For any burgeoning global brand, despite its hefty valuation, if it’s new to China then nothing can be taken for granted.

So when San Francisco-based Uber, backed by the likes of Google Ventures and TPG Capital, forayed into China late last year, the move was expectedly minutely scrutinized.

The entity also faced the usual conundrum that every multinational brand faces: China isn’t easy, is this new on-demand car service mobile app up for it?

Few months later media reports and reviews went even deeper to assess – how is Uber performing in China?

All this when Beijing emerged as Uber’s fourth Chinese city and its 100 market in the world!

The battle is interestingly poised in China in this segment.

Talking of Uber, there has been talk about its minimum fare (reportedly $5), margins being paid to chauffeurs etc in China. One also can’t ignore how Uber is being perceived in other markets. Interestingly, the strength of Uber can also be gauged from the fact that a national daily in the U. K. recently came up with a headline: “Will Uber kill the black cab?” As for the size, the entity closed a financing round in early June, raising $1.2B of primary capital at a $17B pre-money valuation.

So what makes Uber stand out in an increasingly fragmented market like China?

“Uber is all about simplicity and magic. Imagine you are waiting for a pick-up and a luxury car is right at your door in no time. The experience never ceases to amaze one,” this is how Allen Penn, Head of Asia Operations at Uber, believes the app delights a user.

Obviously, pricing counts, but how much you are willing to pay for using a proficient app, plus on-time pick up and courteous driver is your call. Though the company isn’t sharing any details, it’s surely interesting to assess how the app pricing strategy and its localisation efforts are going to complement is technology.

Promising start

Uber is currently present in Shanghai, Shenzhen, Guangzhou and Beijing.

Assessing the progress in China, Allen says, “When we reflect upon our operations in a city like Shanghai, we observe that the growth trajectory of our business has been much faster than what we managed in other markets such as the U. S., the U. K., France or Singapore.”

“What has helped us in achieving this is our focus on simplicity and magic – imagine an Audi 6 waiting for you outside your door in matter of few minutes. We have the ability to create that differentiated experience,” says
Allen, who is scheduled to speak at the upcoming 2014 TravelDaily Conference, to be held in Shanghai (September 3-4, 2014).

As for how the team has focused on combating competition, Allen says Uber is wholly focused on creating a high quality, reliable, and distinctive experience for users and an efficient system for the partners that work with Uber. Be it for completion of a task in a matter of seconds or enabling an app user to be in control throughout the journey, Uber believes it offering a superior experience. For instance, app delights users with critical pieces of information. Uber enables users in visualizing how far drivers are from initiating their journey. How is the vehicle moving amidst the traffic? Also, letting drivers optimize their daily routine is very important. They should be able to fulfil maximum rides, rather than waiting for long, says Allen. “We’ve seen that when riders have that type of experience that allows them to earn a good living, that marketplace just works.
And the growth that we’re seeing in China underscores that distinctiveness and value that both riders and drivers are coming to embrace.”

[…]

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Orbitz-owned HotelClub is gearing up to make some big changes to it’s offering for consumers in mainland China by the end of the year. While making the HotelClub Chinese website more relevant to Chinese consumers, the brand is also repositioning itself – recognisng its roots as a travel club.
So far HotelClub has been tapping the enormous China outbound market mainly through its offline travel agent network. Through HotelClub for Travel Agents, the company offers its inventory as well as membership benefits to 120 affiliate Chinese travel agents booking through its website.
Meanwhile, the company is lining up the outstanding pieces of its China strategy including building new offers tailored for China, offering payment options relevant and familiar to the Chinese market, refining it’s simplified Chinese site, and also offering hotel rates and payments in RMB. The aim is to offer a site which is fully functional for direct consumers in China, according to HotelClub’s president, Nicolas Chu.
The company has already made great strides in its expansion in China. In June, HotelClub became the first online global travel agency to sign an agreement directly with Alipay for online payment solutions. In order to cater for Chinese customers, it has also developed dedicated customer support manned by Putonghua-speaking staff in its call center.
The China market is seen as one with promising growth potential in the Asia Pacific region. “Mainland Chinese have more money to spend on travel, and (they travel to) more destinations. We’re seeing an emerging trend that Chinese travellers are very much after added value and extras when booking their trips,” said Mr. Chu.
HotelClub targets China’s independent travelers. “The needs of Mainland Chinese travelers are similar to Australian and US travelers. Our consumers are looking for deals as well as added value and extras. Hotels on HotelClub are often listed with savings of 40% or more. In addition to great hotel deals, we also offer a number of Member Extras, just for HotelClub Members, including an extra 5-10% off our already low rates and (other benefits such as) upgrades, free breakfast and more,” he said.
The emphasis on Club Benefits echoes the brand’s positioning shift in the past six months, tracing back to its DNA as a travel club. The strategy is already delivering accelerated growth, Mr. Chu said without divulging numbers.

