The fourth annual WIT Indonesia conference took place against the backdrop of turquoise skies and deep blue ocean at Grand Nikko Bali on April 28, 2016.
Part Two takes an in-depth look at where the industry is headed and what it will take for businesses to get where they want to be. While the travel segments vary, the common element that unites them all is not just the necessity of embracing tech but the opportunity to collaborate.
6) The return of water cooler culture?
As the world and workplace goes online and location-independent professionals seek new and interesting places to work, Steven Munroe (Hubud) is bringing back the ‘water cooler culture’ by cultivating Bali’s first co-working space.
The benefits are boundless – creating an intimate community of international professionals (with over 60 nationalities at Hubud alone), networking opportunities, and it costs less than renting a private office.
It also brings forth an opportunity for property owners to make better use of any under-utilised space.
For example, hotels could partner with organisations to optimise spaces such as their conference facilities and ballrooms. However, Dennis Alund (Kumpul.co) said this was a hard sell for hotels which tend to look at hard-and-fast ROI instead of “soft” elements.
Property owners (particularly hoteliers) must fundamentally understand that the startup culture would need to be nourished, in order to be successful and not regarded simply as another revenue stream.
7) Tours and activities need educational support to thrive
Stephen Joyce (Rezgo) considers tours and activities the “ugly duckling” of the travel industry – something people acknowledge exists, but don’t know how to address.
While he considers the market ripe with opportunity (Stephen estimates Asia’s value at over US$100 billion), it is mired in operational inefficiencies, as the vast majority of operators are small, local (with limited outreach and online distribution) and are cash-based.
Fortunately, larger firms such as Viator, Expedia and BeMyGuest are able to offer smaller operators the benefits of exposure and global distribution through their online platforms.
Tushar Khandelwal (Voyagin) agreed, saying that once a tour company achieved a particular number of positive reviews on TripAdvisor, growth tended to occur organically (though the precise threshold was not disclosed).
Companies must also attract visitors directly by investing in digital advertising and optimising their websites’ functionality, to facilitate pre-arrival bookings. Also, embracing online payment methods like Asia Pay and Stripe may be better suited to travellers’ preferences.
However, Tushar also crucially points out that many operators lack a fundamental understanding of the online space and how to enter it.
Thus, digital strategy must go hand-in-hand with educational support to develop effective business practices, improve customer services, as well as to fully understand the potential of taking the business online.
8) The Indonesian travel market’s growing pains are similar to everywhere else
The truth is the Indonesian travel market is very segmented, but it is still growing according to Eric Tjepjep (Ezytravel), with Hiroyuki Murai (pegipegi.com) estimating that the OTA market itself will triple within the next five years.
Hans Tjandra (MG Group) argues however that Indonesian consumers are not necessarily ready to go online but do so because of its cheaper rates, as reflected by the growth in offline agencies as well.
This could be due to the ongoing issue of online payments in Indonesia, as Ryu Kawano Suliawan (PT Midtrans) said in a later panel that cracking e-commerce would take a lifetime to solve, with fraud being a particularly salient issue.
Eric bolstered the argument by stating that in order for Ezytravel to succeed this year, it must develop into an omni-channel and win customers both online and offline, as the market grows.
Ruwie Rahardjo (Wego Indonesia) also advocated a more ‘local’ approach by cultivating deeper understandings of market-specific behaviours displayed by Indonesian consumers (e.g. content as a successful trigger for consumption).
Ultimately, the rise of both online and offline agents has mirrored similar patterns to elsewhere in the world, where differentiation, managing acquisition costs, guaranteeing security and cultivating an intimate understanding with the consumer are top priorities.
9) High competition could drive consolidation, but who will lead?
Traveloka is largely driving acquisition costs online and it has become increasingly difficult to keep a competitive edge. Brett Henry (AngelVest) observed that many have adopted a discounting strategy, where companies drive traffic by offering prices that are too cheap and even conducting transactions at a loss.
If this strategy continues, the panel agreed that it could result in consolidation. While Dimas Surya Yaputra (Tiket.com) stated that consolidation might not be a bad idea, he did not believe it was likely in Indonesia.
Ruwie Rahardjo (Wego Indonesia) said that every industry has its own evolution, recounting how the telecommunications market had so many players until a price war driving lower costs resulted in just three companies today.
She stated that there was a need to educate the market on increasing value-added services, as cutting prices would simply indulge the market and ultimately benefit no one.
When it comes to who might ultimately lead in the Indonesian market, Hans Tjandra felt that realistically there was no way traditional local players would lead for the simple reason that the risk profile is too high.
He believes that the ecosystem is built for new companies to emerge and take over while local players remain in the margins. Yet, Brett warned that new players must pace their investments when entering the market carefully, or they would run the risk of ‘flaming out’.
10) Villa owners need to stay tech-savvy if they want to get on top
As Airbnb dominates market reach in the private accommodation sphere, there is an urgent need for traditional villa providers to develop their online strategies to stay competitive.
To facilitate this, David Chambat (Villa Finder) provides property owners with a free online inventory system for villa owners to easily manage their online distribution on Villa Finder’s inter-villa.com website.
Alastair Loxton (Ministry of Villas) aims to connect villa owners with travel agents by adapting channel management software from hotels to villa providers’ needs (automating distribution, inventory, booking and yield management).
While putting villa owners in touch with OTAs seems counterintuitive to pursuing direct, David points out that there should be much larger focus on simply increasing occupancy rates. Alastair concurred, reiterating an earlier argument that distribution is not a zero-sum game and multiple players could benefit.
With this increased exposure in the marketplace, there is naturally high pressure for villa providers to differentiate to stay competitive.
When it comes to boutique villas, Jimmy Gunawan (Alaya Group) highlighted that properties must identify unique characteristics that make them a novelty to consumers, but above all, a high standard of customer service.
To achieve this, Jimmy and his wife have established their own hospitality management company (AIM Hospitality Group) to handle the operations of every property.
The panel also unanimously agreed that privacy and security were non-negotiable requirements of any private property, with David pointing out that verified quality assurance is often overlooked.
During planning stages, providing quality assurance through verified reviews rather than solely relying on guests to provide ratings could help consumers feel more secure in their booking decisions.
Pairing this with high-end guest-oriented products and services could successfully cultivate loyalty and trust with guests.
