Blog
Untitled Document

Monopoly, disruption and game changers at the centre of the universe

Posted on 22 Sep 2011 at 08:20 am by Yeoh Siew Hoon
BACK

I landed in Baiyun International Airport, Guangzhou past midnight this morning and felt like I arrived in the middle of an industry cocktail party.

At immigration, I met a group of travel agents from Singapore on a Singapore Airlines fam tour. Airline objective: To promote their new late flight to the third largest city in the world’s largest travel market (soon). Agents’ objective: To play golf.

Nice to knows some things don’t change.

I then met a hotelier from a major hotel brand who's probably about to develop his 100th hote in China.

So welcome to the new centre of the universe where everyone is still trying to crack the source code to the riches that lie within. And it appears it may be getting harder because some things do change especially in the fast growing and dynamic online travel sector where new forces are at work and throwing up fresh challenges. 

From my one day at the China Travel Distribution Summit, it is clear that competition has intensified (lots), the landscape has changed with the advent of new players like Baidu (which bought Qunar) and start-ups, and leading OTAs, Ctrip, eLong and Mango City, are facing pressure like never before.

Social networks and the explosion of mobile are causing the ground to shift and while China still offers the promise of growth, it now also offers uncertainty in who will be the new winners or the next game changer.

Raising most concern was the Baidu-Qunar entity which James Tang of Ctrip said had monopolized access to the customer.

Guang Fu (left), CEO of eLong, said with 84% of general search coming from Baidu, the acquisition had created the biggest vertical search engine for online travel and a “monopoly of customers’ entry point”.

This had created “quite unfair competition” for the customer, he said and OTAs would have to find other ways of acquiring customers. “I hope Baidu and Qunar will have fair representation of results, this is a serious topic.”

Guang Fu said that even though the market was growing, the competition has become more aggressive for start-ups and current OTAs and that online travel was “no longer the sector everybody can enter and get customers”.

He said online travel companies had three mountains to climb – traffic generation, rate management which he described as chaotic and customer experience.

The first as he explained was getting more challenging, rate management was increasingly chaotic and the area of customer experience will be the new battleground as travel suppliers and OTAs fight for customer loyalty and retention in a market driven by price and value-conscious customers.

In opening the conference, founder Charlie Li  outlined the new opportunities: Upscale and low end (citing the lack of high end luxury brands), content aggregation for local tours and activities, high speed train, outbound travel planning and booking, likely deregulation of gds market (this potato is raised every year by the way), travel inspiration and sharing and engagement with on-road travellers.

He said the new start-ups cover the full travel process of dreaming, planning, booking, on-road and sharing with a focus on the smartphone but their biggest challenge is “how they can grow customer base and develop a mature business model and not killed at start-up phase”.

One new entrant everyone’s watching is AirBnB and its clones which are popping up everywhere. While some speakers said it was exciting and opened up opportunities, others said the model was still a question mark on Asia with security being the most pressing concern.

During a panel I moderated, I asked the panellists to pick the next game changer. Kei Shibata of Venture Republic, Japan, said “Ali Baba” while Amit Saberwal of MakeMyTrip, India, said, “The one who succeeds in selling offline packages online.”

And there you have it, the centre of the travel universe in the midst of disruption.
 

Tags: China , travel , online , mobile , social networks , distribution , Elong , Ctrip , Baidu , Qunar , AirBnb
BACK