Hospitality tech still “messed up”, opportunities abound for chat, social commerce and innovative bundling

The step change in mobile adoption, social, chat as well as the surge in low cost airline activity in the region will drive changes in the Asia Pacific travel market for years to come, a panel on “Around Asia” at the Phocuswright conference in Phoenix, Arizona said.

And while the region will have to learn with less Chinese travel for now, and pivot and adapt to what demand is available, don’t underestimate China, the China-based travel brands as well as China-based e-commerce brands which got into travel (such as Alibaba and Fliggy) and Meituan, said Mary Li, CEO and founder of Atlas.

Speaking to WiT in a follow-up interview after the panel, the Xian native now living in Singapore, said, “The current situation is forcing Chinese travel brands to look externally. With China closed, they have no choice but to go abroad for new customers and to invest in the global market. This means more competition for international brands from China-based brands. While it may take them a while to get up to speed and initially they might make mistakes, don’t underestimate them. They are survivors.

Mary Li:“Travel sellers all over the world should get ready for China.”

“China is a highly regulated market, with big penalties if you get it wrong. But it’s also a highly innovative, technologically-driven market – more so than others. We should expect to see the gamification of travel packages expand outside of China – something I personally welcome in our quest to make the travel booking process more fun. Large scale marketplaces and apps in China have changed the game – expect to compete with them next year.

“In China we have an idiom that means ‘the wolves are coming’. So, travel sellers all over the world should get ready. In China they do things differently – there are higher efficiencies, greater innovation and they’re hungry to learn. Your competitive set just got a whole lot larger.”

On the panel, she said that when China reopens – “we can’t predict when” – it will create another surge in travel recovery in Asia.

Timothy Hughes, vice president, corporate development, Agoda, said China remaining closed “is one of the hardest things that’s going on in this recovery – we are missing a big chunk of the market, and it’s really being felt by the hospitality industry inside of Thailand and Bangkok. But they’ve just had to pivot and change to get what demand is available.”

Thailand, he said, has had success pivoting to the Indian and Middle Eastern markets – “you’ve just got to, as a country and as an industry, focus on the demand you can get but there’s going to be a gap until China opens up …”

As for Japan, Kei Shibata, CEO of Venture Republic and Trip101, said it was the land of bargains right now with the low yen. He said that traffic to its Trip101 content about Japan has tripled in the last few weeks. “There’s still a gap from 2019 level, however it may get pretty close towards next year, even without Chinese tourists. It’s perhaps the hottest destination in the world now.”

Step change in mobile, social, chat and payments

Away from China, Hughes said the speed and resiliency of recovery in South-east Asia “has taken us all by surprise” and he added that “across the whole of South-east Asia, every category of commerce shifted more online and shifted to the phone – so food delivery, groceries, content, e-commerce, and travel saw a marked shift to online and the phone.”

This has implications in everything, from distribution and marketing to content and product design.

Hughes said the biggest thing that had to change immediately was content, especially images. “Because travel loves the long distance image of the beach, and the long distance image of the property which is useless on a phone. We’ve had to spend a lot of time, re architecting the technology around the content, but making sure we get different types of photographs that work better in that kind of environment.

“We also had to spend a lot of time in chat. Asia is a huge chat environment. There are different chat platforms, no one wants to call anybody let alone call our call centre. A lot of people don’t even use email, so we’ve had to spend a lot of time and money on how to do synchronous and asynchronous chat with our customer care team.”

Kei Shibata: “We are all in on chat.”

Shibata said Venture Republic has been doubling down on chat and messaging ever since it developed a corporate travel service in partnership with LINE, the country’s main messaging platform.

“We don’t have a website, we don’t use emails, we don’t use the phone – every single conversation is taking in our corporate chat platform. It’s been doing extremely well. We also killed our email newsletter a couple of years ago and now the number of followers on our LINE platform is about 15 times more than our followers on Facebook, Instagram, Twitter’s and WhatsApp combined.”

This step change in mobile is also driving social media and commerce, said Li.  “Social media/commerce has been a huge driving force. We see the impact on travel. Live streaming on social media platforms and superapps in China has seen influencers drive millions of sales transaction value for global hotel brands like Marriott and Accor within just one hour. It makes the travel shopping experience more fun,” said Li who further observed that “most of the innovative ideas from Hopper come from the China/Asia market”.

