“Unite” was the theme and, as the WiT Virtual Summit went round the world in six hours, it was clear a few key themes united the world of online travel.
Here are the key takeaways.
1. Domestic recovery begins, but “be prepared for stumbles”
In Samui for his first trip since the outbreak in Thailand, John Brown, CEO of Agoda, shared results of an Agoda survey (2,400 respondents across Australia, Indonesia, Kingdom of Saudi Arabia, South Korea, Taiwan, Thailand, Vietnam, USA), which showed 65% domestic intent, destination preferences skewed towards beach and nature, the 35-44 age group expected to lead recovery and a preference for 4-5-star hotels.
Asked to pick the markets expected to recover the fastest, he cited Taiwan, South Korea, Thailand and Vietnam. “In all four markets, domestic tourism is already back to 2019 levels and all credit to the governments in those markets for bringing the virus under control.” The three laggards would be Singapore, India and the US which he said may go through another dip.
In China, Accor is seeing bookings getting back to “not so far from last year’s trends”, said Louise Daley, deputy CEO, Accor Asia Pacific. “We are really hopeful on China, it’s an enormous domestic market. What came back first was dining, which was pleasing. It gives us a sense of what it will look like – starts with local, drive, train and plane.”
New Zealand is also picking up but because it’s more reliant on international travel, Daley wondered how sustainable that would be if borders do not open up. However, perhaps because people cannot travel outbound, they may travel more domestically.
A similar sentiment is being expressed across South Korea, Japan and Saudi Arabia, three huge outbound markets that the world depends on – that because residents can’t travel abroad, they will travel more at home.
Yanolja is seeing demand outstrip supply in the small accommodation category, LINE Travel.jp is seeing bookings return and Saudi Arabia has to create a domestic leisure market from scratch from its 34.8m population more used to travelling abroad for leisure. In Latin America, superapp Rappi is seeing air bookings pick up from September onwards, with prices and flexible conditions thrown in to entice consumers, said Guido Becher, head of Rappi Travel.
Governments are stepping in – Japan announced a $15b plan to subsidise travellers, a plan that seems to have generated as much controversy as publicity, Saudi Arabia is rolling out a US$4b domestic tourism campaign and South Korea, while not as substantial a budget as Japan’s, is also making moves to stimulate domestic travel, said Min Yoon, CEO, Tidesquare.
In India, domestic travel is valued at $50b and tourism accounts for 10% of GDP so “that’s a lot to lose,” said Deep Kalra, co-founder and group executive chairman of MakeMyTrip. Flights have been allowed to open to 33% capacity but “the reality is, after an initial flurry where people were trying to get back home or bring loved ones back, it’s settled down to about 20%”. Hotels have been allowed to open from June 8 for purposes other than medical quarantine and about 25% of hotel inventory is open.
But recovery is tentative because “the virus is still growing pretty rapidly in India, we haven’t seen the inflexion point yet and until that happens, you travel only if you have to.”
Mindful of the fragility of recovery – with the possibility of second or third wave of infections, Daley said, “We are doing everything for the first time, we will have some little stumbles and it’s how we manage those stumbles that will be important – not see-sawing through the reopening but managing it logically and consistently.”
2. Products being launched in record time – “it’s okay to be scrappy”, “big hairy projects being tackled”
At a time when agility is demanded, hoteliers like Daley have learnt that a quick response is better than a perfect one. “While pre-Covid, everything had to be perfect, the journey had to be wonderful, the consumer interface beautiful, now it’s about getting down and dirty, and functional and safe, and deliver and the consumer will understand.
“And that’s one of the fun things – it’s okay to be scrappy.”
Product timelines have certainly been accelerated. It took Klook less than a month to put together its Klook Home product and one of its best selling services is a home cooking kit where the entire family can bond over an experience, said co-founder and COO, Eric Gnock Fah.
Its new “staycations” product is also selling well in Hong Kong. “Staycations” does not mean just a hotel stay but packaged with outside activities and experiences and Fah said it was working with up to 20 hotel groups to create these products across markets.
At MakeMyTrip, Kalra said self-serve had to be taken to another level, particularly post-sales. Post-the mess of handling mass cancellations and changes with call volumes going through the roof, he said the realization was “we’re going to take post-self-serve to the same level as sales … if people call up post buying something, then that’s a defect and you got to look at that as a defect to your product, so product engineering and product designers have to work in such a way that no one needs to call.”
He called this project as one of “the big hairy projects which always get pushed under the carpet and you keep saying, we will address it and this is one time where we said, okay, guess what, we’re never going to get this time again.”
Agoda launched its Go Local campaign, signing up thousands of hotels with 20-30% discounts. It also launched an Easy Cancel feature in record time “so that consumers will have more flexibility as well as access to great prices”, said Brown.
At Rappi Travel, because travel was flat but its parent company’s business was booming, its team got experience working under pressure and developed travel products around great prices and flexibility, as well as working with airline loyalty programmes to allow customers to convert their points to Rappi Credits to be used for non-travel items, said Becher.
3. Bubbles, green lanes – rapid testing, workcations, great expectations
Another key to recovery is the restarting of regional markets and that’s dependent on governments opening borders not only across countries but within states. Japan is allowing travel between prefectures which is exciting, said LINE Travel.jp’s CEO, Kei Shibata.
Rod Cuthbert (founder, Viator) expressed the hope that Australia and Asian countries would be able to form travel bubbles because both had done a good job of containing the virus and that if ever that was a time for Australia to fully engage with Asia, this was it.
