By Ritesh Gupta

TravelDaily.cn Correspondent

If there is one entity in the Chinese travel e-commerce category that stands out for its sustained investment, operational efficiency and profitability, then it has to be Ctrip.

Jenny Wu, chief strategy officer of Ctrip.com International

While international brands struggle to establish a feasible business model, Ctrip is persistently expanding its reach, with sustained product development and sales and marketing expenditure as well as strategic alliances.

As for the travel category on the whole, the online penetration is the biggest opportunity.

“As of now, online is accounting for around 10-15% of the total transactions in the travel category in China,” said Jenny Wu, chief strategy officer of Ctrip.com International. She expects this figure to rise up to about 20% over the next 5 years. “Relatively mature markets like the U. S. and Europe have over 40% penetration (for online transactions). There is strong potential upside in China that should take place.”

Strong foundation

Ctrip has built its business assiduously over the past 15 years.

“One of our strengths is independent quality assurance and six sigma quality management. It’s a procedure that defines our work flow. We delve deep into service issues and operational efficiency, there is no room for wastage of resources and capital. There is periodical scrutiny of each project, and the management is deeply involved inspiring teams, and different generations to work as a cohesive unit,” shared Wu.

She added, “Running an OTA business model isn’t a straightforward task, and it takes a profound vision and expertise to run a profitable OTA business. Travel service has proven to be a low-margin business, if we look at how traditional agencies operated over the years. But our margin has shown that we can deliver at a huge scale. So far we are still the only online travel player in China that has margins with all other peers being in heavy losses.”

Be it for it strategic alliances or organic growth, Ctrip.com is aggressively looking at refining its one-stop travel platform with addition of travel-related segments.

Take the case of how Ctrip is strengthening its transportation related offerings – optimizing the combination on air, train and bus components for travelling from one city to another. As shared by Ctrip, the statistics for the train segment indicated that the category witnesses two billion tickets on annual basis, and for bus, it is 30 billion tickets a year. Even as air tickets are currently driving the volume growth in the transportation ticketing services  (in Q2 it was 83% year on year), the plan is to strike a healthy combination in the long-run so that Ctrip could effectively serve customers from the start to the last mile of their trips.

Volume counts 

Market leader Ctrip is counting on 2014 as a year of strategic investments. The entity’s expansion plans and associated investment isn’t necessarily related to revenue generation in the current year.

Ctrip’s product development expenses for the second quarter of 2014 increased by 55% to RMB479 million (US$77 million) from the same period last year and 9% from the previous quarter, primarily due to an increase in IT and product development personnel related expenses.

The company asserted that its direct product in conjunction with its open platform product will result in varied choice for its users.

The operations are poised interestingly at this stage. While Ctrip won’t divulge much, but it is clear that the product mix is as diversified as ever. And with an extensive assortment of offerings, for instance, bus and train tickets being among the latest addition, how the volume-margin matrix is going to impact its financial results in the future is worth keeping an eye on. “Although we spent aggressively in the past two quarters in certain key areas, we still successfully achieved the industry’s leading profitability of 12% operating margins. Most of investments we are making are more related to our long term growth targets, rather than directly associated with revenues in the current year, associated costs and expenses are partly up front-loaded and we expect more revenues and operating leverage will gradually kick in later on.” Wu mentioned.

Ctrip points out that the introduction of bus, train tickets or visa-related services, or new offerings like student travel is resulting in brand stickiness. Ctrip recently became a strategic investor in Beijing Mind Education who has served more than 700,000 travellers. The investment enables Ctrip to further extend its user coverage to the people aged 3 to 18 years which could help cultivate a strong habit of using Ctrip from an early stage of a customer’s lifetime.The volume for booking visa applications through Ctrip’s mobile app has increased to five times its volume a year ago. Ctrip has also introduced overseas shopping service. It offers discount to Chinese travellers when they shop at overseas brand stores. The shoppers can get cash rebate from their spending overseas, and Ctrip is garnering commission from the merchants.

Also, the fact that the Ctrip mobile app downloads has now reached 200 million, growing at a rate of 67% quarter-over-quarter, it means the company would be in a better position to personalize and hence capitalize on monetization opportunities, say cross-selling.

As users rely on mobile apps for planning and booking, it means Ctrip would end up with itineraries that users end up booking. This data, if utilized proficiently, can pave way for strong affiliation with the brand and the company’s offerings. Ctrip is also ensuring that mobile customers are being lured into using the mobile portfolio. For instance, customers can avail Ctrip gift cards and manage their balance through the Ctrip mobile app. These cards are for travel products offered by the OTA, as well as third-party vendors such as restaurants.

