Internet Roars In Lion City But Traditional Retail Stable

INTERNET bookings in mature Asian markets such as Singapore have already reached 15%, online operator Zuji believes.

However, the National Association of Travel Agents Singapore is more circumspect, estimating that the internet and direct bookings now account for around 10% of the Singapore travel market.

NATAS Chief Executive Officer Robert Khoo says traditional travel agencies are holding their own in the Lion City, generally regarded as the most net-savvy of all South-East Asian markets.

Mr Khoo says demand for traditional agents is increasing with a 15% boost in local agency numbers over the past five years.

Both NATAS and Zuji agree that booking trends are changing due to the emergence of Singapore as the primary regional hub for Low Cost Carriers (LLC), which in 2004 accounted for 7% of all flights from Changi Airport.

Freshly fluid consumer travel patterns are also having an impact, with the General Manager of SA Tours, Alicia Seah, saying business is strong for her company, one of Singapore’s largest travel agencies.

“The main difference now is that there perhaps is less emphasis on booking flights and more on-the-ground (product) such as organised tours, cars, restaurants and cruises.”

Singaporeans are also travelling more often, says Khoo. “Previously, many Singaporeans saved, sometimes for years, to go on one long international vacation,” he says.

“Now, many have the money but not the time to take long vacations so the trend is to take several short trips on a free and easy basis.”

Zuji says internet booking is getting especially strong strong support from the small to medium business sector in relatively mature Asian market such as Singapore and also Hong Kong.

It says yearly growth (end 2003 to end 2004) was in triple digits in all markets – Australia, Singapore, Hong Kong, Taiwan, Korea.

Director of Corporate Affairs Kim Stockham says hotel sales are particularly strong, growing at around 300% a year.

She adds that much of Zuji forward growth will come from hotel sales following a renewed corporate and marketing focus.


China’s Independent Travel Market Takes Off

By Martin Kelly

Excellent sales growth from China’s leading online retailer Ctrip once again exceeded market expectations and set a cracking pace in the world’s most exciting travel market.

Results from rival China travel retailer eLong told a different story – that of a company still establishing itself … strong sales were counter balanced by increased spending on acquisitions and marketing.

Consequently a clear split has emerged between China’s two big independent travel brands in the eyes of regional travel industry analysts.

That is, Ctrip, which is already making money, will remain dominant for the foreseeable future, while eLong focuses on building for the longer-term.

Analyst William Bao Bean from Deutsche Bank commented: "In light of eLong’s focus on customer acquisition rather than profitability, transaction metrics are the key to measuring success.

"eLong is getting traction as its relationships with portals are driving much higher traffic – but it is now up to the company to convert traffic into customers."

He said other players such as CYTS and Cendant (via their joint venture) are not yet having impact on the independent travel marketplace.

eLong’s net sales for the second quarter were RMB52 million ($US6.42 million) driven mostly by hotels, although the growth in airline ticket sales exceeded expectations.

Ultimately, though, eLong lost RMB11 million ($US1.35 million) for the quarter.

Ctrip powered on, recording net sales for the second quarter of RMB129 million ($US16 million), up 60% year on year. Net income was RMB56.5 ($US6.8 million), an 80% increase on last year’s result.

President and Chief Financial Officer of Ctrip, Neil Shen, who is leaving the company, said the results "highlighted our strength in strong organic and balanced growth.

"We have a healthy business model that we believe will continue to enable us to take full advantage of the vibrant travel industry in China."

Analyst Bean said: "Ctrip hit the ball out of the park again in the second quarter and is gradually cementing its position as a category leader in the China market based on its execution, high barriers and strong growth.

"While risks remain, including the economy and execution, we believe the outlook for Ctrip in the near and long term is good as it leads the small but fast growing independent travel market. "

Revenue at Ctrip is dominated by hotels at a ratio of around 2.5 for every airline dollar. Hotel bookings are also growing marginally quicker, although the most spectacular growth is coming from package tours, albeit from a very low base.

Online transactions are steady at 30%, compared with 20% for eLong.



Online Product Flies For Air NZ

Air New Zealand says customers have embraced the introduction of accommodation and car hire – either bundled or dynamically packaged with airfares – on its website.

