Asia: The new online frontier

Study sheds light on the world's most complex market

The world's biggest emerging online market is also the most complex; and the world's biggest players are making their way to Asia/Pacific.

A new study, just published by PhoCusWright, estimates the online travel market in Asia/Pacific is expected to reach $13.3 billion in 2004.

Which is why, PhoCusWright says, "it is understandable why US travel companies are moving into the region. Online travel in the US is getting saturated, and the European market is growing slower than expected, forcing many travel companies to look east for their next big opportunity."

Whether or not they succeed is still anyone's guess.

The study, The Asia Pacific Online Travel Market: Tapping A Complex Market, says, "its fragmentation and cultural nuances make it among the most complex in the world".

The PhoCusWright study noted, "Culture, language, government, economy and currency - not to mention travel patterns - will impact the success or failure of online travel in the region.

"The airlines, which initially drove travel e-commerce in the US, operate much differently in Asia.

"There is little direct distribution, as national carriers still depend on travel agencies to sell 95 percent of their tickets. To date, only a few airlines have been aggressive in cutting commissions to encourage travellers to book direct, such as Singapore Airlines and Air New Zealand.

"But the advent of discount airlines in the region is making the landscape more competitive and forcing major carriers to seek lower cost distribution channels. This will result in the airlines (many of which already sell 10-15 percent of their tickets online) to dominate the online travel market in Asia for the foreseeable future."

It cited efforts by Asia/Pacific carriers to follow the Orbitz model in the US - that of creating a consortium and a common brand, namely Zuji.

That Asia is a complex market for online travel is not new information to industry players in the region. Online names such as Zuji have outwardly acknowledged the complexities of the Asian market - with each market having its own social and cultural peculiarities and at different stages of development.

Even with its experience, Travelocity, Zuji's partner, admits the difficulty with vice president for Asia, Frank Fotea saying, "The challenge is going to be creating a product that provides the sort of booking patterns that people in Asia are accustomed to.

"There are lots of smaller travel agents competing with the offline agent, much more than in the US or UK. Zuji will have to compete with the brick-and-mortar agents."

But coming they are.

Priceline has already rolled out its service in Taiwan, Hong Kong and Singapore in the first half of 2002.

Expedia is not far behind. After four years as Expedia's UK managing director, James Vaile was recently promoted to vice president, Asia/Pacific, signifying Expedia's renewed interest in the region. Vaile has called Asia/Pacific "the next emerging giant".