Multi-channel strategy

Ctrip is clear that it just can’t afford to slip on the user experience, as well as after-sales service. One of the highlights of second quarter proved to be the chunk of transactions that were booked online or through mobile channels. This accounted for around 80% of Ctrip’s transactions.

In this context, Ctrip clarified that its call centre operations still remain a vital part of its multi-channel distribution mix. The company reckons that its call centre is more like an after-sales service avenue, and is still being counted upon as Ctrip’s key competitive advantage.

Competition

Every travel intermediary has different DNA, different advantages, said Wu.

“Ctrip.com stands out for its service, and operational efficiency. We are focusing  on delivering a one-stop travel service platform, and this is completely different from just directing the traffic as done by some distribution and marketing intermediaries,” said Wu, who mentioned that the company’s performance stands out for its 12% operating profit margin vs. heavy loss making by literally all its peers.

Being asked about her view on Qunar.com, Wu did mention that it isn’t easy for any IT-oriented entity to improvise and transform into a service-oriented model. “Ctrip is profitable, and proven its expertise time and again. Our accelerated growth rate, strengthened market leadership, and stabilization of margin all indicate this,” said Wu who has been Ctrip’s chief strategy officer since November last year and before that she was the company’s chief finance officer for about two years.

Wu further added, “When a supplier works with us, they could simply leave all the labor intensive service work to us by treating us as their outsourced customer service center and order processing center, then they can allocate their resources on working out the best possible user experience based on their core competency, such as, for hotel managers, they now could primarily focus on how to ensure the best experience when customers stay in the hotel.”

Ctrip.com acknowledges the trend of OTA-meta-search strategic alliances, the most prominent one being Priceline acquiring KAYAK. But in China, Ctrip.com states that it has achieved this goal through its organic expansion, that is, by upgrading itself to a one-stop travel service platform and by adopting an open platform. “We are running the best hybrid model in China travel space, smoothly combining the best essence of both a traditional OTA model and a meta-search model.” Wu claimed.

However, it is being pointed out that with the adoption of so-called hybrid or open platform model, Ctrip is also facing significant challenges for quality and service control on the products offered by 3^rd parties as all bookings are still completed on Ctrip’s website or mobile app. As Ctrip is aggressively pursuing this model, the team needs to be very cautious about selecting its business partners and sustaining the service standard as expected from them.

Jenny is scheduled to speak at the upcoming 2014 TravelDaily Conference in Shanghai (September 3-4, 2014).

==

By Charlie Li, China TravelDaily

The secret to The Priceline Group’s success may not be evident from watching Mr. Shatner’s mugging as the “Priceline Negotiator.” One key is that outside North America, the company drops its name-your-own-price model and uses a traditional booking model that has allowed it to become the world’s biggest seller of hotel rooms by selling 141.6 million room nights in 2011.

Primarily driven by international business, Priceline has achieved a 46% CAGR in the past 5 years. During the year ended December 31, 2011, international business (the significant majority of which is generated by Booking.com) represented approximately 78% of gross bookings, and approximately 88% of consolidated operating income. At a market capitalization of over $32-billion (U.S.) as of June 8, 2012, Norwalk, Conn.-based Priceline has become one of the largest U.S. Internet companies.

From its stronghold in Europe, Priceline is actively extending its reach into Asia Pacific, building its brand profile, recruiting more accommodation and looking for more growth opportunities.

Ahead of his participation in the 2012 China Travel Distribution Summit to be held on 12-13 September in Shanghai, Glenn D. Fogel, Head of Worldwide Strategy and Planning for Priceline, shares with Travel Daily China the group’s plans for Asia Pacific and his take of the future landscape of online travel in the region.

• 
• 1. Booking.com and Agoda have been making significant contributions to Priceline’s phenomenal growth over the past several years.  As we know, you are the person who led these two acquisitions, so what made these acquisitions and the business integration afterwards so successful? 

The Priceline Group actually has made four significant international acquisitions, including Booking.com, ActiveHotels.com (which has been folded into Booking.com), Agoda.com and Rentalcars.com, which is our international car hire service that previously was called TravelJigsaw

