Windmills or walls in China?

by Yeoh Siew Hoon

It’s a beautiful spring day in Beijing – one of those rare blue-sky, clear, crisp days – where it’s a joy to be outdoors.

I am however sitting indoors in a hotel ballroom, attending the China Travel Innovation Summit and trying to learn all I can about the China travel market.

The numbers, of course, continue to be big – 300 million online users and growing.

Ram Badrinathan of PhoCusWright, sharing the latest results of his China survey, made the observation that it’s time for China to make the leap from expansion to optimisation.

And that’s the chasm – as tech-savvy as its consumers are – business processes continue to be old world.

Simon Akeroyd, vice president-business development of Amadeus Asia, quoted the statistic that of the 80 million air passenger bookings a year, only 5% are touchless in China, compared to 80% in India.

Quoting a Chinese proverb, “when winds blow, the strong build windmills, not walls”, Akeroyd said that “legacy infrastructure is artificially constraining the growth of China’s tourism industry” and asked, “will you build windmills or more walls?”

The fact that he then announced a partnership between Amadeus Asia and DerbySoft for non-air content in China in almost the same breath would seem to indicate that he is not that optimistic about the walls coming down anytime soon.

Well, just as there continue to be walls – don’t forget the Great Wall was built for a reason – there seems to be plenty of companies building windmills for the day when the strong wind does blow.

In the travel search area, Qunar leads the way. CEO Fritz Demopoulos said that today, 10% of travel was booked online and forecast that “tomorrow”, it would be 50% although he did not specify when “tomorrow” would be.

He shared ComScore rankings that placed it third behind Expedia and Yahoo as the third biggest travel website in Asia. Its traffic figures are formidable, the challenge is converting that to revenues beyond the advertising model.

New players are entering the space. Adame Song of OYESGO spent most of his presentation, beseeching suppliers to understand that travel search engines were not the enemies, and were not the culprits behind price wars – obviously indicative of the difficulties his company is having persuading suppliers to work with his model.

There’s also another player, Go10000, which is making a re-entry into the market. Go10000 started around the same time as Qunar but took a hiatus and now feels this is the right time for re-entry.

Singapore-based travel search, Wego, meanwhile is launching three Chinese websites for Hong Kong, Taiwan and China which prompted a rejoinder from Demopoulos that “managing one website was difficult enough, let alone three”.

CEO Martin Symes remains undaunted however and is exploring partnerships that will give it the break it needs into the Chinese market.

The conversations continued over dinner at the Sichuan Folk restaurant. In the group were several “newbies” who were also exploring the Chinese market.

Josh Steinitz, CEO of Nile Guide, for instance, was on his first visit to China and had been talking to potential partners on how its content could be applied to the China market.

One response it got from a major online travel portal was that Chinese consumers were not ready for such rich content which then prompted the rejoinder from a Chinese entrepreneur who is trying to build windmills that “how do we know that until we give them an opportunity to try it?”

“It’s like the iPhone, we didn’t know we needed it until it came out and look how everyone now wants it,” he said.

After dinner, we adjourned to the Emperor Hotel. It’s a new Design Hotel property, situated in Dongcheng, which opened about a year ago. It has a rooftop bar with phenomenal 360 degree views of the city with Tiananmen Square and Forbidden City in sight.

It’s a beautiful hotel that deserves to do better than it is, and deserves to charge more than what it is – I am told you can get a room for about US$120 which is fantastic value for such a jewel in such a location.

The challenge is, how does a small, independent hotel like this, as stunning as it is, get the word out and be heard above the noise and size of the China market?

It’d be like trying to find a needle in the haystack which, when you come to think of it, is exactly what foreign online players are grappling with.

Finding their gold in the Chinese online travel market is like the Emperor trying to be heard above the walls of legacy and history.

This article appeared in Tough Love, the newsletter of the Web in Travel (WIT) technology conference taking place October 20-23 at Suntec Convention Centre, Singapore, alongside ITB Asia