23 August 2002
Study sheds light on the world's most complex
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
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
"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
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".
HOW WILL ASIA ACCEPT NEW BRANDS?
The PhoCusWright study said the greeting these
new online travel agencies will receive will
depend a lot on how travellers in Asia accept
"Except for China, Internet access is NOT a
problem, as it was for early online pioneers in
the US and Europe.
"As a matter of fact, broadband and mobile
infrastructures in key Asian markets are among
the best in the world.
"Yet selling travel under a new consumer
brand is new to many Asians, who are used to
purchasing travel through mega-agencies and
tour operators such as Chan Brothers
(Singapore) or Wing On Travel (Greater
Unlike in the US, where traditional agencies
have yet to exploit online channels for the
leisure market, Chanbrothers.com and
Wingontravel.com are among the most successful
travel agency sites in Asia/Pacific, according
Different markets in Asia are in varying
stages of maturity, including Australia and
Japan, which are the most developed. Only one
to three percent of total travel bookings in
Asia are made online, but PhoCusWright projects
the Asia/Pacific online travel market to grow
between 60-70 percent annually for the next two
The bottom line, according to PhoCusWright,
is that the Asia/Pacific region does represent
opportunity - especially for discount hotel
aggregators (many of which are already
successful), and vacation packagers