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  Culture, Language, Government, Economy and Currency
Impact the Success or failure of Online Travel Bookers
in Asia-Pacific
By Lorraine Sileo, August 6, 2002

With the online travel market in Asia Pacific expected to reach $13.3 billion in 2004, according to PhoCusWright, it is understandable why U.S. travel companies are moving into the region. Online travel in the U.S. is getting saturated, and the European market is growing slower than expected, forcing many travel companies to look east for their next big opportunity. But whether or not they succeed depends largely on how well they understand this emerging marketplace.

The Asia Pacific online travel market is emerging, yet its fragmentation and cultural nuances make it among the most complex in the world, according to The Asia Pacific Online Travel Market: Tapping A Complex Market, published by PhoCusWright Inc. last week. Culture, language,government, economy and currency - not to mention travel patterns - will impact the success or failure of online travel in the region.

The airlines, which initially drove travel e-commerce in the U.S., operate much differently in Asia. There is little direct distribution, as  national carriers still depend on travel agencies to sell 95% of their tickets. To date, only a few airlines have been aggressive in cutting commissions to encourage travelers to book direct, such as Singapore Air and Air New Zealand. But the advent of discount airlines in the region is making the landscape more competitive and forcing major carriers to seek lower cost distribution channels. This will result in the airlines (many of which already sell 10-15% of their tickets online) to dominate the online travel market in Asia for the foreseeable future.
   
To accelerate their online efforts, Asia Pacific carriers have been quick to follow the Orbitz model -- which is to create a consortium and sell a common brand. This strategy has led to the recent launches of two new online services - Tabini (Japan) and Zuji (Singapore, Australia, others). Travelocity is a co-owner and lead technology provider for the two sites.
   
Priceline was the first U.S. online travel agency to announce its intention to enter Asia. Backed by Asia's leading conglomerate Hutchison Whampoa, Priceline rolled out its service in Taiwan, Hong Kong and Singapore in the first half of 2002.
   
Expedia won't be left behind. After four years as Expedia's UK managing director, James Vaile was recently promoted to vice president, Asia Pacific, signifying Expedia's renewed interest in the region. Vaile has called Asia Pacific "the next emerging giant."
   
The greeting these new online travel agencies will receive will depend a lot on how travelers in Asia ACCEPT new brands. Except for China, Internet access is NOT a problem, as it was for early online pioneers in the U.S. and Europe. As a matter of fact, broadband and mobile infrastructures in key Asian markets are among the best in the world. Yet selling travel under a new consumer brand is new to many Asians, who are used to purchasing travel through mega-agencies and tour operators such as Chan Brothers (Singapore) or Wing On Travel (Greater China). Unlike the U.S., where traditional agencies have yet to exploit online channels for the leisure market, Chanbrothers.com and Wingontravel.com are among the most successful travel agency sites in Asia Pacific, according to PhoCusWright.
   
Different markets in Asia are in varying stages of maturity, including Australia and Japan, which are the most developed. Only 1-3% of total travel bookings in Asia are made online, but PhoCusWright projects the Asia Pacific online travel market to grow between 60-70% annually for the next two years.
   
The bottomline, according to PhoCusWright, is that the Asia Pacific region does represent opportunity - especially for discount hotel aggregators (many of which are already successful), and vacation packagers (emerging). But it is necessary to understand the travel trends in each market and strategies of traditional players to fully exploit the opportunities available.


 
Contact:
PhoCusWright
[email protected]
www.phocuswright.com


 
Also See: One in Five Corporate Travel Transactions Will Be Booked Online by 2003, PhoCusWright Projects; Catapulted by Cost Savings / March 2002
Twenty-one Million Americans �Usually� Buy Travel Online, up 75% from 2000; PhoCusWright Travel Consumer Trends Survey / Nov 2001


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