It’s an interesting time in the travel industry in South-east Asia.
The middle class is growing very fast, 90% of the region’s 360 million internet users are connecting through mobile devices, brands already in travel are expanding their offerings and other e-commerce entities are forging partnerships to sell travel as well.
These were some of the topics buzzing at the WiT Singapore 2019 conference earlier this month, as industry leaders gathered to discuss the fast pace of change across the region.
As vice president of online travel for Amadeus in Asia Pacific, Sebastian Gibergues is closely watching all of these trends in South-east Asia.
“This is probably the last frontier in online travel because it spans from highly developed countries like Singapore to emerging markets like Myanmar,” he says.
“There are up to 50 million new consumers reaching the middles class over the next three years – so that brings opportunity in the market – but there’s also still high growth of inbound tourism. Between the domestic travel outbound with the middle class and their purchasing power increasing and the inbound tourism, it’s really a melting pot of trends in travel.”
Partnerships and expansion were two of the most common themes resonating from speakers, including Grab regional head of business development Shawn Heng who said the app intends to add flights and activities within the next six to nine months, Agoda CEO John Wroughton Brown who shared the OTA’s introduction of its own flights product and its partnership with Grab and AirAsia BIG CEO Spencer Lee who discussed the low-cost carrier’s interest in selling flights from other airlines.
Gibergues says all of these developments reflect the fact that “there is space to take for those big regional brands.”
He also notes that the market’s diversity and fragmentation – in terms of both economic and cultural terms as well as in currencies, payment options and supplier content – also give an advantage to local and regional brands over their global competitors because “it’s difficult for them to swipe the market and really penetrate Southeast Asia since they have to go market by market.”
Fragmentation is a particular challenge in the air sector, where Gibergues (pictured left) says low-cost carriers now account for about 50% of total seat capacity in Southeast Asia, versus about 30% globally.
“There were maybe two low-cost carriers five years ago. Now it’s a long list,” he says.
“You have an amazing density of routes, which is very hard to combine. It’s a huge opportunity, but it also explains why it is difficult for some of the global players to come into Southeast Asia because it’s not content that is easy to manipulate.”
Gibergues says the first challenge is to “re-aggregate this content for the consumer to make sense of what they are buying” and then secondly to help them compare options and prices.
“And will it be travel specialist brands who will take the market or will it be mega-apps or more horizontal platforms? Southeast Asia is probably the best lab to watch all of the forces of online travel at play,” he says.
Featured image credit: Getty Images