Kalra said it’s clear the industry needs to have a proxy for safe travel, particularly for international travel and “rapid testing is going be the way”.
He said the news from Japan was hopeful – the Japanese government is in talks to open its borders to travellers from Australia, New Zealand, Thailand and Vietnam, with travellers expected to take a polymerase chain reaction, or PCR, test before and after arriving in Japan and test negative both times.
“That’s pretty smart – if you can do the full-blown PCR test when you’re leaving, and you can guarantee people that you’re safe. The Maldives have also spoken about that and that’s the ideal place to be in if you’re safe.”
In fact, Kalra said we might see “workcations” emerge out of Covid-19 where people would prefer to be somewhere else if they had to be grounded than in their own countries.
He said having a proxy for safe travel was critical. “Otherwise, the reality is, with the fear of the virus hanging all around our travels, it’s going to take a long time to come back.
“I think a lot of work should be done on testing in parallel, as we try to find a cure. Testing is not about finding the cure. Testing is already out there. You just have to make it faster, more accurate and more freely available and probably cheaper. And if you do that, it’s going to get baked into the cost and people are going to say, okay, we can travel.”
4. Breakout moments for e-commerce, live streaming – “could it replace trade fairs”?
Across the world, superapps based around messaging or e-commerce are having breakout moments. Rappi saw a 150% growth in GMVs during lockdown in Latin America. Shibata said the ability of superapps like LINE to do micro-targeting of travellers with the trend of micro-tourism at this time was powerful.
“I am personally very excited about any technology around location-based information,” he said. It allows local companies “who don’t want a flood of people” to pick customers in certain areas. “That way, we can control the demand to hyper-localised – so this is going to be a smash hit, I think.”
Agoda’s Brown said the trend towards e-commerce was there but had been accelerated – the rise of mobile bookings which the OTA saw during this period.
In China, live streaming has taken on a life of its own – on April 7, Trip.com Group chairman James Liang did a livestream and helped generate transactions valued at 26.9 million yuan (US$3.84 million) within an hour. And during this week’s launch of its Travel On campaign, the group announced that its livestreams in select pilot markets have accounted for more than US$70 million in sales.
Klook’s Fah is excited about what live streaming could do for Klook Travel Fair, its offline event which allows it to engage with customers and drive O2O sales, but is not scalable. “We see a lot of potential in that, it’s the new TV shopping but it allows you to interact with customers directly. Live streaming could scale, however whether it can be as effective in selling travel experiences as opposed to products and gadgets is another thing. We have to experiment with it.”
The 10-day 127th Canton Fair which just closed was run on a live streaming platform powered by Tencent, and drew nearly 26,000 domestic and foreign enterprises, with 1.8 million products exhibited.
5. The search for new customer acquisition models – superapp-like the answer?
William Bao Bean, partner, General Partner, SOSV Capital said travel needed to solve a very big problem – high customer acquisition costs – and he said it needed a new model in which everyone wins, and not like now “where everyone loses but the platform”.
Fritz Demopoulos, CEO, Queen’s Road Capital, said superapps could represent a fantastic distribution opportunity for travel companies but he was unsure if “the arbitrage to buy cheap traffic and monetise” exists.
“There’s no free lunch anymore. If you can design your product or service around the app, and integrate into your service offering, maybe – the way social companies designed around Facebook 10 years ago, and around Google before that – I am slightly more optimistic about that but it will be a difficult slog.”
Bao Bean spoke of one of his investments, Travelflan, a new superapp-like model which worked on revenue share to offer distribution reach to travel suppliers to sell services. “It doesn’t make money on advertising, it works on revenue share. We have industry players who are under such pressure from Google, Facebook, Taobao, all the big giants that they are willing to trust each other and work together.”
Their secret sauce is zero customer acquisition cost, he said. “We should take advantage of this difficult time and come around a trust-based model, stay profitable and serve customers.”
Andrea Traversone, managing partner, Amadeus Capital Partners, said the term “customer acquisition” was a misnomer because often it was about acquiring transactions, not customers, and he said businesses that had to spend lots to acquire those would not do well at a time of more expensive capital.
He said travel startups which focus on unit economics, alternative distribution channels and sustainability would thrive in the future. He said sustainability would remain important and governments would continue to insist on corporations following ESG – Environmental, Social, and Governance – criteria.
6. Good news, sustainability has not gone away
Agoda’s Brown spoke of his trip to Samui like “travelling back in time to a Samui of 40 years ago”.
“Everything’s quiet and pristine, and I hope that when travel returns, we won’t forget and go back to our old ways,” he said, stating that one bad habit travel needed to discard was the drive for mass and numbers.
He said Agoda would continue to help customers find hotels, with sustainability criteria. Klook’s Fah said his generation needed to do better by the environment. “It’s a time to slow down, pause and examine priorities and rethink how the tourism system should work. We have to pay attention to sustainability. It’s hard when you are going full speed, now is an opportunity to do that.”
Sustainability means helping countries spread out domestic tourism, which would then spread economic benefits to smaller, more remote communities. Brown said Agoda was working with regional governments to spread tourism in Thailand to its 76 provinces, and not just the same old places. Fah said its sales teams were actively looking at this – on how to spread out tourism at a time when domestic tourism is on the ascent. “How do we build car rental, itineraries, drivers to get people out of the main areas, that’s what is occupying our time.”
As to what the older generation in the travel industry could do better, Fah said, “Be more open minded. Before there were clear borders around countries, but in my mind, there are no borders. If everyone can have a growth mindset and be ready to take risks, that would be good.”