Global Direct Sales General Manager, Chris Hunter, says: “It’s progressing well and we are happy with the way things are going so far – we’ve had a pretty good uptake.”

He says the product initiative was driven by regular users of its web site.

“Our customer base clearly demanded we sell more than just air tickets on the site,” he says.

“So we went through a significant number of business before deciding to add these components.”

Mr Hunter says consumers are happy to book relatively expensive holidays online.

“We are finding that the decision to travel is driven by the discounted (and bundled) ‘Hot Deals’ but then consumers are upselling themselves.

“Certainly many people are not afraid of parting with significant amounts of money on the credit card.

“I think our strong branding helps with that; we are seen as very trustworthy.”

Mr Hunter says Air New Zealand is continually reviewing the site.

“The brand life online is much sorter than offline,” he said, adding that a major focus of the site is converting the inbound market.



Search Engine Pricing Blowout For Travel And Hotel Websites

By Martin Kelly

Paid Search Engine Marketing costs in the travel sector have blown out dramatically over the past 12 months with sales conversion rates for Australian accommodation sites in particular reaching unsustainable levels.

Industry experts such as Frank Grasso from e-Channel say sales conversion rates have rocketed to almost US$90 per customer for some new players in competitive categories, while a study by researcher Frost & Sullivan confirmed it is a major concern for the industry.

“The increasing pricing problem is worse for new entrants into the market because they get hit twice: they have to pay a higher cost per click and due to their lack of brand presence they have a lower conversion rate,” says Grasso.

This is clearly making the first sale per customer uneconomic and forcing a strategic reassessment with websites justifying the high SEM cost by attempting to generate repeat business.

Grasso says the average cost per click for top position with popular terms such as ‘Sydney Hotels’, ‘Singapore Hotels’ and ‘Bangkok Hotels’ for an established company range between US$2 and US$2.95 on Google.

“A year or so ago we would have been able to get the top position for much less,” he says.

Managing Director of Amplify, Richard Noon, says: “What we are seeing is people moving more to a lifetime acquisition mode because they can’t justify paid search on a single sale basis.

“However, the jury is still out on whether this is the right approach, but clearly some players are prepared to play that game.”

Meanwhile, a report from Frost & Sullivan has revealed that rising prices and increasing competition for top ranking keywords are the top two concerns for Australian travel search engine marketers.

But Research Director, Technology, Foad Fadaghi, predicts paid search in the travel and accommodation category will still grow by at least 30% over the next 12 months.

He says the strongest growth will come from companies marketing destination activities.

Fadaghi estimates that travel is the dominant force within the Australian search engine marketing industry with 17% of total spend, closely followed by financial services on 14%.

Grasso says the rising costs are forcing many travel and accommodation companies to reassess their search marketing spend.

“The answer to this dilemma is to get smarter when devising a search engine marketing strategy,” says Grasso.

“Companies should allocate some of their budget towards PR and Branding, while using search as an acquisition tool. 

“Advertisers also need to become more aware of what the lifetime value their customers is and work out how much they are willing to pay to acquire a new customer. 

“The most successful search engine campaigns are the ones that follow a strict Cost Per Acquisition benchmark.”

Noon says the cost blowout throws the spotlight back on the importance of organic search and other marketing tools.

Both Frank Grasso and Foad Fadaghi will be speaking at TRAVELtech in Sydney on August 30. 



Suppliers Gain Market Share From Online Retailers

ONLINE travel agencies are losing customers to suppliers in the world’s biggest travel market – a finding that has strong implications for online Asia Pacific businesses.

According to the latest report from PhoCusWright, 40% of online travel shoppers in the United States price check on web agency sites before booking direct with the supplier.

Airlines have been the big winners with “nearly half of online travel shoppers” booking air (either through the call centre or web site) after cruising retail sites.

“This compares to three out of 10 who have shopped online travel agencies but ultimately purchased direct from a hotel or car rental company,” PhocusWright says.

“Low price guarantees, loyalty points and improved website navigation and services have impacted this shift.”

Service is also a factor. “More than twice as many online travellers (36%) believe the supplier-direct channel provides the best customer service compared with 15% who choose the online travel agency channel.”

Even traditional agencies fared badly with just 33% of respondents claiming they provided the best service.

