customers can book directly from their websites, a lot of the behind-the-scene operations are still quite manual with booking confirmation and other customer services done mainly through their huge call centres. Fulfillment and in particular payments are done offline most of the time. Use of CRM is also at an infancy stage.”

The traditional agents are also starting to become more aware of the need for automation especially for their internal front, mid and back- office operations. A lot of them have also started to enrich the services offered in their websites.

“While the adoption of such technologies is not at an advanced stage when compared to other markets, we have seen increasing adoption of such technologies by our subscribers in the last couple of years,” he said.

Agents continue to be the centre of attraction

Agents are being increasingly targeted by online consolidators, online travel agents and new booking engines offered by travel technology specialists for partnerships.

Lai agrees and says the number of companies offering such online consolidation and partnerships is indeed increasing.

“Travel agents need to consider factors such as the organisation’s reputation, content being offered as well as the level of service and support that are extended to them before taking up any of the offers,” he said. “GDSs like Abacus provide the benefits of an extensive network of a full range of travel suppliers and expert advice on the travel market. Travel agencies in many markets have come to realise the efficiencies and cost effectiveness that GDSs can offer. To-date, Abacus has partnerships with over 450 airlines and 80,000 hotels. As a result, GDSs continue to serve as the major and in many cases the only booking engine for online as well as offline travel agencies across the world.”

Agents, web and technology

Abacus has also created products such as Abacus WebStart and Abacus Create, offering travel agents a low cost and efficient way to develop an online business without having to invest in a lot of resources and hardware. Travel agents who are traditionally brick and mortar are exploring options of making their services available to the growing number of travelers who are interested in self research and booking.

“At this stage, travel agents going online still rely on a large amount of offline work to complete the whole transaction, but we believe that with the increased Internet adoption and penetration of online payment solutions the online channel will become essential to both the online and offline agents. We have already seen the rapid progress of the online channel in domestic travel, and this trend will soon spread to international travel as well,” said Lai.

In some markets, agents have already started using a range of Web 2.0 options such an image gallery, discussion forums, events calendar, third party applications such as blogs to engage with customers online.

But Lai says Asia as a whole is not as quick to use Web 2.0 to engage their customers.

“However, there are quite a few online agencies who are leading the scene such as Eztravel and Yatra; both agencies have a blog. Another online agency, MakeMyTrip.com has a travel stories site. It will be great to see more travel agencies making further use of the available technology to stay engaged with their customers and also to market themselves. E.g. Putting up a focused travel group on Facebook.”

Abacus has already termed mobile phones as the most pervasive form of technology and harnessing the new technology available for the mobile platform must be a central part of travel agents’ strategy for growth.

China currently has the largest number of mobile phone subscribers in Asia Pacific with 540 million as of March 2008. The sheer penetration makes mobile a powerful tool for interacting with consumers.

Lai says the travel industry has the opportunity to drive greater innovation in the mobile marketplace as consumer needs and corporate wants are very much aligned for the sector.

“There are key areas to look at to enhance the overall travel experience: Planning, Promotion, Transaction and Information. Some of these services are already made available to the travelers, e. g., real-time updates and information on flight schedules etc. Some airlines have also made boarding pass available on the mobile devices, especially in the US,” said Lai. “Abacus is working with our partners to bring even more services to our travel agents to offer to their customers, for example, flight notification with location awareness, destination information upon arrival through our Abacus VirtuallyThere.”

Lai further added that mobile as a travel tool is still a very context sensitive channel.

Most business and leisure travelers currently use mobile to receive real-time updates and information such as flight delays, gate information and directions.

“The Abacus VirtuallyThere currently offers such services to the travel agent and allows the travel agent to ensure that their customers are kept in the know while on the go. While the capability obviously exists, there is not yet a universal demand for using a mobile to book the next family holiday or corporate trip,” said Lai. “Mobile can be both a tool and a channel depending on how the technological capabilities are utilized. Mobile may be easily accessible but it also has certain limitations.”

To capitalize on the technology, travel agents need to think about what they want to achieve with this medium and what their consumers are able and willing to use their mobile phones for.

Benefiting from alliances going forward

Abacus International’s President and CEO Robert Bailey, in the recent past, said travel agencies from relatively mature markets know the real benefits of forming strategic partnerships. They have expressed keen interest in forming alliances with overseas travel agencies and suppliers to strengthen the dynamics of their inbound and outbound business.

Answering a question related to how agents in China can benefit in the long-run with this approach, Lai said China’s domestic travel reached 1.6 billion passengers in 2007 and inbound arrival is expected to continue to grow by 7 to 8 percent a year to 163 million in 2010, according to PATA. Meanwhile, the outbound market from China was 40 million passengers last year and is expected to reach 45 million this year.

“Endowed with a huge geography and diverse sub-cultures, China has much to offer to both the domestic and inbound travelers. The travel industry can only tap on the full potential of the market through forming strong relationships with the various sectors of the travel chain, from rail, car to hotel and inbound tour agency across the whole of China,” he said. “This is especially true between mainland China and its North Asian neighbors like Japan, Korea, Taiwan, Hong Kong and Macau which combined account for a whopping 87% of all inbound travelers into the mainland in 2007.”

All of these markets, according to Lai, have become more closely integrated not just in terms of economic links but also socially and culturally, and it is becoming not only an opportunity but a necessity for travel agencies across these markets to establish strategic as well as operational relationship with their counterparts.

TAGS: Abacus
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