The two countries combined have a population of 330 million, with internet penetration reaching 30 million in Indonesia and 25 million in Vietnam.  In terms of GDP growth, these are some of the fastest growing countries in the world.  As wealth increases, travel soon becomes a top priority, right up there with owning a house and a car.  In addition, LCC have been very aggressive in penetrating into Vietnam and Indonesia, enabling inter- and intra- air travel to the masses.

 

For Johan Svanstrom, Vice President and Managing Director of Hotels.com Asia Pacific it is clear – these two markets are huge and rapidly developing which translates into untapped opportunities.

 

With the onslaught of new mobile websites and apps and improved telecom infrastructure, mobile internet penetration is also growing.  To seize the opportunity, hotels.com has rightfully decided to develop mobile and web strategies in local languages to enable customers in Indonesia and Vietnam to do localized searches and bookings.  And why not.  Just in Indonesia there are 170 million people with mobile phones out of which a large majority use mobile internet to access information.  

 

I was curious to know which operating system they were focusing on for the hotels.com apps.  Surprisingly, it was Android and iOS for these two countries, even though BlackBerry is the predominant operating system in Indonesia.  Johan made an interesting observation that as price-points of Android handsets start to drop, combined with increased variety, people will slowly start to make the switch to more high-end smartphones.  Basically it’s just a matter of time which does not bode well for BlackBerry, which is already having strategic issues in how they’re perceived in the mobile OS wars.

 

Hotels.com is placing equal emphasis on apps and mobile sites.  Their strategy is to cater and develop great experiences for both, for there is a natural distinction between the two.  Mobile web, due to the more complex design which enables greater availability of information, lends itself to the earlier stages of trip planning, which involves a lot of research.  However, when one begins to travel more frequently, or for business, mobile apps are crucial for this is a market segment that requires frequently updated information and makes changes while enroute.

 

Hotels.com currently does not have their app in Bahasa Indonesia and Vietnamese languages, but Johan confirmed that native apps for both countries are just a month-and-a-half away.

 

It has been no secret that lately hotels.com has been placing additional focus on the corporate travel segment.  It is no different for Indonesia and Vietnam, where there is huge potential for corporate travel.  Besides the very large state-owned corporations with tens-of-thousands of employees you have a large number of SMEs and entrepreneurs that are starting to travel in the region.  They are traveling predominantly in the ASEAN region and are doing the bookings themselves.  It is this latter target market which hotels.com is putting ever more emphasis on for it’s a vibrant segment with lots of growth opportunity.

 

As with all the other markets that hotels.com has entered, they are aware that localization is very important, for all these markets have very strong incumbents and are very competitive.  Johan always likes to point out their motto:  try to be more local than the locals.  Sites in native languages are important, but so are adaptations where hotels.com looks at website construction and how the locals are used to interacting with e-commerce sites.  Thankfully, with internet it is easy to get customer data that indicates customers’ online behavior, to see what is working and what is not.  Combine that with results from focus groups in these countries and voila, hotels.com can develop and localize their sites according to local nuances.

 

Marketing is very important in order to build trust in the brand in local markets.  Johan pointed out that this cannot happen overnight, ‘trust has to be built and earned over time.’  The key is to get consumers to your website.  Hotels.com already has some impressive KPIs:  global company, 135,000 hotels, 2 million hotel reviews, no cancellation fee, good content and great selection.  That is trustworthy in itself.  Besides, hotels.com can offer very low prices and low prices can overcome a lot of other doubts.  Running promotions will be crucial for the two new markets for hotels.com wants to not only attract the customers that are flying from Vietnam to New York, but also the movement from Hanoi to Ho Chi Minh city.

 

What is next for hotels.com in Asia Pac, given that they have opened operations in nearly all the countries in the region?  Johan has his answer ready – ‘going deeper into the markets.’  Asia Pac is a $260 billion travel market out of which $60+ billion comes from online travel.  This makes the region the second largest travel region in the world.  Even though today all the three major global regions are fairly similar in size, the online growth rate is very different, reaching 30-40% in Asia Pac.  North America and Europe are nowhere close to those growth rates.  Thus by drilling deeper into the Asian markets, hotels.com still has tremendous room for growth.  This is true for both the established markets such as Singapore, Hong Kong, Japan, Korea and Australia, as well as for fast growing countries such as Indonesia, India and China.

 

That is why Hotels.com is continuing to invest in technology, marketing and headcount in Asia Pacific.

 

Johan gives me one last statistic:  online travel penetration in Asia is 20%, the US has 55+% and Europe 40%.  ‘There is no reason to believe that Asia won’t reach those penetration levels.  The question is how fast will it go and of course, the penetration will be different from market to market.’

 

Stay tuned.  Many more exciting developments to come in the Asian online travel market.