Kuoni responds to digitalisation, China a key market in new scheme of things
As a B2B specialist, Kuoni is looking at several opportunities, including capitalizing on the capabilities of different partners in China in order to increase the visibility of its offerings.
ChinaTravelNews - The commencement of 2015 paved way for a major change in the course of The Kuoni Group’s history. The group chose to sell the tour operating business, and leverage the strength of its B2B businesses.
In the 2014 financial year, Kuoni Group generated turnover of CHF 5 508 million (2013: CHF 5 669 million). Organic growth came to – 0.1%. The strongest organic growth was registered by the future core activities: FIT (new GTD) + 8.8% and VFS Global + 13.9%.
As for the way travel industry is shaping up, Kuoni acknowledges the changes resulting from the digitisation of travel, and more and more travellers now opting to create their holiday packages online. So what does this mean as far as emerging opportunities are concerned? Kuoni underlines that this is resulting in new requirements among online intermediaries and other travel providers.
A market like China exemplifies the way industry is undergoing a change. And expectedly, the Asian giant is among the list of markets that are being targeted by Kuoni.
“Chinese outbound travel is in the middle of a fundamental change. More and more people can afford to travel (internationally),” says Simon Hauswirth, SVP, Strategic Development & Partnerships at Kuoni Group. He adds, “Some years ago, the market used to be mainly about organized groups, but now FIT is witnessing stronger growth. So the travel industry is also evolving quickly.” According to China National Tourism Administration, the number of Chinese tourists travelling abroad increased by 19.5 percent Y-o-Y to 109 million last year.
The group has B2B businesses in China - online accommodation provider GTA, Kuoni Group Travel Experts, the leading provider of group travel products to Asian travel agents and tour operators, and VFS, a visa process outsourcing business catering to governments.
Keeping up with pace of change
As for challenges for the group in China, Hauswirth says maintaining profitability, particularly with the intense competition in online distribution, is a major one. Also, considering fast changes in customer needs and behaviours means Kuoni needs to enable its customers and partners to cater for a multitude of requirements in today’s environment. “This requires product expertise as well as technology,” he says.
Hauswirth says travel distribution in China is undergoing a fundamental change – the overall choice of travel products, the way travel is sold and booked, especially with the emergence of online and mobile technology.
He says bookings are moving online, particularly to mobile devices. “This is an area where China is ahead of most if not all other markets in the world,” he says. “Travel distributors therefore need to be able to serve their customers across multiple channels, including online/mobile and offline.”
The industry is already witnessing interesting technology platforms and the way suppliers’ content is reaching out to new channels.
Hauswirth acknowledges and says, “There are new business players with distinctive models in the distribution chain. Plus, different customer segments such as first time travellers and those who have already travelled make for an interesting matrix of what to offer, how and where in order to optimize business opportunities.”
The online distribution market is witnessing intriguing changes, with Ctrip now collaborating with over 5000 third party partners via its Open Platform, Qunar opting to work on a mix of traffic generation and transaction-based business model, and the likes of Tuniu, too, now on the horizon.
Hauswirth said interesting opportunities have emerged for a group like Kuoni, which is investing substantially to better serve its Chinese customers and make the most of the presence of new players. For example, how to capitalize on capabilities of different partners in order to increase the visibility of Kuoni’s products and services.
Referring to the possibility of strategic alliances, he said, “Kuoni looks into all options. As our business model is B2B, strong partnerships with distributors are particularly important for us. As a leading global provider to the travel industry, we are uniquely positioned to support the Chinese travel industry in growing their outbound business. We want our customers and partners, large or small, to benefit from our destination expertise, global experience and product range. Therefore we also invest in our own capabilities, technology and resources to better serve the needs of our Chinese customers.”
It should be noted that in mainland China, Kuoni doesn’t sell directly to travellers (B2C) but exclusively to the travel industry (B2B). So Kuoni is working with traditional agency partners, online intermediaries, and technology players who have developed technology platforms to sell but with limited content at their disposal.
For its part, through its GTA business, Kuoni has certain offerings such as client APIs, allowing OTAs and other partners’ access to its travel content via XML interface for integration into their reservation system or website. This is possible without any need to use any of GTA’s traditional booking sites. While GTA is equipped with such technology solutions, the group is also developing such ways to offer content for Kuoni Group Travel Experts through online channels.
“Other than distribution, one opportunity that Kuoni is looking at in terms of strengthening its content is to leverage its network of destination management companies across the U.S., Middle East, Australia, Africa and Asia to offer new products and experiences to Chinese travellers,” shared Hauswirth.
Differentiated travel product
As for travelers from China, Hauswirth says they have clearer expectations from what they want to experience during their trip, therefore they look for more differentiated travel products, beyond the typical first-time tours.
He highlighted some trends:
• Long-haul travel will grow faster than regional, intra-Asian travel. It will remain a key aspiration to travel to destinations like Europe and get more in-depth experience
• While shopping will remain a crucial element for Chinese travelers, the popularity of guided shopping tours will go down.
• Individual travel is increasing in importance, which means travel companies need to be able to advise travelers about their ideal trip and build the trip together with the travelers based on their specific requirements and interests
It is vital that travel companies provide a wider range of products and cater for more specific needs and interests such as in-depth experiences focusing on a specific destination, thematic travel, etc., shared Hauswirth.
Kuoni has decided to strengthen its support for Chinese customers with local staff based in its offices in Beijing, Shanghai, Guangzhou and Chengdu.
Simon Hauswirth is scheduled to speak at the upcoming 2015 TravelDaily Conference in Shanghai (September 16-17, 2015).
(Report by Ritesh Gupta)