We think that there are several reasons for the success of our acquisitions to date.  Excellent management is one reason.  We have acquired companies where senior management was enthusiastic about staying on after the transaction to continue building their businesses.  Over my more than a dozen years at the Priceline Group, we have met with literally hundreds of companies that were potential acquisition targets for us.  And we have seen some great ones that we thought on initial review might be a good fit with our strategic needs.  However, we did not pursue many of these companies because we did not think the entrepreneurs fit with what we thought (and still think) was necessary for long term mutual success: namely, a desire by the entrepreneurs to continue to work hard with us after the acquisition to make their companies even stronger.  A second reason for success to date is the independence that companies retain after becoming part of the Priceline family.  We recognized that the entrepreneurs who built their companies know more than we do about their businesses and their markets.  So we give them a great deal of independence to continue to do what they have been doing well.  And our final reason is that we generally do not do full integrations.  For example, Booking.com markets hotel rooms under the agency model, while Agoda uses a merchant model.  A common tactic after an acquisition is to cut costs by choosing one platform and merging systems.  Another acquirer might have thought of integrating Agoda into Booking, keeping only the Booking agency platform.  But that is not what we did and we are better off having fast growing agency and merchant players in the Group.  Of course, some people may recall that Active and Booking were merged together, but that was a decision that Active and Booking management were fully involved in and it was an integral part of the acquisition plan when we approached Booking so they, the local managers, were very much part of the decision.  It was not the faraway corporate HQ demanding the integration.

2.       What challenges do you see from emerging channels and models, or how to leverage such as last-minute, flash sales, group buying, social media, etc.?

The world of hotel distribution continues to evolve and there is constant innovation and new, creative ways to book travel.  I don’t see any of these as challenges.  Instead, they offer opportunities for us to consider and leverage if we think they can help us best match travel demand with hotel supply at the right price. The Priceline Group’s brands such as Agoda and Booking.com utilize many different ways including last minute, flash sales, etc. to best serve our suppliers and travelers and we will continue to do so.  We are much better positioned due to our breadth of supply, best prices and brand awareness among consumers to present deals through these different sales channels than single-focused start-ups that might get some mentions in the travel press and perhaps venture money. In the end, what matters is how many rooms did you book for your hotel partners today? And how many will you book for them tomorrow?

3. What will be the key driving force that will impact the way that consumers buy travel in the next few years? Google? Facebook? Mobile? 

If only I knew what the future would be, my job would be much easier!  The truth is no one knows how the future will unfold but, due to our size and flexibility, we are better positioned than many to adapt as the market changes.

4. OTAs have been competing on price primarily. Will the battle continue to be on price, and price alone? Or will there be new battle fronts (service, marketing or what)? If the battle extends to service, how do OTAs compete with travel agents?

The claim that OTAs have only been focused on price is a myth.  No doubt, price is a critical component when a consumer decides to book a hotel, but the consumer is also concerned about breadth of inventory or availability, customer service, cancellation policies, ease of use of the site, site language, payment method, etc.  There are many factors that determine which site a traveler uses to book a hotel.  And OTAs have been quite busy making the customer experience more satisfying from beginning to end.  In terms of competing with offline travel agents, I think the speed with which people around the world have chosen to use OTAs like Agoda and Booking.com instead of offline agents, is proof that the OTA model has significant advantages for the consumer.

5. Some suppliers are increasingly reluctant to rely on OTAs because of higher distribution cost. Does that cause concerns for OTAs?

Unfortunately, another myth.  Just look at the steady growth in hotels participating with various brands in the Priceline Group.  OTAs provide hotel revenue managers with a highly efficient distribution tool that can sell their unsold rooms to travelers from all over the world.  Those travelers can even shop and book rooms in their native language.  And we are aggressive marketers.  Hotel revenue managers who understand the value we provide consider OTAs to be excellent value for the money.   Also, using our services is a much less expensive way to fill rooms than most channels, particularly when compared to the outrageous levels of compensation certain wholesalers or consolidators demand.

6. As you said two years ago on Traveldaily conference, the hotel consolidators may disappear in the future since the Internet is creating a more transparent business environment. Do you still think this will happen in the near future?

I think a basic economic truth is when one service is much cheaper than another, eventually the less expensive service gains share.  If a hotel can distribute its rooms through an OTA at a much lower price than through consolidators, it will do so.  As more and more demand comes through the OTA channel, hotels will hand over less and less inventory to more expensive consolidators.

7. What are the major differences between the online travel habits in Asia Pacific vis-à-vis the more developed Western markets or global trends?

I think generalizing across broad parts of the world is a dangerous thing to do and trying to compare Asia Pacific to a Western market is not very useful.

8. How should Asia Pacific online travel market be tackled strategically given such differences? 

We do not think of Asia Pacific as a single unified market.  Every country is unique and even within countries there can be substantial differences.  The important thing is not thinking of Asia Pacific as a single market.

9. Which Asia Pacific markets offer the most promising growth prospect for OTAs? What is Priceline Group doing to expand its market share and penetration in Asia Pacific and specifically China? 

As a rule, we do not talk about what we are going to do in the future.  However, we can talk about the prospect for growth in general and one can just look at travel statistic trends and see there is great opportunity throughout the Asia Pacific region.  It is an obvious point that as people’s incomes rise, they are more likely to travel.  We have been fortunate over the last two decades to witness the greatest movement of people from poverty to middle class in the history of the world and most of this upward mobility has occurred in Asia Pacific.  These new entrants to the middle class want to travel and as the economies in the regions continue to expand, the amount of travel will also grow.

