"Consumers are using the web to ask open ended questions for the first time"
Published: 02 Jul 2008
Sales and Marketing in Travel Asia Pacific
Has the Australian market reached a stage where a media/advertising supported travel business model is attractive enough to support expansion plans?
Tim Hughes, VP - Commercial, HotelClub, certainly believes so.
To substantiate on the same, Hughes says, "Online advertising in Australia was more than A$1.35 billion in 2007 (during Q1 2008, it was $385m alone). On a per capita basis Australia is number two in the world behind the UK in online advertising based on data from PricewaterhouseCoopers and others. These statistics prove that the online advertising money is there for content companies that can generate an audience."
In an interview, Hughes, chosen as Chairman for EyeforTravel's Sales and Marketing in Travel Asia Pacific 2008 conference, provided an insight into the current status of online travel business in the region, developments pertaining to web 2.0. and much more.
Excerpts from an interview, conducted by EyeforTravel.com's Ritesh Gupta:
Ritesh Gupta: How do you assess the battle among various online travel agents in this region, especially in the wake of consolidation in the last few months?
Tim Hughes: The intellectual and operational challenge of competing in the Asia Pacific online travel market is that there is no one single, region wide answer to questions about facing off with competitors and associated consolidation. We have to look market by market and sector by sector. But we can say this - the big four are all in Asia Pacific, in different ways and with different strategies.
Expedia appears to be continuing the market by market, slow and steady organic approach that proved a success in Europe ( except for eLong and these rumours circulating around TravelGuru). Travelocity, again like their approach in Europe, has a multi-brand approach to the region based on a mixture of acquired, local and international brands. Priceline - in another European strategy mirror - is ignoring their initial efforts to launch the `name your own price model' and are instead focusing on an acquired online hotel region wide business (Agoda). I will leave it to others to comment on how Orbitz fits into that mix.
Ritesh Gupta: Site performance and site scalability continue to be core issues for growing travel content providers as they focus on increasing their online bookings and building customer loyalty. What trends have you witnessed in this arena?
Tim Hughes: If you want to seen online you have to be live online - all the time and with stability and security. These are now basic requirements. Environmental requirements. What is challenging now is that traffic is going up exponentially.
In the past, traffic growth came from more consumers coming online. Now it is driven by three factors - more consumers, searching more often and using tools that search even more often (i.e. meta-search). Pegasus is talking about look to book ratios now on thier system of 250,000 to 500,000:1. If you want to be an online player be prepared to buy a lot of servers and a sophisticated network architecture. As to loyalty, the best way to build loyalty is to build trust, best way to build trust is to have the site work, give great customer service, great rates, great availability and market a brand that has meaning. In other words - old school delivery of customer expectations. I reject the notion that brand is dead but as I said in this post it just has a different meaning in the online world.
Ritesh Gupta: The travel industry is witnessing the emergence of "Travel 3.0 intelligent agents" such as UpTake.com. UpTake's founder says the very success of the web 2.0 travel sites and content types is making the planning process harder for travelers. What sort of role do you foresee for such sites near future?
Tim Hughes: I have blogged at length about the challenge of "too much information" and discussed this with UpTake.com in a recent interview. It is clear to me in this phase of online travel that consumers are using the web to ask open ended questions for the first time (ie "where should I go next") rather than the traditional close questions of the earlier phases of online travel (ie "what is the cheapest price for a flight to Sydney").
The response to these open ended question is an avalanche of answers and information from a almost limitless range of content providers. Consumers need help sorting out the informed bloggers from the spurious fake reviews from the true user experience. I am not yet ready to say that UpTake.com is the answer but there certainly is a need for indexing, searching and content management to help consumers sort through "too much information".
Ritesh Gupta: An online travel agency recently launched a blog, powered by its employees. Should intermediaries or even suppliers look at driving audience from e-mails to their own web 2.0 sites like these and strengthen affiliation with the brand?
Tim Hughes: A single editorial blog is nice to have but not that significant traffic driver. Even as good as a thematic blog like a Gridskipper will generate nowhere near the traffic that deep content initiatives like a TripAdvisor will.
My advice to companies is launch a blog but make sure you fully appreciate the low scale nature of it.
Ritesh Gupta: CRM has taken new dimensions with the way the self-service technologies are integrating the customisation to the customer's end. Social media can assist the customer in increasing awareness of what is available to them before the property or the airline familiarizes them with the options available. How do you assess the situation?
Tim Hughes: Consumers have always trusted word of mouth more than advertising. Social media is making word of mouth easier and faster to distribute. No one has figured it out…one has to market properly to social networking. Then again this is no surprise as no one in the history of marketing has yet figured out the magic way to set up a guaranteed word of mouth generating campaign. People are looking for the magic solution and assuming that very soon we know exactly how monetise and advertising on social media. I am not so convinced. Instead I think we will see a continuous and never ending race as marketers try to catch up with consumers through word of mouth generating campaigns.
Hughes, an avid blogger (tims-boot.blogspot.com), is also scheduled to present during the EyeforTravel's Sales and Marketing in Travel Asia Pacific 2008 conference, scheduled to take place in Sydney on 29-30 July.
For more click here: http://events.eyefortravel.com/smapac/agenda.asp
Or
Contact Tom Ellum (+44 (0)207 375 7236/ tom@eyefortravel.com)
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