HOW ASIA IS CREATING A BOOMING TRAVEL INDUSTRY

November 14, 2018

According to the World Travel and Tourism Council, five of the world’s ten fastest growing tourism cities are in Asia, putting the region at the forefront of tourism in the foreseeable future. Compared to major western economies, such as the U.S., U.K. and Germany, where GDP grew at less than 2.5% year-on-year in 2017, the APAC market grew at a much faster pace. China’s GDP, the second largest worldwide, increased by 6.9% in 2017, whilst India, rose by 6.6% during the same period.

So, why are we seeing a boom in travel from Asia?

Leading the charge in mobile

Mobile is steadily becoming the primary digital platform for travel bookings in APAC. At an aggregate level, mobile share of the APAC online travel market stood at 48% in 2017 with China leading – 68% of its online travel bookings are made on mobile devices. Adding to this, social media platform WeChat is now being used by Asian airlines to allow users to book flights, search their flight status and check-in online. By delivering the tools customers need in the palm of their hands, travel companies are maximising the opportunities to sell with the click of a button, meaning it’s easier and faster for consumers to book.

Expansion of travel routes

Although 80% of travel in Asia is intraregional, according to Euromonitor, this is expected to change as regional airlines respond to increasing demand for further afield travel from the rising middle class.[1] While this is a global phenomenon, it is particularly pertinent in Asia, with the World Economic Forum highlighting that it’s been driven by the Chinese and Indian middle classes and younger generations, particularly tech-savvy Millennials. While the primary destinations for outbound tourism from China remains to be Japan, Thailand and France, smaller and lesser-known destinations could also begin to benefit from the desires of this new generation, who with their knowledge of history and culture, are seeking out more customised and unique experiences.

From an inbound tourism perspective, the growth in Asia is being propelled along by the relaxation of travel and visa sanctions in some regions, particularly those in China which hopes to make the country one of the world’s largest aviation hubs. As an example, China’s big three carriers (Air China, China Eastern and China Southern) are now prioritising international routes and vying for dominance in the market.

Dominance of the OTA market

Asia is leading the way when it comes to online travel. Ctrip is not only the top travel intermediary in Asia, with a market share of 22%, but also the fastest growing global OTA, thanks to its shopping spree, acquiring Trip.com and Skyscanner. Its success, according to Euromonitor, has also been pinned on meeting the increasing demand for independent travel, as opposed to package holidays, among millennials.[2] This is a trend that is expected to grow, courtesy of the mobile channel, as tech-savvy millennials seek to plan their own travel, influenced by social media.

Asia keeping its reign

Asia will continue to take the industry by storm and therefore offers immense growth opportunities for travel companies. According to Phocuswright, to succeed in the region, firms must create localised products, find new customer acquisition channels and build local brand awareness in a manner that resonates with consumers in Asia. Additionally, they must ensure that they’re able to cater to the wide range of payment options that Asian consumers expect.

This doesn’t need a system overhaul – travel agencies should look at the way they pay travel suppliers, such as through eNett Virtual Account Numbers, which are processed like a normal cards, and integrate with existing booking flows and back-office systems.

There’s a lot we can learn from Asia. Putting the customer first is at the heart of the fast growth seen in the region, and something that companies in all parts of the world should aim to emulate.

ENDS 

[1] Euromonitor International, Travel Intermediaries in Asia Pacific

[2] Euromonitor International, Travel Intermediaries in Asia Pacific

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