The 2012 China Travel Distribution Summit will be held at the Wyndham Bund East Shanghai from September 12 to 13.

More information about this summit is available by clicking on this link.

Australia’s biggest online travel group Wotif kicks into gear for regional expansion

Republished with permission by  China TravelDaily

Wotif.com has cornered the online accommodation booking space in Australia and New Zealand, turning over US1.1 billion worth of bookings per year for the 10,000 accommodation providers in Australia and New Zealand and 7,000 in Southeast Asia listed on its site.

Claiming a market share of 10 per cent of all Australian accommodation bookings by end of 2011, the group has been named the number one travel-destination and accommodation site in Australia by independent ratings agency Hitwise for eight years.

From its stronghold down under, Wotif is actively extending its reach into Asia, building its brand profile, recruiting more accommodation and entering into joint ventures such as iViVu.com in Vietnam.

Ahead of his participation in a panel discussion on “The Emerging Asia Pacific Online Travel Market” in the 2012 China Travel Distribution Summit to be held on 12-13 September in Shanghai, Wotif Group CEO Robbie Cooke shares with Travel Daily China the group’s plans for Asia Pacific and his take of the future landscape of online travel in the region.

What’s your growth strategy in Asia Pacific?

We are very Aussie centric in terms of people booking through the site. We have a very strong proposition for Asian properties wanting to target Australian and New Zealand customers.

We’ve been quite open in our desire to extend our footprint in Asia. We currently have a good business in Asia (accounting for 14% of our bookings last year) and we want to get bigger. We are actively out there looking at ways to extend that reach.

We take a market-by-market approach, looking at ways to provide bespoke offerings in Asia Pacific. For example, last year we launched a joint venture with the Thien Minh Travel Group in Vietnam and developed iViVu.com. It is positioned as a domestic online travel booking site for the Vietnam market, specifically focusing on local needs.

Our approach is quite different. We are not taking the “one site fits all” approach, but rather identifying what needs to be customised for the specific markets of focus. Others are going for a more holistic or cookie-cutter approach for all markets, and time will tell which of these strategies will be the right one.

Which Asia Pacific markets are on your radar?

There are obviously markets where there are players of the same ilk as Wotif.com –  leading domestic brands that have very strong footholds in their home markets, such as Rakuten in Japan, and Ctrip and elong in China. It would be difficult to dislodge such strong incumbents and as such they are markets we’ll less likely focus on from a consumer facing point of view.

Markets that have no dominant incumbents are obviously of some interest to us. Joint ventures in these markets make sense for us. Vietnam was the first cab off the rank. We learnt a lot from that exercise, particularly the need to customize the offering for local needs.

What do you look for in joint venture partners?

We are very interested in identifying partners who are local, who understand the idiosyncrasies of their particular market place, have good access and reach to consumers, and are keen to leverage their position and tap into the travel market via a low risk joint venture model.

Wotif brings to the table a complete technology solution, inventory solution and expertise in the online accommodation space. We have almost an off-the-shelf travel solution for joint ventures that can be readily tailored and modified to suit the specific market needs.

What challenges do you face in extending Wotif’s Asia footprints?

The competitive nature of the online travel space is a given – it is (and always has been) a hyper competitive space. We are not “Robinson Crusoe” in our ambitions and the challenges to achieving them. There’s a lot of investment being made in online travel in Asia Pacific. A lot of people are trying to execute similar growth strategies in Asia. Everybody focusing on the region also brings something unique to the table which makes for a fascinating battle for the customer.

The markets are relatively immature and this will see more and more players entering the space over the next decade probably. Competition is healthy and produces the best outcomes for accommodation suppliers and customers alike. One thing is for certain – the landscape in five years will be very different from that which we are living today.

How do you cater to the online travel habits of different cultures?

It’s critical to know the idiosyncrasies specific to different consumers in the geographies you are targeting. You cannot form assumptions about Asia as a whole. It has less to do with whether the market is immature in an online transactional sense than understanding deeply the culture of the country.

Things like whether there is still a strong appetite to negotiate other than just accept the price, or the desire to have interaction with somebody, will influence the models that are adopted in certain markets. Similarly the desire to pay in cash as opposed to card (irrespective of access to cards) will and does drive consumer behavior – the absence of alternatives in certain markets will dull the uptake of the online model in certain territories.

One Company that I much admire that has been very successful in tailoring its offering is  Ctrip in China. Their preparedness to adapt their online capabilities and being flexible in the way they interact with their customer base I think sets them apart from the pack.

Will future competition among OTAs shift from price to customer service?

