Travel Research Online: A Study in an Emerging Market
One of the most compelling economic stories of the past decade has been the transformation of travel research online in China. Unprecedented economic growth has fueled the country’s travel industry, which is now positioned to overtake Japan as the largest travel market in Asia. China already has the largest aviation market in the region in terms of passenger volume, as well as the most investment in hotels. The country is now seeing significant investments in travel, tourism and infrastructure across all sectors, including rail, road, airports and hospitality.
The challenge for international players has historically been the government control of key parts of China’s travel value chain, such as the CRS (central reservation system), airlines, travel retailers and the media. But over the past several years, China’s travel industry has opened up and become considerably more transparent, due in part to the 2008 Beijing Olympics. This, along with the fact that China has the largest broadband user base and the fastest growing credit card market in the world, means that there are exciting opportunities to be tapped as the demand drivers for online travel fall into place.
For full-service travel retailing, relationships with local flagship carriers and the dominant CRS player (TravelSky) will be critical as well as time-consuming. Those pursuing the fulfillment model will have to take into account payment alternatives including partial payment, offline credit card payment, a call center- based model and final cash collection. Immediate opportunities exist for entrepreneurs, investors and market entrants on the demand side of the travel value chain, especially in the searching and shopping phases of the online travel research and planning process.
Travel Research Online in China
In addition, the explosion of broadband access and Chinese consumers’ pursuit of authenticity online have heightened the relevance of social media-based travel applications. Search and metasearch players not involved in transaction fulfillment will likely see continued growth. Outbound Chinese travelers are increasingly sourcing destination information online, rather than through conventional, offline media, and destination marketing organizations (DMOs) need a bold approach that incorporates localized, rich media strategies in Mandarin. Since service-based commissions are low in China, it is important to build a low-cost Chinese business model. For success in China’s travel industry, it will be critical to think local, act local and be local.
The Chinese travel marketplace is highly service-oriented, and most transactions are completed through call centers. Systems should be able to integrate localized processes and fulfill transactional and reporting requirements. More specifically, the partner must have the technological capability to interface with TravelSky as well as the appropriate licenses from government agencies to issue air tickets in each city in which it operates.
In an effort to control the burgeoning population, in 1979 the Chinese government instituted its one-child policy. The impact of this policy on travel behavior is evident; despite the importance of family, there is an increasing preference for choosing friends and/or groups as travel companions, says Phocuswright’s travel research online.