Traditional industry players have embraced digital competition and both industries are setting the stage for the dawning of AI
Travel tech is one of the most dynamic industries in tech — one that is defined by a direct encounter (I hesitate to say clash) between the traditional industry and its internet-based competition.
It is one of the most competition industries out there, and fast-moving startups are both competing and partnering with MNCs notorious for sluggish processes.
However, in Asia the travel tech industry is full of opportunities. According to Hotelier Maldives, the compound average growth rate for the hospitality industry in Asia-Pacific was 5.3 per cent between 2008 to 2015. Nearly 280 million tourists arrived in Asia during that time period and intra-regional trips are expected to reach over 286 million by 2020.
Whether it is western companies like Expedia or Trip Advisor forcing the big boys to take notice, or Asian startups like Wegodive and BeMyGuest finding their niche, travel is an industry that has become a microcosm of the general startup revolution.
So, what is happening within the industry?
It seems like every industry, no matter the companies are corporates or startups, are waking up to reality that artificial intelligence will be obligatory part of business in the coming years.
While feasible ideas for 2017 included chatbot concierge services or intelligent voice services, but those ideas felt like suggestions which were slightly restrained for the context of a public panel.
Clive Ellul Hawthorn, the Director of Market Management for Malaysia & Singapore from Expedia said the company is actively pursuing artificial intelligence.
Christine Tan, the Vice President of Asia Pacific at FASTBOOKING (a company that tries to help hotels do for themselves what OTAs already accomplish), made it clear that AI was essential for the future of the industry.
“I think AI, AR, VR are going to become huge. I know that it seems really far out, but it’s not,” she said.
For example, Tan said FASTBOOKING is piloting a programme that will let companies that booking a conference room visualise potential set-ups through 3D imaging.
Online Travel Agencies
Online Travel Agencies (OTAs) is a term that is used to describe platforms like Expedia, Kayak and similar sites. One key takeaway from the afternoon Travel Tech Track at Echelon Malaysia 2017 is that the traditional hotels have accepted OTAs as a part of everyday life.
“Hotels should not be looking at OTAs (Online Travel Agencies) at friend or foe. They cannot completely get rid of OTAs, but if a large percentage of revenue is from OTAs, that is big trouble,” explained Christine Tan.
Adelene Tan, the Director of Revenue at Hard Rock Hotel Penang, said OTAs can reach people that brands may struggle to penetrate (be it because of language or demographics) but that,
“[Hotels] need to capitalise on the fact that the OTAs can reach certain markets that brands cannot.”
Possibly the most famous of these OTAs is Expedia, and Clive Ellul Hawthorn, the Director of Market Management for Malaysia & Singapore, broke down where the company is heading.
“It’s not mobile first, it is mobile only,” he said.
He said Expedia gets 45 per cent of its traffic, and about one-third of transactions are done from a mobile advice. Which means Expedia needs to find ways to keep people engaged over multiple devices.
“Seamless experience across multiple devices is incredibly important. From a consumer perspective, being logged in is really really important,” said Hawthorn.
When it comes to numbers, this translates to US$1.2 billion invested in technology (but by comparison, it spent US$4.3 billion on marketing). Those numbers suggest that while tech development is important, Expedia is spending significant resources into getting new customers online and brand-new users to become loyal customers.
“Think about that funny little man, that mascot encouraging customers to coming to supermarket. We need to do that too. We need to spend money, and mostly online,” he said.
For people trying to get into the travel industry, one interesting data point is that the middle-ground for booking is a death zone for cities like Penang (who does see significant tourism numbers from Singaporean spontaneous vacations).
In Penang, the company sees 39 per cent of rooms booked via mobile to be done less than three days in advance. On the flip side, 36 per cent of phone-based bookings occur outside of 15 days. So, the time period between 4-14 days only accounts for just 25 per cent of bookings.
Looking forward, Expedia is exploring how chatbots and AI can fit into the platform.
Like other industries, startups in the tech space are set to gain from the sheer fact that millions of people in Asia are entering the middle-class, and trying new things for the first time.
CG Chop, the Founder of a scuba diving bookings startup named Wegodive, told e27 that 60 to 70,000 people per month are trying diving for the first time (an astounding statistic).
He acknowledged that his concern is companies like Expedia, Booking.com or Kayak pivoting into his vertical, but also pointed out places like China are seeing a huge industry boom, which presents an opportunity.
Also Read: These 7 Penang startups might be under the radar, but show a lot of potential for the Malaysian ecosystem
As with the fintech industry, the difference in speed between the startups and the traditional players is a frustration brought up on multiple occasions during the day.
From the perspective on the older players, the challenge is convincing the hotel management the investment will reap the necessary rewards. On the flipside, startups often don’t have time to wait — not due to impatience, but because their cash might run out as the big boys move the initiative up the corporate ladder.
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