Deep dive into Asia Pacific online travel market
Asia Pacific travel market ousted Europe to become the world’s biggest regional travel market in 2012, accounting for bookings worth about $320 billion, according to a report by PhoCusWright.
The APAC Online Travel Overview estimates the market will reach about $350 billion in 2013, an increase of 8% year-on-year.
Here are the highlights of the study.
Asia Pacific – online travel
Online travel in 2012 was at 24%, and in 2013 the online travel market is expected to grow 18% to $93.4 billion.
OTAs grew faster than supplier sites in APAC in 2012, but accounted for only 33% of the online travel market.
APAC travellers often research prices online but book offline. Wholesalers, tour operators, traditional travel agencies and in-person sales still account for a significant portion of travel bookings in APAC.
Increased internet penetration, adoption of mobile devices and telecom infrastructure improvements will take the online travel market to $126.6 billion in 2015.
Supplier website gross bookings represented 67% of APAC’s online market. By 2015, online direct sales will total $85.5 billion.
Asia Pacific – Mobile travel
Aggregate mobile travel gross bookings in China, India and Japan stood at $4.6 billion in 2012. Mobile will be the fastest growing travel distribution channel in the region, quadrupling to $18.7 billion by 2015.
However, mobile travel bookings in China and India are at a nascent stage, accounting to $218.4 million and $109.8 million, respectively. These two markets will be the fastest growing mobile markets in APAC through 2015.
The potential of the mobile channel in APAC will remain largely untapped in the near future.
Japan finally ceded its position to China as the largest APAC travel market. Japan’s online travel market generated $30.9 billion in gross bookings in 2012, in comparison China generated $96.2 billion.
Japan will be one of the slowest growing online travel markets in APAC in the next several years, the online share will shrink from 39% in 2012 to 32% in 2015.
Led by Japan Railways, Japan’s mobile gross bookings considerably outstripped other APAC markets in 2012. At $1.4 billion, they represented 4% of the total Japanese travel market, the highest such share in the region.
Mobile gross bookings in Japan will increase 160% from 2012 to 2015, reaching $11 billion, and accounting for 11% of the country’s total travel market.
India’s total travel market grew by 11% in 2012 in local currency terms, but growth was completely flat in US dollar terms due to the weak rupee. However, the online travel market increased 15% to $6.9 billion.
In India, rail and LCCs drive online travel sales. At 35%, India’s online travel penetration is second only to ANZ’s in the region.
India represented 9% of the APAC online travel market in 2012. Continued double-digit gains will increase its share to 10% by 2015.
China will account for nearly a third of the regional travel market by 2015. Online gross bookings in the country will more than double, jumping from $14 billion in 2012 to $30.3 billion by 2015. Still, online sales will represent less than a quarter of the total Chinese travel market by 2015.
China’s online travel penetration will remain the lowest in APAC. But, China’s mobile travel market will experience the most growth through the forecast period, accounting to $6.4 billion by 2015.
While China had the highest online growth rate in APAC (47%), many Chinese travelers prefer to book offline via call centers or opt for cash payments.
Partly for this reason, online travel penetration in China was among the lowest worldwide (15%) in 2012. On the bright side, offline to online migration is well underway – leading domestic OTAs report significant gains in online bookings as a share of total sales.
Indonesia’s buoyant economic environment and promise as an online travel market have attracted the attention of many intermediaries: BookPanaroma, EzyTravel, GoIndonesia, Nusatrip (TLabs here), Rajakamar, Tiket.com and Wego Indonesia have all set up operations.
Indonesia will be the fastest growing online travel market in APAC by 2015, rising 268% over 2012.
Australia, New Zealand
Led by air sales, ANZ earned $13.7 billion (17% of APAC’s online travel market) in online gross bookings in 2012, and its online penetration was the highest in APAC at 39%.
The maturity of ANZ markets will keep growth slow in the next few years. By 2015, ANZ’s share of the regional online market will shrink to 14%.
Online penetration in Southeast Asia was 21% in 2012, contributing to a gross bookings worth $9.3 billion.
Hong Kong, Macau, South Korea and Taiwan
Online penetration in Northeast Asia was at 11% in 2012, accounting to $4.2 billion in 2012.
Travellers in these markets prefer to book offline, particularly for international trips. Northeast Asia represented only 5% of APAC’s total online travel market in 2012, but the growth will be in double-digit through 2015.
NB: Asia people image via Shutterstock.
Karthick was general manager for Tnooz in Asia until September 2014.