At the STB Tourism Industry Conference earlier this week, a cast of tech giants from Expedia, Alibaba and Google, moderated by WiT’s Yeoh Siew Hoon, discussed a burning topic in travel and beyond: how to thrive in the face of disruption.
Arguably each of the companies present on stage has been regarded as a disruptive force at some point, accelerating change in their respective sectors. For example, when Expedia was founded in 1996, it disrupted the travel industry by giving customers the information typically kept behind the desk of a travel agent. It contributed to a shift in power from the hands of travel suppliers to consumers.
Google on the other hand had a mission to “organise the world’s information and make it universally accessible and useful,” said Stephanie Davis, country manager, Google Singapore. Now seven of its core products have amassed approximately one billion users each.
Alibaba Group, in its 20th year, reported having 642 million consumers last year, with a target to reach two billion users by 2036. Angel Zhao president, Alibaba Global Business Group, shared its goal of making at least two million SMEs profitable online by developing an “e-infrastructure” that would allow “global buy, global pay, and global sales” within its platform.
COMPETITION, ACCESSIBILITY AND CONSUMERS ARE GLOBAL
Even giants cannot rest on their laurels, regardless of their scale. There were three key disruptive forces identified in the discussion: that consumers, competition, and accessibility are all global and no longer limited to the local.
Greg Schulze, senior VP of commercial strategy and services, Expedia Group said that travel’s disruptive forces are presenting huge opportunities. He specifically remarked on how barriers are coming down, through things like the rise of LCCs and visa-less travel, which are making people even more mobile than they’ve ever been before.
Google’s Davis echoed a similar point, adding that pre-online travel, competition between hoteliers or tour operators was limited to rival businesses down the street. Now, it’s about who can deliver the best customer experience, regardless of where they are as everyone competes on the same turf – online.
Zhao added “it’s no longer a challenge to travel … with a passport and mobile, they can do anything.” She explained that to truly understand what ‘disruptive’ forces are truly driving the change in customer behaviours, companies should go back to basics and understand what customers prioritise in their travel experiences and why.
The underlying pattern is that globalisation is a force that has blurred industry lines as well as physical borders. People are travelling more and more; meaning potential is only getting greater. However, as with every opportunity, new challenges will arise and all companies – online and offline – need to be ready to address them.
SEAMLESS TRAVEL WON’T EXIST WITHOUT INDUSTRY COLLABORATION
With disruptive forces coming from increased globalisation, a globalised approach is required to to tackle them, something that giants like Expedia, Google and Alibaba are perhaps best positioned to provide but it’s not as easy as it sounds.
Zhao lamented the way in which travel, despite all advancements, still operates in silos. She argued that in an era of increasingly sophisticated technology, there should be greater efforts and collaboration between industry players to not only make travel a more seamless experience for customers, but make the industry more collaborative. The blurring of lines and shared capabilities that result could even pre-empt future disruptions, or at least better prepare companies to adapt to them.
“We provide our services in verticals and we’re not linked with each other. From last year, [Alibaba] has started to think about how to set up a new travel alliance, and work together with everyone, from travel suppliers, agencies and micro-service providers… to create a one-stop solution for customers.”
Schulze added that on a more basic level, companies needed to ensure that they are seen as locally relevant regardless of the markets they’re operating in. “How do you appear like a Singaporean company to Singaporeans, while also a Japanese company in Japan?”
Expedia’s tagline of being “locally relevant on a global scale” would require understanding both the general differences and subtler local nuances that drive consumer behaviours.
On another level, it would also contribute to a deeper understanding of whether customers truly want a fully integrated online travel experience or if there is value in a variety of platforms offering different services.
There is pressure on travel companies to develop a way in which consumers can book trips in their entirety. But at the same time, travellers will never tire of choice. Ensuring that there remains diversity in travel experiences means smaller players must still be protected, despite industry power being consolidated in a few big names.
DON’T FORGET: THE ONLINE MARKET IS HUGE BUT OFFLINE IS ALIVE AND WELL
Google’s Davis stated that online travel makes up $30 billion of the total value of the digital economy in South-east Asia, estimated at $72 billion. “A lot of industries get attention like e-commerce and ride-hailing… but e-commerce is worth $23 billion and ride-hailing is only $6 billion.”
Global online travel bookings measure up to 41% of the digital economy, and Asia makes up more than half of that (57%). Together with the rapid pace at which populations are coming online (90 million internet users in the last three years alone, powered largely by mobile), means there is still vast potential to grow the market even further.
The crucial takeaway from all of this, according to Davis, is the importance of digital and mobile in particular, in helping brands get traction and exposure to potential new customers. Being discoverable, mobile and fast are fundamental to succeeding in an online market.
Nevertheless, Schulze reminded audiences that while market estimates for online travel are enormous, a large proportion of bookings are still offline. And the proof is in the numbers. In APAC, online bookings make up 44%, with 56% booked offline.
“More than half of travel is still booked offline [and] we can’t neglect what customers are telling us… we want to push digital and mobile but we have to sell the experience and that’s very personal.”
So, investing in the offline experience is therefore still a crucial component to succeeding in the long run. Alibaba seems to have picked up on this as it has already opened in its first ‘future hotel’ in Hangzhou, “Flyzoo Hotel”, while more ‘traditional’ technology giants are still investing heavily into the realms of machine learning and advancing AI.