Price/value is and will continue to be very important. Customers are ultimately after the best deal.

(However) China and India are two good examples where the online model has been modified by some players to still encompass more traditional service, so clearly there is more to the equation than just price alone. In other markets I believe you will over time, see the emergence of models where a premium level of service in the online sense (or in other aspects of the transaction path) will be available on a use and pay basis.

We have some thoughts on these lines. It forms part of our strategy going forward.

How will regional players fare vis-à-vis global OTAs?

You will continue to see divergence between players that are trying to achieve global domination and players who have very strong regional footprints.

The next three to five years will be very interesting to watch. My view is the regional players will continue to flourish because they understand, are very focused on and are able to adapt most appropriately to their local markets. You have got very good case studies across the globe of regional players doing exceptionally well – like Rakuten and Ctrip in Asia, HRS and Hotel.de in Europe, and Wotif in Australia and New Zealand. These strong regional players are proving that they can compete very effectively against the global behemoths.

Over time the strong regional players will work out ways to increase their inventory access globally, which I think, is key. The regional players particularly in Asia are positioned exceptionally well to have very prosperous futures if strategies to resolve these access issues are addressed.

How do you counter challenges from emerging channels?

There have always been and will always be new technology, new channels, new models that we’ve got to deal with. The secret in this space is being very focused on your core business and not getting diverted too far from core.

There is a real risk in trying to do everything. You can get very distracted and diluted in trying to deal with every new fad. The trick is in identifying new trends that are going to get consumer traction and getting onboard at the right moment in time for your business (and this will be different by market and by consumer offer).

We, like many others, have had to deal with new comers in the product space where we saw a risk of sales leakage, flash sales is a good example of this. There are probably 10 to 15 deal-of-the-day type-sites that sprang up in six to12 months in Australia and New Zealand. We did see some opportunities and some risks to our business.

Rather than trying to build a separate flash sale site, we simply modified some of our promotional offers so that we could provide a deal-of-the-day type offer to our 1.6 million strong Australian customer base.

It worked very effectively. We didn’t divert ourselves too far from our core offer. We simply worked within our existing parameters and used that as a promotional tool. It (our “Wot deal of the Day”) is a much more beneficial model for hoteliers with a lot less commission demanded of them than the local flash sale sites.

Will flight bookings become a bigger part of your business?

Flight booking is a relatively new space (for us). It is an area where, as our customer awareness of our new offers grows, we are well positioned to capture growth – particularly given about 35% of our accommodation bookers travel to their destinations by plane.

We are currently only doing flights that are originating in the Australian market. The way we look at flights is that the accommodation part will always be the “hamburger”, and flights will be the “fries”. I’m very happy to sell the “fries”, and I think we’ll sell more and more of them, but they are obviously a less profitable part of the mix.

What are your plans for the China market?

We have about 550 properties in China working with us at the moment, a pretty small number. We are delivering mainly Australian and New Zealand consumers into those properties.

It’s absolutely a brilliant market with a strong leisure interest both by Aussies to China and vice versa. There is also a strong business flows into and out of China as well. There are very strong forecasts for this two-way flow to continue growing as the economic ties between our countries continue to build.

We are focused on accessing inventory that meets the business and consumer needs from the Australian and New Zealand markets. We absolutely are looking to grow our product range in China in next six to 12 months.

(In terms of tapping China’s outbound travel market), the Wotif brand is not one that the Chinese consumers know of. We have the biggest range of hotel inventory in Australia and New Zealand bar none. The missing piece of the puzzle is how to  provide this great inventory exposure to the Chinese consumers. That’s something we haven’t got a solution for yet.

What are the key messages and takeaways for your participation in the September event?

Every time I visit China I come away with a little bit more knowledge and understanding of the market. I look forward to participating and learning more about the China market. For me a big part of attending the conference is to simply listen to the great speakers you have attending and to get the chance to meet a few more local players I have not had the pleasure of connecting with to date. This is what I hope to take away.

What I hope to leave with the conference is more understanding among the attendees of Wotif.com – what we do, our markets, where we are strong, the appetite of the Australian and New Zealand travellers for the China market – and make people aware of what we have to offer in the Australia and New Zealand hotel markets.

For more information about China Travel Distribution Summit, please visit the event website. http://summit.traveldaily.cn/18/index.aspx

China Travel Distribution Summit Partners with PhoCusWright

Guangzhou, China, Jun. 4th- TravelDaily (www.traveldaily.cn), China’s leading online publisher and event organizer with emphasis on distribution, marketing and technology in the travel and tourism industries, announced today it will partner with PhoCusWright to host the 2012 China Travel Distribution Summit in Shanghai from Sep. 12 to 13 2012.

