Why the Travel Industry in Asia is Such a Big Deal
Kudos to Charlie Li and the TravelDaily team for pulling off a great event last week in Guangzhou, China – the 2013 China Travel Distribution Summit. We were honored to have a significant role by presenting our thoughts on Big Data in the global travel industry. We discussed how consolidating massive amounts of data from thousands of sources creates a very precise understanding about consumer behavior which helps the entire travel industry (an industry whose very foundation is creating unique connections with travelers).
The major themes that emerged at the conference this week were as clear as they were compelling:
Domestic Chinese travel will boom over the next 20 years
- Mobile rules. Almost half of the online travel bookings are already made through mobile. That number will increase to more than 60% by 2020. (Domestic travel itself is expected to nearly double in the next 10 years). Mobile is not just a preference, but rather a necessity as it is how most Chinese consumers connect to the internet.
- Revenue management chaos. Driven by the domestic travel segment, ADRs are under tremendous pressure in China today – it’s a price war across most categories of hotels. What’s more, booking lead times are shrinking to a few days, spurred by same day booking behavior. This means channel costs are under assault as the relative value of a consumer to a hotel steadily decreases.
Chinese outbound travel will grow significantly
- DMOs that get it right will be rewarded. Destinations from all over the world seek increases in international visitation – it’s the most valuable incremental growth opportunity. Chinese tourists and business travelers represent the largest percentage of international growth with outbound visitation expected to grow over 60% between now and 2020.
- Lift matters. No question that DMOs that do a better job of working with their airports to win non-stop routes from China and Asia will find it much easier to gain a higher share of the growing Chinese outbound travel segment.
Inbound travel is a big opportunity for Chinese travel industry
- High-value customers are a yield goldmine. With high-growth Chinese domestic travel market inducing price wars, demand from international travelers to China is critically important to hotels in particular. These FIT and Business Traveler customers produce higher ADRs, longer lengths of stay and booking windows and high outside the room spend. The Chinese hotels and destinations that do the best job of winning valuable inbound business will simply be more profitable than those that do not.
- Experience matters. Winning these FIT and BT consumers requires differentiation on service, particularly as it relates to alleviating the significant travel friction points of language, food quality, transportation and overall experience in destination.
As the world’s largest repository of internet search and booking data, we are going to focus on the most lucrative segments of the booming Chinese travel market. We want to help our DMO, Hotel and Attractions clients tap into the outbound Chinese traveler; and we also want to work with Chinese Hotels and DMOs to help them reach the very important inbound FIT and business travel consumers.
Travel is a big, exciting, dynamic industry. Nowhere is that more apparent than in China and, indeed, the entire Asia-Pacific region. In a global travel market where incremental growth is hard to achieve, there’s no question that those who play the opportunities in China wisely will be well rewarded.