Blurring of business and leisure creates opportunity for blended travel model, says Shibata
LINE TRAVEL jp is taking a bet on its future by blending the world of corporate travel with chat and, in the process, moving to a merchant-of-record model with its new chat-based corporate travel booking service.
The service, TRAVEL jp for Business, which is integrated into LINE Works (regarded as the Slack of Japan), will have a ready customer base of 200,000 clients in Japan who already pay a subscription fee for the service. The travel service will be bundled into the subscription fee.
Kei Shibata, CEO and co-founder of LINE TRAVEL jp, said the new product idea was actually conceived pre-Covid because it saw an opportunity to leverage with its joint venture with Japan’s dominant messaging app.
“We faced a tough decision – should we put the product on hold or not? The financial situation was not favourable but overwhelmingly, Kenichi (Shibata, his co-founder) and I wanted to keep this project going to build our future. It wasn’t easy to keep investing but we feel this is a way to grow our business for the future.”
As Shibata sees it, just as the lines between work and life have blurred so will business and leisure travel and this new service is a stepping stone to “connect the dots between corporate travel chat, our meta-search leisure business for consumers and our media business for consumers”.
“By nicely blending these pillars, it will create a very unique business model,” he said, “and we are very excited to be taking the lead in this.”
Covid, with its devastating impact on travel in Japan, gave the team an opportunity to deep dive into the development of the new corporate tool. “It is the biggest new initiative during Covid and we are fortunate we have a great partnership with LINE Works and were able to plug in our service to their platform. Almost any company is able to subscribe to our service with a single click.”
Its partnership with LINE Works also means that Softbank, which has one of the biggest B2B sales forces in Japan, becomes its distribution partner.
With this new line of business, it will become the merchant of record, a huge departure for the company that built its business on meta search. Said Shibata, “It’s ground breaking for us. Travel has been changing over time – mobile has become a major platform, apps have become more prominent and online penetration is higher than ever.
“When you run a meta search, especially on mobile, users feel awkward having to switch tabs and go to a different site. There is no integrated user experience. Meta search is still powerful but over the last five years, we were seeing limitations – users have become more impatient, they love mobile and chat and they want it quick and easy.
“This is where the world is and we wanted to do something disruptive, to tap into a new market and it gives us an opportunity to sustain our business.”
As to whether it would also move its meta-search leisure business to a merchant of record model as well, he said, “We have no specific plans to do that. Of course, personally, down the road, we’d like to get into the B2C space too but B2C is very different from B2B in terms of user acquisition, more complicated user enquiries.”
The corporate product include flights, hotels, rail, car rental, restaurants, mobile WiFi, travel insurance as well as trip cancellation support. While the supply side took a significant amount of time to negotiate, Shibata said most time was spent on product development, with the most significant aspect being to ensure “great customer and transaction flow on chat”.
“No one has done it before so we are pioneers starting from scratch. We ran a lot of AB tests, spent a lot of time on improving user experience,” said Shibata. “People talk a lot about AI and chatbot but there are limitations and we need to have good quality concierges, especially in uncertain times. Corporate travellers are nervous and they have a lot of questions we have to address. Yes, tech is important but the quality of the people to handle queries is very important.”
Its customer service centre will be in Tokyo initially but in future, Shibata said with the new “work from anywhere” mentality, it could have concierges anywhere should it decide to expand the service beyond Japan. “It will be much easier to localise a product of our services compared to a self-service booking model. If you have good concierges, you can localise pretty quickly.”
Of course, with a model depending on people, it runs into scalability issues, he conceded. “There is talent available though because travel is struggling and we can offer employment opportunities to those who have lost their jobs.”
Shibata also sees an advantage in being integrated with LINE Works because “people who use the service chat non-stop and we feel we can be a connected travel solutions provider and we can answer their questions throughout – before, during and after travel.”
Since its launch, it’s seen encouraging sign-ups but given the current state of emergency in parts of Japan due to Covid, the appetite to travel is still not there. Having said that, Shibata said corporate travel is still happening in Japan. “Our research shows that domestic corporate travel is not entirely gone – 50% is gone but there are over two million corporate travellers still travelling a month. Being a newcomer, we can get market share.
“In markets where Covid is under control such as Australia and New Zealand, about 80-90% of domestic corporate travel demand is back so corporate travel will come back.”
It’s the last trend he feels most excited about – the emergence of a new work-life style and workations forced by Covid. “The corporate travel segment is going to change. People will make fewer trips but have longer stays and so the total business pie could become bigger. The Japanese government is talking about business-leisure travel and we are looking at those opportunities on the supply side – how can we offer business travellers leisure options on their work trips for longer stays.”
Personally, he said he’s also changed his travel patterns where he used to make frequent shuttles between Singapore and Tokyo. Currently in Singapore, he’s staying for three months instead of a week and then he will return to Tokyo to spend another two to three months. “It’s a better lifestyle,” he said.
