By Martin Kelly
I should be excited, but I’m not. Expedia and Travelocity have finally landed in the Asia Pacific retail space, and it feels very much like just another news story in a fast-moving world.
Which is not to say they won’t succeed, they probably will. Both companies already have successful regional hotel operations, and have simply expanded into retail, albeit via different routes.
Expedia has opened an Australian website, while Travelocity now owns 100 per cent of Zuji, recently upping its stake from around 13 per cent.
Their arrival is something the industry has been talking about for years, anticipating it as a catalyst for massive change.
Expedia alone spends more than $100 million each year on technology and pretty much defines Dynamic Packaging, while Travelocity, part of the Sabre empire, is hell-bent on global growth.
They are genuine global giants, boasting business models purpose-built for the 21st Century.
Yet now these marquee players are here, it feels to me like an anti-climax.
For a start, it’s been a long time coming and Asia is merely the latest in a long list of web outposts for each company.
For example, Travelocity already has a site in Denmark, that well known economic powerhouse, while Expedia has been operating for some time in Holland.
Both countries have less people than some Asian cities, and they are here now because the region has enormous growth prospects.
For Expedia, Australia is an easy first step with a common language, strong economy, political bonds, and a web-savvy population who aren’t afraid of spending money (even they don’t have it) and trying something new.
They also have an eye on Japan, and own a large chunk of eLong in China.
Travelocity has come through the back door through buying the remaining 87.3 per cent of Zuji (which operates in six regional markets) for US$34 million, which seems high but isn’t.
Australia’s Webjet is capitalized at twice that – US$70 million on the ASX, while last year Travelocity forked out a humungous $US1 billion for in Europe.
There’s a lack of hype – as usual each company is voluble without giving anything away, every message an exercise in corporate communications.
Travelocity boss Michelle Peluso has made no comment beyond a joint press release with Zuji, so no sizzle or excitement there, while Expedia is still in soft-launch mode with offering just hotels.
Another reason for the flat feeling may be that anticipation often exceeds the reality, and also a sense that the online travel world has moved on.
This is especially true in Australia, where online uptake has been particularly strong.
Airline sites remain dominant but online retailers are gaining market share.
One analyst suggests that online agencies could have a 25% of airline ticketing by the end of this year.
Australian consumers also appear to have made their mind up about where they are getting these fares – and that is from Flight Centre and Webjet.
These companies have broken from the pack and now dominate the online travel retail market with a market share of around 14% each, according to recent Hitwise figures.
It is no coincidence they have great booking engines that allow consumers to check prices across all carriers and solid, integrated marketing that works across different platforms.
No-one else is close in the Australian market.
Third-placed has 5.54% market share, while a handful of other companies garner between 1.5% and 3% of online travel eyeballs.
Zuji is among this group and hardly setting the world on fire with just 2.67% for has 1.99% and 1.21%.
Obviously they have a long, long way to go. So I’m not getting that pumped – yet. But only a fool would bet against them having long-term success, anti-climax or not.
Maybe then I’ll get excited.
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