Meanwhile, nearly four out of 10 (38%) of online travellers believe suppliers offer the lowest prices, up from just 14% in 2002 – a 24-point gain in two years.

Online shoppers also believe that suppliers offer the lowest fees (44% vs. 29%), most bonus miles/loyalty reward points (51% vs. 14%), and an easier change/cancellation policy (39% vs. 17%) compared to online travel agencies.

“Online agencies have lost their footing with leisure travelers in 2004 as a result of aggressive supplier efforts to better manage inventory and win business through online and offline direct channels,” according to Susan Steinbrink, PhoCusWright analyst and author of the report.

“The key to their long-term, Internet survival will be in successfully upselling the customer with valued multiple travel components.”

A total of 500 interviews were conducted via telephone from International Communications Research/ICR’s centralized telephone center between Oct. 6 and Oct. 16, 2004, for the survey.


The News Is All Good, Or All Bad – It’s A Matter Of Perspective









By Martin Kelly

OMIGOD – the world has changed. Things are different now. Those crazy kids aren’t reading newspapers, all they do is talk and text on mobiles; they’re always online and you can’t even talk to them any more.

I mean, even Rupert Murdoch reckons the internet is the way to go!

Recent reports, many of which were read online, carried the shocking news that media baron Rupert Murdoch believes newspaper editors must embrace the internet, saying print news executives “sat by and watched” as a generation of digital consumers turned away from print.

He could be talking about travel.

The omnipotent CEO of News Corp cited a recent report by the Carnegie Corp in the United States showing that 44 per cent of respondents between 18 and 34 years old said they use websites at least once a day for news.

In Australia, figures from Nielsen//NetRatings reveal that 13.2 million, or 84%, of people aged 16+ have access to the internet, 50% of users have broadband, most spend 30 minutes a day online, and that travel (like news) is one of the most popular categories with 36% “reach” among users. The vast majority of users are aged between 25 and 54.

Murdoch said that newspapers face a dire future unless the way they gather and deliver news changes dramatically. Otherwise, he said, the steady migration of readers and advertisers to web will continue unabated.

“The trends are against us,” Murdoch told the annual meeting of the American Society of Newspaper Editors. “We’ve been slow to react. We’ve sat by and watched. Unless we awaken to these changes, which are quite different than those five or six years ago, we will, as an industry, be relegated to the status of also-rans.”

So why am I telling you this? Well, replace ‘news’ with ‘traditional travel businesses’ and see what you come up with. Murdoch’s words should resonate with us all because he is simply talking about consumers wanting their product delivered in a different format more suited to the times.

Also, remember, it’s Rupert Murdoch, one of the world’s smartest businessmen, who is saying this. And, while he may be well north of 70, the so-called ‘Dirty Digger’ knows a good thing when he sees it, and it is not too proud to see the error of his ways.

The same applies Kerry Packer who, like his former compatriot, did not become insanely rich by ignoring the bleeding obvious and is set to make another large fortune with the upcoming listing of Seek, the market-leading internet job site.

Murdoch concluded that the future is strong, provided the newspaper industry – like traditional travel businesses – finds the correct balance of product delivery to satisfy a new generation of customers.

“I’m still confident of our future, both in print and via electronic delivery platforms. The data may show that young people aren’t reading newspapers as much as their predecessors, but it doesn’t show they don’t want news. In fact, they want a lot of news, just faster news of a different kind and delivered in a different way.

“And we are uniquely positioned to deliver that news. We have the experience, the brands, the resources, and the know-how to get it done. We have unique content to differentiate ourselves in a world where news is becoming increasingly commoditized. And most importantly, we have a great new partner to help us reach this new consumer — the Internet.

“The challenge, however, is to deliver that news in ways consumers want to receive it. Before we can apply our competitive advantages, we have to free our minds of our prejudices and predispositions, and start thinking like our newest consumers. In short, we have to answer this fundamental question: What do we – a bunch of digital immigrants — need to do to be relevant to the digital natives?”

Ends/ 20 April, 2005.


Cendant to Launch New Regional Vendor Platform

DISTRIBUTION market leader Cendant TDS is launching an integrated online product platform through Galileo that will – for the first time – see the company distributing packaged wholesale products through its agency network.

