Demand up in Phuket

The main Thai hotel markets of Phuket and Bangkok have emerged as the star regional performers with good revenue growth during April.

But many other Asia Pacific hoteliers had a soft month with STR Global reporting that regional occupancy rates fell 0.5% decrease to 68.6%, average daily rate dropped 2.3% to US$127.20 and revenue per available room (REVpar) was down 2.8% US$87.22.

“The Asia/Pacific region, with a 2.6-percent decrease in RevPAR, reported modest declines in all three key performance metrics during the first four months of 2013 as reported in U.S. dollars”, said Elizabeth Winkle, managing director of STR Global.

“RevPAR in Dehli NCR dropped 20.5 percent year to date through April, as the supply and demand imbalance in the market continues to create challenges.

"The strongest performance in the region has been in Thai markets of Phuket and Bangkok, with RevPAR growth of 14.2 percent and 24.2 percent, respectively.

"Last year, Thailand had a strong recovery from political strife and flooding in 2012, and that growth trajectory continued through 2013 as the country reports even stronger demand figures”.

Highlights from key market performers for April in local currency (year-over-year comparisons):

• Ho Chi Minh City, Vietnam, rose 10.6% in occupancy to 70.4%, reporting the only double-digit increase in that metric.
• Three markets experienced double-digit occupancy decreases: Taipei, Taiwan (-15.5% to 66.7%); Seoul, South Korea (-13.9% to 73.2%); and Bali, Indonesia (-11.1% to 59.3%).
• Four markets experienced double-digit room rates increases: Jakarta, Indonesia (+16.2% to IDR1,071,059.68); Taipei (+11.1% to TWD6,061.25); Osaka, Japan (+10.8% to JPY11,453.44); and Tokyo, Japan (+10% to JPY15,949.71).

Related posts:

1. Asia Pacific Hotel Rebound Continues
2. Singapore Average Hotel Room Now S$300 a Night Says STR
3. Thai Rebound Continues But Issues Ahead

There’s a great program and compelling speakers organised for this year’s No Vacancy Southeast Asia conference in Bangkok on June 25, which is based around the theme of Beyond Price.

Big topics are loyalty, pricing and distribution, brand expansion, new mobile booking models, backpacking, online search, website design, marketing and conversion, aviation and demand trends plus two industry leader’s session –one featuring OTAs, the other hoteliers.

Many of the region’s leading accommodation and online travel brands are represented suchas Accor, Banyan Tree, Agoda, Expedia, Wotif, InterContinental Hotels Group, Compass Hospitality, Starwood Hotels and Resorts, Wotif.com plus many up and comers.

Where: Sofitel Sukhumvit Bangkok
When: 9am – 5pm, June 25, 2013
Program: Click for details

No Vacancy SEA – which last year attracted 160 hoteliers, OTAs, distributors and tech suppliers – is unique in the way it mixes the online and offline worlds. Speakers for this year’s event include:

• Scott Blume, CEO, Wotif Group
• Bill Barnett, Director, C9 Hotelworks
• Javier Cedillo-Espin, VP Comms and Loyalty, Accor Asia Pacific
• Daniel Fraser, Director, Smiling Albino
• Anthony Green, Digital Director, QUO Global
• Nalin Kalayanamitr, Marketing & Sales Strategies Manager, Lub d Bangkok Hostel
• Bambos Kaisharis, Industry Head, Travel, Southeast Asia, Google
• Tomas Laboutka, CEO & Co-Founder, HotelQuickly
• Max Lambert, Co-Owner, Vietnam Backpacker’s Hostels
• Andrew Langston, VP Hotels Operations APAC, Banyan Tree
• Vikram Malhi, GM, Expedia South Asia
• Clint Nagata, Founder and Creative Director, BLINK Design Group
• Stephen O'Dell, Director, SODA
• Lothar Pehl, SVP Operations and Global Initiatives, Starwood Hotels and Resorts AP
• Rob Rosenstein, CEO, Agoda
• Nikki Scott, Publisher, SEA Backpacker
• Tejinder Sidhu, VP Sales & Marketing, Compass Hospitality
• Tarandeep Singh, Director Revenue Management For Hire – AMEA, InterContental Hotels Group
• Karthik Siva, Chairman, Global Brand Forum
• Brendan Sobie, Chief Analyst SEA, Centre for Asia Pacific Aviation
• Mark Southby, CEO, CheckInTonight.asia
• Jerome Wise, VP eCommerce, TravelClick

No Vacancy SEA is produced by TravelTrends.biz, which has been creating and running successful travel industry conferences since 1999.

