Travel agencies in North Asia must seek closer relationships

BEIJING – It may be one continent, but considering its diversity and structure geographically, Asia is aptly categorised into many territories with striking differences, be it for various cultures or languages or infrastructure or even other factors.

This obviously has surfaced as a major hurdle for any organisation in the travel distribution business, offline or online, to expand their business in more than one territory.

Within the region, are there any signs of clubbing various markets in North Asia into one as a whole? Should one start looking at China and its neighboring markets as one virtual market?

As a travel facilitator, Abacus backs the same and that, too, with certain statistics and trends.

“It is interesting to see how interdependent the travel industry in China and its neighboring markets have become. The total number of inbound travelers into mainland China in 2007 was 26 million (+18%), with the top five markets all being its neighbours (Hong Kong, Macau, Korea, Taiwan and Japan).

“What is amazing is that these five markets as a group account for 87% of the total inbound into China. You can’t have more integrated markets than these, and as a result, when China sneezes, all its neighbors will catch a cold,” says Abacus International VP North Asia, Patrick Lai.

Lai referred to the historic direct weekend charter flights between mainland China and Taiwan since July as one example.

“As a result, airlines from these two markets as well as those in Hong Kong and Macau have to juggle their network to accommodate the changes in travel patterns.

“While the travel industry in Taiwan rejoices over the prospect of a large influx of mainland Chinese tourists (up to 3,000 per day) those in Hong Kong and Macau have to prepare for the loss of the lucrative transit traffic between Taiwan and the mainland. These direct flights will drive some significant structural changes in all these markets.”

Abacus International surveyed more than 40 leading travel agents from China, Hong Kong, Korea and Taiwan markets in the second half of 2008.

It was found that 30% of the companies surveyed saw automation as a key way to survive the financial crisis.

“Based on a recent survey we did with our key agency customers in mainland China, we found that most of them have expressed strong interest in streamlining their back-end operations to see how they can manage their business more efficiently and cost effectively.

“The other measures that they are considering to put in place are, in terms of priority, cost management and increasing productivity through using business automation tools, business diversification, down-sizing, review existing contracts with suppliers for better value, sourcing for new suppliers and accelerating the online presence,” said Lai.

Lai added, “Generally, travel agents in North Asian countries are showing similar travel sentiments across the board during the current crisis.

“One difference though is that in markets like Hong Kong where the financial sector is significantly affected by the downturn some international TMCs have to resort to more drastic cost saving measures like no-pay leave and staff lay-offs.”

Abacus found that travel agents in mainland China are very open to new ideas and new ways of doing things.

“Internet penetration was at 15.9% and stood at 210 million users in 2007 (Travel Distribution China Report). The number of online travel agencies is increasing in mainland China. Although Ctrip and eLong are the leading OTAs in China, others such as Mangocity, Yoee etc have made their presence felt,” said Lai.

“Having said that, these OTAs’ adoption of new technologies is still at a relatively low level. While their customers can book directly from their websites, a lot of the behind-the-scene operations are still quite manual with booking confirmation and other customer services done mainly through their huge call centres.

“Fulfillment and in particular payments are done offline most of the time. Use of CRM is also at an infancy stage.”

Agents are being increasingly targeted by online consolidators, online travel agents and new booking engines offered by travel technology specialists for partnerships.

“Travel agents need to consider factors such as the organisation’s reputation, content being offered as well as the level of service and support that are extended to them before taking up any of the offers,” he said.

“GDSs like Abacus provide the benefits of an extensive network of a full range of travel suppliers and expert advice on the travel market. Travel agencies in many markets have come to realise the efficiencies and cost effectiveness that GDSs can offer.

“To-date, Abacus has partnerships with over 450 airlines and 80,000 hotels. As a result, GDSs continue to serve as the major and in many cases the only booking engine for online as well as offline travel agencies across the world.”

Abacus has also created products such as Abacus WebStart and Abacus Create, offering travel agents a low cost and efficient way to develop an online business without having to invest in a lot of resources and hardware.

Travel agents who are traditionally brick and mortar are exploring options of making their services available to the growing number of travelers who are interested in self-research and booking.

“At this stage, travel agents going online still rely on a large amount of offline work to complete the whole transaction, but we believe that with the increased Internet adoption and penetration of online payment solutions the online channel will become essential to both the online and offline agents.

“We have already seen the rapid progress of the online channel in domestic travel, and this trend will soon spread to international travel as well,” said Lai.

In some markets, agents have already started using a range of Web 2.0 options such an image gallery, discussion forums, events calendar, third party applications such as blogs to engage with customers online.

But Lai says Asia as a whole is not as quick to use Web 2.0 to engage their customers.

“However, there are quite a few online agencies who are leading the scene such as Eztravel and Yatra; both agencies have a blog.

“Another online agency, MakeMyTrip.com has a travel stories site. It will be great to see more travel agencies making further use of the available technology to stay engaged with their customers and also to market themselves. E.g. Putting up a focused travel group on Facebook.”

Abacus has already termed mobile phones as the most pervasive form of technology and harnessing the new technology available for the mobile platform must be a central part of travel agents’ strategy for growth.

China currently has the largest number of mobile phone subscribers in Asia Pacific with 540 million as of March 2008.

Lai says the travel industry has the opportunity to drive greater innovation in the mobile marketplace as consumer needs and corporate wants are very much aligned for the sector.