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653 days ago
 

As the Asian tech powerhouse continues to grow, can offline travel agents compete?

While air passenger volumes have started moderating in the second half of the year, Asia’s still the best place to be at right now when it comes to growth compared to the rest of the world.

This, at least, is the opinion of Abacus International at its International Conference in Seoul last week.

“The industry is still healthy, growth is still ahead that of last year and the money is still there for travel,” says president and CEO, Robert Bailey. “We’re still looking at an industry growth of 3-5%.”

But most exciting of all is that Abacus is sitting in a region that’s not only prospering relative to others but is also seeing dynamic changes in technology adoption and rapid changes in customer behaviour.

Lap it up

By 2025, a third of the world’s airline traffic is expected to originate from Asia, which will represent 43% of the world’s GDP by 2020, larger than the United States and European Union combined.

More immediate is the advent of what Abacus calls Web 3.0 – a new wave of innovation based on the always-connected vision offered by consumer mobile technology.

The region already has the largest mobile subscriber base in the world with aggressive smartphone adoption. Both Malaysia and Singapore lead the region in smartphone penetration rates at 88% within a South East Asian region that sold $2.4 billion worth of smartphones in just the first three months of 2012.

Read that again: $2.4 billion worth of devices using Android, Apple et al operating systems.

In Australia and Japan, smartphone users (74% and 78% respectively) never leave home without their phone, and in China, more than half of smartphone owners would rather give up their television over their smartphone, claims Abacus, citing various research sources.

So with all the changes going on, what’s the traditional travel agent to do to compete in a world where technology is getting so personal and people are getting so social?

With web bookings in Asia-Pacific set to reach $90.8 billion in 2013, out of which 32% are being driven by online travel agencies, the fastest growing distribution channel in the region, there is reason for brick and mortar agents to be concerned.

Sure, the total travel market is huge and Asia is the place to be right now – with confidence still remaining strong although growth has slowed down somewhat, according to Abacus – but the ground is shifting mightily under their feet and those who do not keep up with change might fall into the abyss of irrelevance.

Power shift

Brett Henry, vice president commercial and marketing of Abacus, believes that mobile will shift power to the intermediaries away from supplier direct “because who wants to download every supplier app?”.

The question, therefore, is which intermediaries? The ones who leverage technology to achieve scale, price and choice for their customers, or the ones who get smart about using technology to maximize productivity and efficiency and deliver personal service to their customers?

If Henry has his way of course, all these intermediaries would use Abacus products and he is very clear in claiming leadership in innovation in agency product.

He claims:

“We are serious about product, we are 12-24 months ahead of competitors in every product category and we are the global leader in mobile solutions for travel agencies.”

“Mobile is disrupting Facebook and we have to make sure we are [also] not disrupted,” he adds.

Abacus is betting its mobile future on HTML5. “You get it right once and it works across all platforms,” Henry says, adding that Facebook and Google, too, work well and like HTML5.

The Abacus Mobility Suite comprising Abacus Mobile, Virtually There, WebStart and TripPlan, is seeing good adoption. Abacus Mobile now accounts for over 78,000 visits to the platforms, with a 50% increase in active subscribers as well as visits in the first half of 2012. VirtuallyThere gets more than 40 million unique visitors a year, the company claims.

Agency efficiency and USP

Quite a few of the solutions are aimed at improving productivity and saving costs, such as the Automation Hub (unveiled in Seoul) which is aimed at automating business process and eliminating time-consuming manual tasks.

But other than becoming more efficient and productive, what else can travel agents do?

Well, Dan Lynn, CEO of AirAsia Expedia, has this advice – do not try what OTAs do and attempt to compete on price and selection, but instead focus on why your customers use you, he says during a panel discussion at the event.

“By all means do a website, do a low cost website, but ask yourself ‘what do your customers use for you’, and focus on making that better.”

The one area OTAs cannot do as well as travel agents is personalization, he says, and although big data is coming and that will help OTAs personalize to some extent, “it will never solve personalization”.

“You sell the complete trip, you sell the itinerary and you make people feel comfortable with that.”

Lynn cites the example of Flight Centre Australia, which is doing a good job helping customers feel assured about the complete itinerary. But obviously that doesn’t stop Abacus from wanting to help its agents compete in the area of choice and price and its RoomDeal product is aimed at doing precisely that in the competitive hotel segment.

Developed in partnership with Indonesia’s RajaKamar group, RoomDeal is aimed at unlocking the best hotel deals from key hotel content aggregators across the region and offering them at net rates to agents, thus allowing agents thereotically to compete on price with the likes of Expedia, Agoda or Booking.com.

It has signed partnerships with aggregators such as Asian Trails, Hotelbeds, the AOT Group and HS Travel International. Aimed at the leisure and smaller corporate travel agents, it has 140,000 hotels in the system, allows agents to merge PNR with flight tickets and has its own payment gateway so agents can issue their own vouchers.

Now Bailey detects a shift in the mindset of travel agents to technology adoption.

“When the Internet came in, they saw it as a threat to their business. With mobile and how things are changing, people are now excited by it and are trying it out.

“In a sense, we have to hold them back because the key question is, how are you going to apply these solutions to get a business result, rather than a quick gee whiz kind of thing.”

NB: Asia selection image via Shutterstock.

 
 
Siew Hoon Yeoh

About the Writer :: Siew Hoon Yeoh

Siew Hoon Yeoh is the editor-at-large for SHY Ventures and editor/producer of WIT-Web In Travel.

She created and manages the travel insider website The Transit Cafe and also runs WIT - Web In Travel, Asia’s leading travel distribution, marketing and technology conference, and the weekly WIT newsletter.

In 2008, WIT was awarded the Most Innovative Marketing Initiative by the Singapore Tourism Board. Siew Hoon is also an established speaker and facilitator at travel industry conferences and workshops.

She is also is a published author, having written titles including “Truth, Lies & Other Stuff” and “Around Asia in 1 Hr: Tales of Condoms, Chillies & Curries”.

 

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