Further Information: Martin Kelly – 612-9882-1575 or martin.kelly@traveltrends.biz

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"This should be a seen as a lesson to ALL accommodation operators that the only model worth doing business on is an agent model where the client pays the hotel direct and the OTA is paid their commission post guest stay," said Matthew Thomas, National Manager, Meriton Serviced Apartments.

"These merchant models are too risky… hotel owners and honest travellers shouldn’t have to deal with this – OTA’s spend too much money on advertising and SEO; It’s only a matter of time before they spend more than they make.

"A major shift to direct bookings should be the number one goal for every brand even independent operators.

"We are lucky we didn’t use them over the last few years, so have no financial woes to deal with."

However, many others were not so fortunate, with the comments section on the original TravelTrends.biz story jammed with tales of financial woe.

"We are owed over $3000  as guests have paid them directly and we can only invoice check-in.com.au the amount after the guest has been and gone. I know many many other managers on the gold coast that have outstanding invoices too," wrote one operator.

Other comments include:

• "We have an accommodation business in the Blue Mountains and for the past number of months we have had to work REALLY hard at chasing our monthly payments!! This explains everything."
• "Many on the Sunshine Coast have been affected by this, too. Also telling people they have to pay again for their holiday is not pleasant. Happy to support Australian businesses but I don't understand how this kind of business can operate without keeping clients funds safe in a Trust Account."
• "We have lost thousands of $$ and more than likely will never recover these funds. We have honored our commitment by supplying accommodation we should be paid."
• "We are an accommodation provider in Mollymook they owe us money for the last few months they refused to make the payments now i see why. For the last year they have been making excuses computer problems or best of all send us remittance that the payments have been made however never made it to our account."
• "I feel sorry for the staff that work for the company too. My friend works there and got into work yesterday and told sorry you no longer have a job or an income and received no warning or heads up that anything was wrong. Sad for hotels, customers and the good staff that were just doing what everyone was doing, trying to make a living."
• "Same story as the Accommodation Provider in Mollymook. We are owed over$1,800.00 for Guest accommodation from February to May inclusive. "

All those owed money are advised to submit an email 'Letter of Demand' to the appointed Administrator mholzman@holzmanassociates.com outlining monies owed so they can be listed on the Creditors Register.

Alternatively the Administrator can be contacted as follows: Holzman Associates, GPO BOX 3667, Sydney NSW 2001. Ph: 02-92229070 or Fax: 02-92229071.

Check-in.com.au was placed in voluntary liquidation yesterday.

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An email sent to the industry said there'll be a creditor's meeting in June and told hoteliers that if they are holding "future bookings to please contact the guest to arrange direct booking and payment.

"For a refund to be issued, please advise the guest to submit a claim to their credit card provider," the email said.

"If their credit card provider is unable to assist in providing the guest with a refund, the guest should contact the liquidator, Holzman Associates for further assistance."

Liquidator Manfred Holzman said he'd been only given the job today and declined to comment on the number and nature of creditors.

At this stage the website is still up and running with no indication of its financial trauma.

However, while all appears normal as as users navigate the booking process, the final page says the "website is undergoing maintenance and not processing reservations".

Check-in.com.au was founded by Managing Director Simon Isaacs 11 years ago.

The site has historically performed well in terms of traffic with Mr Isaacs telling TravelTrends.biz in 2010 that it was attracting 450,000 unique visitors a month.

However, at the time he said rising search engine marketing costs had become a major challenge for the business.

As result, Check-in.com.au increased commission to 15% to give it extra funds it needed to compete with the free-spending multi-national online travel agencies.

Mr Isaacs has been contacted for comment but has not yet responded.

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As Project Manager for multinational consultancies, Tomas focused on market entry strategies and matchmaking in Central and Eastern Europe.

Tomas was also member of the Sub-Committee for Entrepreneurship of the National Economic Council of the Czech Government.

He earned his CEMS MIM degree from the Rotterdam School of Management and the University of Economics in Prague.