The China Travel Distribution Summit 2012 will bring together some of the world’s and China’s most influential travel industry leaders and executives to discuss core issues affecting travel.

“Despite a global downturn that has been impacting the world economy since late 2008, China remains the hotspot of the world’s travel market by achieving 22.4% growth in the number of outbound travelers for 2011,” said Charlie Li, founder and CEO of TravelDaily.

In two days of keynote speeches and panel discussions, industry leaders will explore how travel organizations can partner to improve market share, build customer loyalty and collaborate to revitalize the travel and tourism sectors.

“At this crucial moment, participants in our summit seek solutions that can help transform, drive efficiency and improve bottom-line performance for their business in this extremely complex digital world.,” says TravelDaily’s Li. “By working together with PhoCusWright, the world’s leading research authority and executive event organizer for the travel industry, we are confident we can create a truly interactive and inspiring event for travel decision-makers.”

“In the midst of a global travel, tourism and hospitality industry jolted by advances in technology and ongoing economic uncertainty, China continues to represent an area of significant opportunity for travel companies. As China’s middle class grows, millions of travelers are empowered to venture beyond their borders for the first time,” said Philip C. Wolf, chairman of PhoCusWright. “PhoCusWright’s partnership with TravelDaily underscores our commitment to this key market.”

“High Touch, High Tech” is the main theme of the 2012 China Travel Distribution Summit. TravelDaily conferences are regarded as the most prestigious industry events by Chinese travel professionals and global travel companies interested in investing in China.

Distinguished speakers for this conference include:

Min Fan, CEO, Ctrip
Glenn D. Fogel, Head of Worldwide Strategy, Priceline Group
Bart Tompkin, Managing Director, Amadeus China
Robbie Cooke, Managing Director and Group CEO,Wotif.com
Guangfu Cui, CEO, eLong
Zhiwen Huang, President, Mangocity.com Ltd.
Fritz Demopoulos, Partner, Queen’s Road Capital
Richard Wiegmann, Managing Director, Trust International
Rodney Bao, CEO, Jinjiang International E-commerce Co. Ltd
Sandra Leonhard, Director Web Strategy& Business Development, TUI Travel
RJ Friedlander, Founder&CEO, ReviewPro
Qinghua Hong, CEO, Lvmama.com
Zhixiang Wu, CEO, Tong Cheng Travel Network
Dan Wacksman, Senior Vice President, Outrigger Hotels & Resorts
Justin Luo, CEO and Co-Founder, Tujia
Ron Cao, Managing Director, Lightspeed China Partners
Yu Qian, Principal, Fidelity Growth Partners Asia
Jay Wang, CEO, Aotian Huijin
Yu Wang, Vice President, Spring Airlines
Barry Volinskey, Founder, Evature
Serge Faguet, CEO, Ostrovok.ru
Evans Jia, Co-founder and COO, Zizaike Travel
Sandy Liu, CEO, Zhuna.cn

The 2012 China Travel Distribution Summit will be held at the Wyndham Bund East Shanghai, Sep. 12-13, 2012. The conference is now open for registration and the super early bird rate will be valid through Jul. 1^st. For more information, please visit the event website: http://summit.traveldaily.cn

About TravelDaily
TravelDaily (www.traveldaily.cn) is China’s leading online publisher and event organizer focusing on distribution, marketing and technology developments in the travel and tourism industries.

Our China focus, up-to-the-minute news and feature stories, and in-depth analysis by leading industry experts will keep you up-to-date on the latest industry trends.

About PhoCusWright

PhoCusWright (www.phocuswright.com) is the travel industry research authority on how travelers, suppliers and intermediaries connect. Independent, rigorous and unbiased, PhoCusWright fosters smart strategic planning and tactical decision-making.

PhoCusWright delivers qualitative and quantitative research on the evolving dynamics that influence travel, tourism and hospitality distribution. Our marketplace intelligence is the industry standard for segmentation, sizing, forecasting, trends, analysis and consumer travel planning behavior. Every day around the world, senior executives, marketers, strategists and research professionals from all segments of the industry value chain use PhoCusWright research for competitive advantage.

The company is headquartered in the United States with Asia Pacific operations based in India and local analysts on five continents.

PhoCusWright is a wholly owned subsidiary of Northstar Travel Media LLC.

