Hotelbeds aiming for healthy growth in China and Asia as they celebrate 10 years

At the recent WTM (World Travel Market) in London I interviewed Joan Vilà, Managing Director of Accommodation & Destinations Sector at Hotelbeds and TUI PLC, the parent company. Hotelbeds are 10 years old and have unveiled a revamped brand and some growth goals at the WTM this year in London.

They intend to increase investment in IT and sales/marketing spend (40% increase) and grow their workforce by 18% with particular focus on expansion in Asia and the Americas. I sat with Mr. Vilà and Marta Alvarez, Deputy Managing Director – Sales and Marketing, Hotelbeds to discuss their experience in China to-date and future plans for that market. TUI acquired an Asian company, Pacific World, in 2007 and proceeded to merge certain functions with Hotelbeds in the Asian countries. Until now, many backoffice functions and office space are shared between the two companies. While Pacific World is a full service corporate travel, incentives and meetings service provider, Hotelbeds is a bed-bank. Hotelbeds contract space and discount rates at hotels worldwide and distribute this wholesale to retail agents (through the BedsOnline brand), white-label website partners (Hotelopia) and to distributers and OTAs.

They have experienced strong growth in Asia over the past few years, especially in Korea, Singapore and Thailand. Their focus for the moment is on increasing the overall number of directly contracted hotels in the region to make them a strong player in regional travel sector. The vast majority of hotel reservations happen between Asian countries as opposed to travel from Europe or America to Asia and therefore Hotelbeds needs to own sufficient product at competitive rates compared to regional players in this sector.

 

TUI PLC also has a joint venture in China, TUI-China. TUI own 75% in this company while a major local brand, CTS, own 25%. Earlier this year TUI China obtained an outbound travel license from CNTA, allowing it to sell outbound tour packages to Chinese directly. Hotelbeds, by contrast, concentrates on working with the travel trade and for the moment, is focusing on driving more hotel bookings into China from their existing network of travel agent clients from around the world.

In terms of the challenges ahead, Hotelbeds are growing the team of local Chinese contract managers to increase the numbers of hotels in China and improve the prices and conditions of these contracts. They recognise that the preferred business model of Chinese hotels is different from that of Hotelbeds and are pushing hotels to accept their standard business terms. This includes providing guaranteed allocated rooms and receiving payment from Hotelbeds post check-out for all reservations. Overall they are happy with their progress to-date in Asia but acknowledge that Japan is proving a much tougher market to operate in, while China will take some time to become one of their mainstream destinations.

To assess Hotelbeds performance in China specifically is difficult as they are mostly focused on inbound business to China and Asia. They are in the contracting and growth stage now. There is no doubt that they have resources and existing infrastructure through other TUI companies such as Pacific World and TUI-China to implement an outbound strategy, selling global hotel reservations to the Chinese travel trade and becoming a major player in this sector. The advent of the outbound license given to TUI-China can make this process faster.

In terms of corporate image for TUI PLC and Hotelbeds in China, they can greatly improve their positioning through better localisation of their messaging and engagement with China’s dominant search engine, Baidu. The Chinese industry will appreciate knowing TUI group’s scale, however the website is presently not translated to Chinese. Hotelbeds also does not seem to have a Chinese language website or even Chinese information available to download.

While TUI-China does have both Chinese and English sites, the branding is very different than that of TUI Group and the site would benefit from a design refresh more suitable to Chinese viewers. The logo and brand could be localised as well as TUI’s Chinese name is actually pretty good (途易 – roughly translated as ‘the road is easy’).

 

Roy Graff, for ChinaContact and The China Business Network

About Hotelbeds: 

 Hotelbeds (www.hotelbeds.com) is a global hotel distribution partner with an online accommodation database of over 45,000 hotels from over 1500 hotel chains and independent hotels in 147 countries.

For the year ended 30 September 2010, Hotelbeds sold over 11 million roomnights and outperformed the market with 24% growth in total transaction values (TTV). For the year ended 30 September 2011 Hotelbeds sold circa 14 million roomnights and its total transaction values are forecast to increase by 25%.

Hotelbeds was founded in Spain in 2001 following the acquisition of Barceló Travel Division by First Choice PLC in 2000. When TUI Tourism and First Choice Holidays PLC merged in 2007, Hotelbeds became part of the Accommodation & Destinations Sector of TUI Travel PLC, the international leisure travel company. Hotelbeds has 132 offices in 38 countries and employs over 6000 people.

 

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