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JetRadar's main property is Aviasales.ru – now getting 2.5m visits a month – which was started as airfare blog by founder Konstantin Kalinov, who moved to Thailand from Russia for the weather and lifestyle in late 2007.

CEO Max Kraynov, who lives in Sydney, takes up the story.

'His travel blog on cheap airfares to warm countries (Thailand, Dominicana, Indonesia etc) found a very strong following," Mr Kraynov said.

"In fact, the AdSense ad placed on his blog and a couple of occasional advertising gigs were able to sustain a decent lifestyle.

The real catalyst for the business happened the following year when Russian airfare distribution was liberalised, allowing sale of e-tickets.

"Immediately a number of offline agencies created their online subsidiary, but it was the newly created OTAs that stole the thunder," Mr Kraynov said.

"Aviasales.ru (as the blog was called) was able to capitalize on the newly ignited interest of Russians with credit cards to travel by connecting to multiple OTAs."

It got paid per acquisition rather than by click and business went gang busters.

By 2011 the company employed 10 staff and was profitable but had reached a fork in the road.

Founder Konstantin decided to up the ante, stepping aside as leader, becoming EVP of Products, and installing an executive team (CEO Kraynov and CTO Boris Kaplunovsky) to accelerate growth.

The company also reincorporated in Hong Kong under the name of JetRadar.

CEO Max Kraynov

Search advertising was already getting super-expensive so a decision was made to use affiliate marketing as the major accelerant.

The strategy has worked. JetRadar's 10,000 registered affiliates already account for around 20% of revenue and about 22% of bookings.

"The affiliate program is something we have high hopes for and are looking to make a bigger push for it in certain markets, including UK and Australia."

Mobile has also been a focus for JetRadar, which now has an in-house development team sale after buying mobile studio, CleverPumpkin, which created the Aviasales.ru iOS app.

Mr Kraynov said the mobile channel now accounts for 19% of all bookings, about 85% of which come through Apple products.

He said hotels metasearch is the next growth focus for Jetradar, which now has 60 staff – a 600% increase in just two years.

"In August 2012 a 3-person hotel metasearch startup BookMyBest called asking for an angel investment into their product," Mr Kraynov said.

"They had a working prototype and a decent understanding of the hotels business; they were probably 6-9 months ahead of JetRadar in their thinking.

""The entire team and their prototype were acquired, relocated to JetRadar’s Thai office and were given all the love and resources they needed to continue working on the full-scale product.

"The hotel metasearch product was launched in Russia in March 2013 under the name of HotelLook.ru and is currently being adapted to the Western public’s tastes on HotelLook.com."

Looking ahead, Mr Kraynov said JetRadar is looking to grow via:

• Country expansion: "JetRadar is currently present in the US, UK, Australia, Germany and Russia. Some other countries are in development. JetRadar pulled out of China late last year because the preferred CPA (Cost Per Acquisition) model simply didn’t work in China or was unprofitable whenever it worked.
• Number of products. "Hence the hotels metasearch. The management team is trying to be careful and not get possessed by the 'there are simply higher margins in hotels distribution' hype, but there’s money on the table, and JetRadar must at least make an attempt to grab whatever it can reach.
• New distribution channels. "That's where the mobile app and the affiliate program come into play."

"We are eager to work with airlines and hotel chains directly to give the power back to suppliers, but this is a long and bumpy road," he concluded.

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Darrin Grafton

Corporate travel technology company Serko plans to raise NZ$20m and list 25% of the company on the New Zealand and Australian stock exchanges later this year.  Co-Founder Darrin Grafton claims the company's primary product, the Serko Online corporate travel booking engine, dominates its market sector in Asia-Pacific. He told Stuff.co.nz that Serko "can be profitable" now but isn't with excess cash invested back into the business. The money raised will be used for product and sales development. Full story.

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In April it flew 5% less pax than the previous year while overall numbers are down 0.8% for the 10 months to April 31. Yet it has more seats to fill with extra aircraft and flights, so domestic loads for the financial year have fallen 4.6% to 75.7%.

The only good news is that the yield per passenger has increased. "This improvement was driven by the benefits of the new Sabre system starting to flow through and a continued increase in penetration of the higher yielding corporate and government markets."

However, increasing capacity (and with it operating costs) remain a long term issue for the carrier, although not as bad as first thought.

It's forecasting capacity growth of 4-5% over the next 12 month, down on previous guidance.

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