At WiT Seoul held in early April, a panel of investors discussed what it would take to capture the hearts and dollars of South Korean travellers in an increasingly competitive travel space.
It naturally distilled down to the core importance of harnessing data and analytics to better understand customers to deliver more relevant products. But that only scratched the surface of what it might take to win in this burgeoning market.
The panel discussion also touched on the importance of how to overcome the seasonality of travel, by breaking out of silos and diversifying your products to keep customers coming back.
One key area of interest across all investors is how AI and data will continue to change the way in which consumers find and book their travel products. Said Ryan Lee, CEO & managing partner, Dunamu & Partners, “we’re going to see that those players that are well equipped with these technologies will win the game.
“I’d say those players who close transactions like flights and tickets… and organise such data in a usable way… with a commodity like technology, you can take advantage of the ability to cross-sell downstream.”
He added, “Globally, we’ve started seeing a lot of global names using this technology pretty smoothly. I can see performance improving in terms of conversion ratios from that technology.”
Being able to target customers at a sweet spot, when they are most likely to be thinking about travel, will be the key to not just maximising revenue, but also making any marketing efforts far more efficient. This is particularly true of the travel industry where, despite high spend, people seldom think of planning and booking travel on a daily basis.
“It’s a seasonal event, so it’s very hard for companies to grab people’s attention, so using data is that much more important. You need to be able to pinpoint your offerings to customers in the right setting,” said Lee.
It is part of the reason why many travel companies are beginning to look at diversifying their product to go beyond trips, and become more relevant to consumers’ every day.
Margaret Feng, head of Oasis Labs, Ctrip, partially agreed, saying, “if you talk about travel, it’s a low frequency business, but right now our youngest customers want to spend more time on the community. We should collect more user data to really understand what they want to do.”
But this would mean going farther than simply interpreting customer data and offering products back to them. Companies need to go one step further and perhaps even be able to predict what a customer might want, before they’ve even thought about it for themselves.
Feng, whose expertise lies in consumer tech companies, said, “Web 1.0 was when you open a website and they show you something you can click. Web 2.0 is when you start searching things, when customers know what they want. We’re now moving to Web 3.0, which is about [being presented] information that is even more relevant to us, based on data.”
Developing this capability will inevitably require a high degree of trust from the very customers companies are collecting data from and selling to.
Perhaps their most logical entry point would be in lucrative sectors like tours and activities, still very much a hot topic. But how will new startups compete if more giants (and more heavily invested in startups) play on this green turf?
Han Kim, managing director, Altos Ventures argued that many in the tours and activities space boast about the size of their inventory as an indicator of strength, but the more crucial metric is the volume of booking and subsequent reviews from customers who actually go on those experiences.
How usable and ‘sticky’ customers find the company’s online experience is of the utmost importance, if it is to be a consumer’s service of choice when they travel. That stickiness would be a big advantage going forward as new products or services are introduced.
Companies must figure out how “to delight the customers so they’d trust the service,” said Kim.
As one example, Altos Ventures invested in Korean tours and activities company My Real Trip, with a strategy to guarantee a measure of success in its core market, before expanding to new products like flights.
“[Korean consumers] are more likely to be drawn by My Real Trip, because of the many locations on it that Koreans like to go to,” said Kim. This contrasts with companies like Klook – the highest funded startup in the sector – that has a much broader approach in tackling multiple travel demographics at once.
Its strategy was “to just make sure we win on the outbound track and get a clear win… once we have it, we can compete the air travel sector,” said Kim.
The logic being that by being successful in its core field and gaining high margins from it, it would free up a company’s ability to venture into new sectors, without fears of having to operate at a loss to compete.
“We [would] offer the cheapest [airline] ticket… and because we have such a high margin on the tours and activities, we can afford to lose a bit of that margin to sell tickets, while competitors have to lose money to compete.”