The repositioning strategy is intended to drive growth. “It is our strategy to go back to our roots. At the end of the day, there are hundreds of sites selling more or less the same products and same hotels at the same rates. We are not the biggest. It was important for us to define our value proposition around what consumers actually want and need,” he said.
In less mature markets where consumers are in the “bro-bo” stage (browse online but book offline), HotelClub deploys its offline affiliate travel agent program to meet market needs. The HotelClub for Travel Agents program has been growing significantly especially in China and has been recently launched in the Middle East as well.
Mr. Chu maintained that HotelClub’s dual strategy of also dealing directly with consumers is not in conflict with its affiliate travel agent program. “We still offer our inventory to travel agents with some extra benefits. For example, rewards are linked to an agent’s personal account. Effectively we don’t give rewards to our travel agent partners’ customers who are not booking with us directly, but we do give the rewards to the travel agents themselves,” he said. He also added that the company and travel agents are in fact going after different segments, as there are still quite a lot of people in China who prefer to book through travel agents for various individual needs – such as visas, for example.
HotelClub woos affiliate travel agents with its speed-book program, sales support, specific training, exclusive offers and extensive inventory suited to mainland Chinese travelers.
Meanwhile, the company is also investing in expansion through mobile devices in order to catch the next big wave in online travel.
An online thought-leader with a long experience in online businesses, Mr. Chu anticipates that interactions based on a traveler’s location while using on-the-go devices (including mobiles and tablets) could be the next big trend for online travel development.
While online travel began with travellers using the internet simply to hunt for bargains and make last minute bookings, it has since progressed to travellers sharing their recommendations online. Now we are seeing the dynamic exchange of information and recommendations as travellers begin to have conversations online – both between themselves and also directly with providers themselves.
“In the future it won’t be just about checking what people are saying on the web. Because you are in a specific location and you are linked to a specific group of people you will be able to view specific content which has been adapted to your needs. There will be interaction between people, combined with both the social and location dimensions. That’s what I believe will be the future and the logical next step for online travel,” he said.
“We are already starting to see this happen. It’s really the early stages at the moment.”
HotelClub will gear up for such trends in markets where mobile penetration is healthy. “It’s definitely something we are investing in. As a group, Orbitz is leading the way in terms of mobile. We already have a lot of data and analytics from our current mobile offering, which will be used to further optimise the way we use mobile in the future,” he said.

Mr. Nicolas Chu, president of HotelClub will speak the 2013 China Travel Distribution Summit to be held on 11-12 September in Guangzhou. For more information about China Travel Distribution Summit, please visit the event website http://summit.traveldaily.cn/20/index.aspx

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.

ChinaContact has been providing market entry services for nearly five years and has developed an extensive network of contacts in China. The technology tour is intended for a small group of people visiting Beijing, Tianjin, Xian, Hangzhou and Shanghai. They will meet innovators and leaders in China’s tech & internet sectors and visit some of the most exciting, fast growing companies in China. Social events will allow the group to get to know local entrepreneurs and investors better. This tour is planned around entrepreneurs who are thinking of China as their next big market and want to understand the environment first-hand and/or looking for local partners that can help them with aspects of their business development.

For a true understading of the culture, they will visit some of the best tour attractions in China such as the Great Wall near Beijing, Terracotta Warriors in Xian and West Lake in Hangzhou.

ChinaContact MD Roy Graff is a veteran of China’s tourism industry with a focus on online travel and e-commerce. He lived in Shanghai and Beijing and traveled around China extensively. He will personally be leading this tour. This is a fantastic opportunity to enjoy direct and undiluted contact with fresh minds in China to see how much we have in common and how much we can learn from each other. An added option open to the group is to continue to the Hawaii Technology Week retreat in November.

Confirmed China partners (more will be announced soon):

• Sam Flemming, Founder, CiC: China focused Internet Word of Mouth (i.e. blog and BBS message board) research and consulting firm.
• George Godula, Co-founder, Web2Asia: Internet Entrepreneur and Marketing professiona based in Shanghai.
• Kai Liang, Co-Founder and Acting Chairman at Coordinate Technologies Communication Ltd
• Sage Brennan, MobileMonday Shanghai – mobilemondayshanghai.net. Telecoms Consultant with 10 years of China experience.
• Kaiser Kuo, advisor to several Chinese Internet startups, including consulting work for China’s leading Internet video site, Youku.com.
• Toni Piech, Founder, Piech Asia Enterprises: Beijing based business incubator that develops “home-grown” start up companies in which it aims to retain a majority stake.

Media partner: TechCrunch Europe

To learn more and apply for a place on the tour, visit http://techtour.chinacontact.co.uk