For Hughes, the biggest impact of the shift to online and mobile is in payments – digital payments has accelerated in South-east Asia along with the rise in wallets – and how OTAs have to start behaving like banks.

Reiterating “if you’re not a fintech company in travel, you’re missing something”, he said, “when we’re sitting at the heart of billions of dollars’ worth of transactions and every basis point we can save, every basis point we can earn, just go straight to the bottom line”.

He related a couple of things that happened at Agoda during the pandemic. “Firstly, we revamped our supplier site completely and we now issue our own virtual credit cards for payments. We don’t even go through a third party on that, we’ve actively become a credit card issuing organisation. And then secondly, because we were all trapped domestically, we had to dramatically ramp up our local payment services in each market. If you’re going to be domestic in Indonesia, or Korea or Japan, you need to not have five payment methods, you might have 10 or 15. And so we went to local payment methods that, pre-Covid, we never really considered.”

Low cost airlines boom and fighting to own flights

Li, whose company operates a global platform for low cost flights, is excited about the spate of new low cost airline startups that are emerging in the region. “In Korea, there are 10 low cost carriers is competing with one full service carrier; in Japan, there are another 14 low cost carriers; in India, there are 10 low cost carriers … before the pandemic, in 2019, 57% of air capacity in Asia were driven by low cost carriers.”

In a separate interview with WiT, she said, “We can see the potential demand for Asia, and low cost airlines are welcomed by young generation consumers because of their affordability and personalisation. Those new start up low cost airlines do not have any legacy distribution systems, they embrace new technology into their retailing strategies and have worked well with new aggregators like us and e-commerce superapps.”

Tim Hughes: “We couldn’t sit back and let our competitors own the airspace.”

Speaking about Agoda’s flight product which it launched in the third quarter of 2019 and kept investing in through the pandemic, Hughes said, “It’s expensive building a flight engine. We put a lot of engineers through 2020 and 2021 into flights and we caught the early recovery, which was all domestic, which pushed us quite naturally into the low cost carriers because that’s what the domestic markets were.

“So we’ve spent a lot of time perfecting the low cost carrier feed. We’ve now got the challenge, as outbound and inbound returns, we’ve got to try and do the same with long haul carriers. It’s a big investment. It’s expensive. It’s challenging, but we couldn’t sit back and let our competitors own the airspace – that was just not possible anymore.”

Messed-up hospitality tech, autonomous driving with VR, and innovative bundling

Asked to give examples of “deep automation delivering intelligence services and travel”, Hughes started talking about personalisation and targeting but went back to his favourite bug bear – hospitality tech – “how messed up hospitality tech is right and how much we need to be able to get deep automation going in hospitality tech …

“The fact that we went through three years of Covid and we still don’t have touchless check-ins anywhere at scale – that drives me bananas and the fact that the history of my booking behaviour can’t be shared with Marriott or anybody so that my experience can be tailored more to me is crazy. So I continue my plea for the industry to get hospitality tech sorted out.”

Shibata is excited about a future that blends autonomous driving with virtual reality that would make the downtime more productive, entertaining and educational. “I love road trips and then if I hit the road … I definitely want to learn and be entertained.”

Li sees opportunities for innovative bundling and extending the idea to travel passes. “The concept of travel passes to create ticket bundles or upsell upgrades or lounge passes has been offered in China for a while now. But I haven’t seen it elsewhere yet. This is a really exciting opportunity to create partnerships across airlines, airports, hotel and agencies to offer more valuable loyalty experiences.

“Now that most of us are back to travelling, the race for loyalty is on and innovative bundling is essentially the development of a loyalty product. For example, using my frequent flyer airpoints, I should be able to pre-purchase 10 trips I know I’m going to take in the next year at fixed prices, and use them as I need them. I can then add lounge access, spa passes, hotel breakfasts all as part of the bundle. Collaboration across the travel eco-system only serves to create better travel experiences, and therefore more loyal customers.”

 In conclusion, the panellists were asked for key words to picture the new world of Asia – Hughes picked “Environmental Tipping Point”, Shibata “Crazy Rich Asians (enormous spending power), Diversity” and Li “Collaboration, Simplicity”.

Putting these words into an AI art generator, this was the result. Which is your choice?