Due to the fast economic growth and high education levels in China, internet usage has been booming in the past decade. Young urban professionals are morel likely to obtain their travel information online than through any other source. All major cities have reliable and affordable broad band internet access. Most Internet providers are based in Beijing. The internet is also often used for on-line reservations for hotels (FIT travellers). Fees for Internet media advertising are relatively low and enjoy a large, professional and young audience. Payment is normally in the form of space rental rather than pay-per-click as in the West.
The main internet portals are: sina.com, sohu.com, 163.com, online.sh.cn, tom.com,.21cn.com.
At the same time as the World Wide Web is becoming increasingly popular among Chinese, the Chinese central government is getting worried about the negative effects of this new media. While some worries are justified (addiction to online games, internet gambling, pornography and credit card fraud), others stem from the tight control China exercises on all other forms of media.
The result of this concern is a high degree of censorship and restriction of internet content. As China cannot control sites that are hosted outside its borders, it resorts to monitoring and censoring what Chinese can view from external sites. This can lead to certain servers at certain times being blocked. With most websites held on shared servers, any site can be affected by this.
The other issue not yet resolved is capacity – usage outpacing investment in underwater cables and routing systems. This results in frequent bottlenecks and extremely slow uploads of external sites. Companies and organisations that want Chinese viewers to access their site need to consider that it will be frequently unavailable or load at such slow speeds that people may become frustrated and go elsewhere.
The solution is to host a mirror of your site on a shared server in China. To do this, it is important to note:
•    Chinese sites have different design requirements – often very busy sites with animation and colours.
•    Registering your domain with .CN will improve search engine performance in China and avoid your domain name being taken by someone else.
•    Chinese search engines also use registered domains in Chinese – a separate registration is required and this is only available in China
•    Only companies registered in China can legally host a website in China – an ICP license or application number is now required for any site, no matter what the content is provided the site uses a .cn domain name. Application can only be accepted from companies legally registered in China.

Travel Industry and the Social Media Puzzle

China TravelDaily Exclusive by Maggie Rauch (republished by ChinaContact in partnership with China TravelDaily)

June 3, 2009: With China’s leisure travel market growing at the same time as its online usership grows, it’s no surprise that a number of players are looking to capture the attention of travel consumers through social media.

The social media tools that are gaining steam–social networking sites, bulletin board systems, microblogging–may be a relatively recent phenomenon, but their function for marketers is based on a tried and true principle, says Mark Inkster, chairman of Yiqilai.com.cn. “You might not believe what you read online, but if it comes from your friends you will trust it.”

From travel booking sites like eLong and Ctrip to airlines and hotel review sites, China’s travel industry players are experimenting with using social media to attract and engage travelers. But the best ways to leverage that are still unclear, and social media strategy–particularly involving online social networking–was a major topic of discussion and debate at the recent China Travel Innovation Summit in Beijing.

“The barriers are quite high for creating a standalone social network,” says William Bao Bean, partner, Softbank China and India Holdings, who moderated a panel on social media at the Beijing summit. “Everybody belongs to two or three and doesn’t want to add another.”

Lufthansa Airlines learned that lesson when it experimented with creating its own social network for the U.S. market, Genflylounge.com, which failed to generate the interest that Lufthansa had hoped for. Its social media tactics in China are now anchored by a partnership with Xiaonei.com, the so-called “Facebook of China.” Lufthansa uses its presence at Lufthansa.xiaonei.com to interact with young consumers at the same place where they interact with each other.

“We felt that we would rather hook up with an existing social network provider,” says Martina Groenegres, Lufthansa’s chief China representative. “We chose Xiaonei because it is the biggest network for students, with 22 million active users. They’re generally well-educated, between the age of 18 and 25 and come from more than 3,000 universities.” Lufthansa’s 1,000-plus “friends” on Xiaonei share travel tips and have access to special deals and contests.

Jason Xie, eLong’s vice president of web and business development, is not so positive on the use of online social networking for travel industry players. Says Xie:  “It’s hard to have success with SNS in tourism because: One, the stickiness is not enough–people travel maybe twice a year for tourism; two, travel itself doesn’t generate sufficient content; and three, travel information is destination-based, so I think that SNS is in conflict with travel information. I don’t care about the ten places my friend has been.”

Mark Inkster, chairman of Yiqilai, a travel review site that relies heavily on user-generated content, directly disagreed with Xie. “Because you only travel two or three times a year, you want to come back [to social media] and have fun,” he said. “Dream, plan, book, travel, share–these don’t happen in sequence. We are looking to engage people as they move among these phases of the travel experience.”

Despite his aversion to social networking, Xie said that eLong is working on an initiative with Xiaonei, though he would not elaborate on it. The only program he discussed was eLong’s Yiqifei (“Fly Together”) program, which allows travelers to connect online with people who will be on their flight. Ctrip tried and scrapped a similar program in the past, as have several companies like the now-defunct Intown2.com, but Xie seemed confident that Yiqifei would appeal to eLong’s customers.