The Regional Vendor Platform (RVP) – due the final quarter of this year – will also aggregate and distribute air, hotels car hire, cruise, destination activities, insurance and foreign exchange through traditional and online agencies.

Utilising the Travel Service Aggregator (TSA) technology Galileo developed with Webjet and Microsoft, RVP will allow agents to directly access and book the live inventory of contracted suppliers via a web interface.

Cendant TDS Managing Director John Guscic says RVP will feature “all types” of online and offline product, although suppliers must have a robust technological capacity to ensure seamless integration with the web-based application.

“It will be used as a booking front-end for agents or sites to provide the most robust and integrated content platform available in the market,” Guscic says.

“I think it’s a great opportunity for suppliers and wholesalers to expand their product reach.”

Guscic says that work is already well advanced on the technical aspects of RVP, which will be integrated into GDS desktops.

“The TSA technology is so robust; it integrates into the mid and back office, enabling touchless transactions.

“This product is a great success story for the Australian travel industry and has already been rolled out globally.

“It is being used by UK consolidator and wholesaler Travel 2/Travel 4, while Harvey World Travel is using the TSA platform in a B2B environment.”

Planning for the product accrual strategy is now underway with Cendant set to appoint a dedicated partnership and relationship manager.

Director, Product Management and Marketing, Kurt Knackstedt, is currently scouting product from all sectors.

“We want everything,” he jokes.

Guscic adds: “We want all the content we can get then let agency customers make the decision on what they want to buy.”

In terms of marketing, Guscic claims RVP will give Galileo a major advantage over its competitors, although TIAS also offers agents an aggregrated database – albeit without air – through Traveltools.

“No-one else will have the suppliers, the technology or the distribution reach, while agents will be able to get all content through the same booking engine rather than visiting separate websites or making lots of phone calls.”

Guscic claims that Galileo’s share of the Australian Global Distribution Systems market has grown 10% over the past year and now sits at around 50%.

Its agency partners include Harvey World Travel, Flight Centre, American Express, and BTI.

May 13, 2005

Webjet Diversifies as Sales Grow

ONLINE retailer Webjet is starting to diversify income by placing its airline booking engine – which already generates most of the company’s revenue – on three new websites within the next two months.

Managing Director David Clarke said the booking engine will soon feature on the Travelmate and Need It Now consumer sites, in addition to the Creative Holidays trade site.

The booking engine is part of the Travel Service Aggregator technology platform Webjet developed in conjunction with Galileo and Microsoft.

It can process up to 1000 transactions a minute and has been a key reason for the recent strong business performance of Webjet, which recently announced a net profit for the six months to December 31, 2004, of A$254,484.

Further profit announcements are expected with sales continuing to surge.

February, with just 28 days, was a record month with A$8.1 million in sales (11% up on January) driven by 22,000 bookings covering 30,000 passengers.

“Just wait until you see March,” Clarke said.

He added that TSA, which is able to aggregate and display product from disparate suppliers, has allowed Webjet to increase sales while controlling staffing costs.

“Most of the incremental growth goes straight to the bottom line,” he said.

“At Webjet we have 16 full-time staff,” he said. “The throughput of the best run traditional travel agencies is around $1 million a year per staff member – we can do A$6 million per person.”

Clarke said Webjet operates on a gross margin of 7% before costs – 6% is fixed while the remaining 1% goes to marketing, generally evenly split between online and offline.

“I believe you’ve got to be a visible presence in the real world – it’s no good just being a cyber space identity.”

While Clarke was reluctant to forecast because of ASX rules, he said “if the model holds true I believe our net margin can fall within the 1.5% to 2% range by the end of the year based on current trends.”

Current rampant growth rates will be difficult to maintain, he said, although the company is aiming to double existing (low-commission) airline traffic, which currently dominates income at 60%.

Another 20% comes from car, hotels, and insurance, while the remaining 20% comprises services fees.

Webjet charges a A$6.95 service fee for every transaction, no matter what volume or amount.

“It’s been in place for more than a year and we have had absolutely no resistance,” he said.

Meanwhile, whatever resistance there was to investing in Webjet has evaporated.

