Tourico gears up to counter inimitable hurdles in China
What is key to scaling up the high-volume, wholesale model in China? Tourico believes supporting hotel companies with right technology can be a major asset.
ChinaTravelNews, Ritesh Gupta - Global travel wholesalers have always strived to offer a differentiated offering to hotel companies, with their ability to amass inventory via pre-purchase of a major chunk of rooms or working out attractive pricing standing out over the years.
The wholesale model, based on brokerage for high volume of rooms, has proven to be a feasible one over the years for the likes of Tourico Holidays.
But if there is one market that still demands special attention it remains to be China.
And Tourico is now trying to penetrate with a well-rounded localization strategy.
The company is set to launch a new office in Shanghai, which is going to be positioned as a technology hub for the company’s operations in the Asia Pacific region. The new office, to be opened in August, is part of Tourico’s plans to double its staff to 70 in China by the end of next year.
This expansion follows the recent appointment of Franz Nitz as VP of sales and product for the Asia-Pacific region.
“We currently have a team of around 35 executives in China. We have a presence in Beijing, Shanghai and also an office Hong Kong for customer service/ call centre operations,” says Nitz.
As renewed focus on the region, Tourico is diligently looking at expanding its intra-Asia business, rather than just driving business to markets outside this region. With impetus on localization, new initiatives are going to focus on appointing a strong team on the ground, and also clearly understand the distribution and technology requirements.
“We see many opportunities throughout Asia Pacific and China. There is a growing market inbound and outbound. Hotels want to leverage and spread their distribution and not be too reliant on too few partners,” says Nitz.
He adds, “We are looking at strengthening our product (contracting with hotels) and distribution (where the team targets entities like packaged tour specialists, owners of loyalty programmes etc. to augment their sales strategy). In fact, we have just scratched the surface in the Asia Pacific region, and going to invest more in human resources, products and technology.”
Nitz categorically states that Tourico’s core expertise lies in bringing in incremental value to its partners. “We don’t sell anything directly and do not own the customer, too,” says Nitz.
“Our proposition is clear – we bring incremental value, enabling hotel properties to reach out to audience they wouldn’t have managed to target otherwise. Also, hotels remain in control - our extranet paves way for hotels to improvise rates as well as control inventory and availability. Overall, there is increased visibility for a brand and there is also a strong billboard effect,” says Nitz. Also, with Tourico’s platform featuring hotels, attractions, transfers, car hire and multi-lingual content, the platform caters to different needs of a trip.
Nitz asserts that Tourico is heavily reliant on technology, and being a data-driven company, the team closely looks at historical trends and demand for a product, predicting future fluctuations in key markets. Last year it announced the supremacy of its predictive analytic software, which collects and processes travel search and booking data to monitor trends. It assesses whether the demand for a specific city, state, or country is going up.
“So if we aren’t in a position to bring additional room nights for a hotel going as per our assessment of demand, Tourico wouldn’t go ahead with contracting. Our system is all about driving revenue and visibility that traditional marketing strategies and partners are unable to deliver,” he says.
The company recently signed a couple of deals that exemplify its way of functioning. Tourico recently agreed to buy pre-purchase 44,000 room nights at Grand Hyatt New York, and 47,000 room nights at Hyatt Regency Paris Etoile. In fact, the company sold over 500,000 room nights in New York for 2014, and has 425 active hotel supplier contracts in Paris with an average of 2,100 rooms sold per day.
As of now, Tourico is looking at 4-star and above categories for partnering in China. “We don’t restrict ourselves to a particular star category. It’s not that we are going to ignore a 3-star hotel in Guangzhou if we see an opportunity. We completely go by the indication that emanate from our data-driven process.
“Tourico offers differentiated ways to work with hotels and in many instances guaranteeing production and working with hotels on their specific needs,” pointed out Nitz. Also, in addition to this, the company also counts on its exclusive distribution partnerships with Emirates, Sams Club/ Walmart, American Airlines etc. to enable hotels’ to reach out to traffic in different ways.
Association with Chinese partners
Other than crafting its own software to pre-emptively react to future spurt in demand, Tourico is also in the process of ascertaining the needs of local partners in China to strengthen its connectivity.
“We are in the process of setting up a team of engineers and developers in China. Even though there are standardized XML APIs, there is no one-size fit all phenomenon that makes it a straightforward task to work with our partners. Rather there are challenges in B2B distribution that need to be countered at a local level,” added Nitz. This would also help Tourico to get associated with new business players with distinctive models in the distribution chain in China. He also added that the team needs to go beyond Chinese translation of product offerings, and the team is looking at the right blend of people and content at a local level, understanding local culture to make steady progress in this market.
On the technology front, Tourico is rather optimistic and Chinese hotels would find value. For instance, with its data caching technology the company has enabled hotel companies to extend pricing and availability more accurately. Another highlight: the hotel listings and bookings are powered with real-time data delivered via XML protocol.
“We constantly match needs and find sweet spots to drive demand. Unlike an OTA, Tourico customizes and specifically target opportunities when airlines need to fill capacity and flash sales to drive demand,” said Nitz.
“In 2015 Hilton Hotels business is trading at 68+% up year-on-year, and in the pipeline are Starwood Hotels and Resorts, and Marriott Hotels,” said Nitz.
From product perspective, the company last year chose to rationalize the distribution of its main products – including hotels, flights, cruises, activities, group travel etc. Updating on the same, “Car rental is readily available. Also, this year we will launch a group bidding engine, allowing customers and hotels to connect effectively on group business,” shared Nitz.
Tourico is expected to approach China the way it has done other markets. The growing team’s main emphasis is going to be on a more diverse, unique and attractive hotel portfolio.
The category is bracing up for competition as it has also the likes of GTA in the fray.