Inkster, though bullish on the role that social media can play in travel, acknowledges that Yiqilai is still working out its strategy. Echoing Bean, he says, “People are parts of other networks. I’m not too confident in travel social networks, so we’re building a presence on other networks.” Yiqilai allows users on its own site to contribute content through wikis, BBSes and interactive games. Its “Where I’ve Been” map app, which lets users place virtual pins on cities they’ve visited, is available on four different social networking sites including Facebook and Xiaonei, and is a top-rated app on 51.com, Inkster says.

China presents an interesting set of challenges and opportunities to travel providers when it comes to social media. Its rapidly emerging leisure travel segment does relatively little online booking, but is otherwise very active online.

“Online social engagement is higher in China than in the United States and Europe,” says Jens Thraenhart, president of brand strategy firm Chameleon Strategies. Forty percent of China’s online users can be categorized as “creators” Thraenhart says, compared to 14 percent in the United States. Thraenhart considers 44 percent of China’s online population to be critics or commentators, compared to 16 percent of the United States’ Internet users.

Of course, spinning that engagement into air ticket purchases and hotel bookings is not an easy thing. Questions of measuring return on investment for social media projects were raised throughout the Beijing travel summit, and there were no easy answers.

Groenegres says Lufthansa is still waiting to see if its latest experiment pays off: “Will people actually exchange a lot of information and then finally buy something? Do they link with our own site, Lufthansa.com, and book something?”

What this means is that Western companies and destinations need to get smarter in how they market and sell travel services in China. It used to be the case that simply becoming an approved destination (ADS) was enough to start getting tour groups, and a photo-op with a Chinese government leader got you all the business you needed. This is no longer true. Consumers shop around, research destinations online and share experiences with others that have been on chat rooms and web forums.

When it comes to travel within China, things have also changed almost beyond recognition. The Chinese invested heavily in infrastructure while entrepreneurs built countless hotels, resorts and other services for travellers. This has indeed led to increased cost of travel but at the same time opened up more destinations and made travel in China more accessible.

The fast pace of development has created problems, ranging from overcrowding to corruption and environmental damage. There are ways to manage this growth in a sustainable way and China can and indeed often does learn from other experienced and mature tourist destinations to figure out the best way forward.

Since 2006, I have directed the WTM-ChinaContact forum each year in November as a way of raising awareness in the West of what China means in the tourism world and how more Western organisations and companies can benefit from the emergence of a dynamic travel market in China. It has been a cornerstone of the forum from the beginning that tourism development with China must be a bi-lateral and bi-directional collaboration as this is the preferred way of doing business in China in any sector.

My vision is to motivate more companies to formulate a sound strategy for China engagement and bring the two sides together to exchange ideas and information. The support we’ve received from the national tourism boards of both the United Kingdom and China is proof that they recognize the importance of the effort. For the past two years our expert speakers and panellists have provided an insight into the operation of successful West/China business cooperation and shared practical advise with delegates. I was pleased to see in the forum delegates not only from the UK and Western Europe but from the US, North Africa, Middle East and Australia.

In 2008, we will continue bringing more examples of successful business relationships between Chinese and Western tourism organizations and give advice and help to companies on things like product development, relationship building, cultural awareness, sales and marketing.

One area that needs to be carefully studied is the use of online media in China, since it is so different from the West. Understanding the differences and harnessing the power of this new media is crucial to success in China. Conversely, Chinese destinations wishing to market themselves in the West need assistance and guidance on working with media channels in the West.

This year, China has been featuring prominently in the headlines so it is unavoidable that more people are taking an interest. The Olympics Games provided a window into China that can now be used to develop more tourism business. At the same time, the experience of these Olympic Games gives us several important lessons when it comes to targeting consumers in China or thinking of sending our clients there – be it leisure, business or incentives.

I selected a range of speakers that can bring their experience to bear on these topics. They are not simply representatives of companies engaged in tourism with China, they are individuals who themselves made in-roads into this market and proved that the Chinese tourism industry is healthy and profitable.

The WTM-ChinaContact forum is a chance for those involved in tourism to find out the real situation of China’s tourism industry and understand how the opportunities in the market can be applied to their business. Destinations will learn the best marketing methods; tour operators will hear examples of successful market penetration and learn how to forge close links with partners in China; travel agents will discover exciting opportunities for new travel products in China. This event comes only once a year. In 2008, as economic uncertainty surrounds us, we must look ahead and go where the market can bring us the best return on investment. For those that know how to play the game, this place is increasingly called ‘China’.
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Roy Graff is Managing Director of ChinaContact and a recognized expert on China’s tourism industry. He counsels tourism destinations and travel/hospitality companies on market access, marketing and sales strategy. Roy spent three years in China in senior business development roles for a leading multinational tour operator. He launched ChinaContact in 2005.

To learn more about the WTM-ChinaContact forum visit http://www.future-of-travel.org or call +44 20 32399688