Over the past seven months Webjet shares have increased from three cents to a high of 22 cents (check) and are currently trading at around 16 cents.

Daily trading volumes regularly exceed one million shares, resulting in major paper profits for some of the biggest names in Australian travel.

Significant investors who bought in or struck options deals when the stock was scraping the bottom of its range include Harvey World Travel (19%), Cendant (9%) and Australian Outback Travel (3.5%), which owns Need It Now and Travelmate.

Both Cendant (GDS, hotels and car – Avis, Budget) and Australian Outback Travel (Australia and NZ hotels) are also using Webjet to distribute its products, while the HWT alliance provides it with buying power.

The frenetic stock activity has inevitably led to speculation and rumour.

But Clarke said there has been little or no recent change in the Top 20 shareholders.

“We are not sitting here trying to organise a buyout or takeover,” Mr Clarke said.

“If someone makes an offer, we’ll consider it but it’s not in the business plan or strategy.”

Ends/ 22 March, 2005

Shoulda Been There - Back in 2019

You should have been there. The first sold-out edition of Travel IQ was a fantastic day.

Make sure you don't miss out in 2019 - register your interest here to get the latest updates.

Travel IQ is a one-day conference that celebrates the business of travel.

It's designed for entrepreneurs, key executives, business owners, directors, analysts, investors and managers across all verticals.

The aim is to get people thinking – and also inspired - with case studies from some of Australia’s most renowned travel entrepreneurs and innovators.

This unique format resonated with the attendees at the first event, which was staged at the Langham, Sydney, on October 24.

As one high-profile speaker commented: "I met with many great people and the overwhelming comment was how much they got out of Travel IQ.

"Personally, I also enjoyed the event very much.

"It is always great getting the heads of companies in the same room, inspiring. So well done!"

Another said: "Excellent first up business event - great base to build on."

Travel IQ 2018 featured an outstanding program packed with industry leaders including:

Anthea Hammon, Managing Director, Scenic World; Director, Hammons Holdings 

- Anthony Hayes, Chief Operating Officer, Sealink Travel Group (SLK)

- Anthony Moulder, Head of Transport & Infrastructure Research, CLSA Australia

- Bob East, Chairman Tourism Australia/ Chair Experience Co (EXP)

- Brett Mitchell, Regional Director APAC, Intrepid Group

- Darrin Grafton, Co-Founder, Serko (SKO)

David Hammon, CEO & Director Hammons Holdings, (Scenic World/Sydney Harbour Bridge Tourism Experience)

- Dax Eddy, Executive Director, Jamberoo Action Park

- Jamie Pherous, Managing Director, Corporate Travel Management (CTD)

- Jeff Lewis, Vice President Technology & Strategic Initiatives, TripAdvisor

- Josh Oakes, Director, The Sunshine Tribe

- Kathryn Valk, Director of Marketing, Royal Carribean Cruises Ltd

- Les Szekely, Managing Director, Grand Prix Capital, early investor in SiteMinder and Rezdy

- Nigel Benton, Publisher, Australian Leisure Media

Quirin Schwaighofer, co-Founder and COO, MadeComfy

- Rachel Wiseman, Chief Investment Officer, The NRMA

- Robert Halfpenny, Managing Director, Aurora Expeditions

- Rod Cuthbert, Founder Viator, Former Chairman Rome2rio

- Rob Smith, Divisional Director, Australia/New Zealand, Merlin Entertainments (LON: MERL)

- Sue Badyari, Chief Executive Officer, World Expeditions

- Simon Lenoir, Co-Founder, Rezdy

- Tammy Marshall, CEO, The B Hive

- Vasso Zographou/Michael Simpson, Savills Hotels

Travel IQ will be back in 2019, date and venue to be advised.

Travel IQ is produced by Martin Kelly, publisher of and creator of several respected industry events.

More information on Travel IQ

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- It's All About The Information - 

TravelTrends founder Martin Kelly has diversified and now also runs Bluewater Press, a communications and thought leadership consultancy with a particular expertise in travel. Services include:

- Strategic Communications
- Media Releases & Distribution
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Martin is a communications, public relations and media professional with extensive high-level experience across the travel, internet, property and banking industries, both in-house and as a consultant.

For further information please email