Although many established metasearch markets exist in the region, there is real opportunity for differentiation and innovation in Southeast Asia In Asian markets like China, India and Japan online travel – and that includes flight and hotel metasearch – is established, flourishing and mirrors global trends.
China’s Qunar, for example, launched in 2004 as a flight and hotel metasearch but quickly emerged into a more hybrid travel play with a strong focus on the higher margin hotel-booking segment. According to analysts at the Yale School of Management, in the fourth quarter of 2014 there were “66% more direct sales than platform sales in terms of volume”. And in the longer term, analysts expect this to reach 80%, which explains the expansion of Qunar’s workforce from 2,500 to 7,500 employees in 2014.
In India, the country’s biggest online travel firm MakemyTrip has been around since 2000, first serving the travel needs of US-based Indians returning home to visit family. By 2005 the firm had established a local base and after bedding down set to expanding its armoury of travel related products and services in the region. Holding up a mirror to global diversification trends, in 2011 it acquired Gurgaon-based metasearch play iXigo.
Meanwhile in Japan, one of the world’s most innovative and established travel markets,15-year-old Venture Republic operates the largest domestic metasearch engine with domains Travel.ip and Hotel.ip. In 2012, it experienced 50% user growth versus just 15% from players in the OTA space.
Unsurprisingly all these markets have proved attractive for global metasearch firms. UK-based Skyscanner is just one and by 2012 it had established a presence in China through a partnership with search engine Baidu. Later, in 2014, it acquired another – Youbibi, proving that local partnerships are an essential ingredient. Last year, just to tick off another country, Skycanner linked up with Yahoo Japan in a 51%-49% JV.
Southeast Asia: the addressable market?
In Southeast Asia, where many travel bookings here are still made through traditional travel agents there is plenty of opportunity and room for growth. Here there were over 100-million tourist arrivals in 2015, according to ASEAN, the association of Southeast Asian nations, and nearly 50 million of these came from within the region – most notably from China.
Max Kraynov, CEO and founder of metasearch firm JetRadar, which has headquarters in Thailand, has an interesting view. While he sees huge and growing potential for hotel metasearch in Southeast Asia, he is not convinced of the potential for flights, because “there are no real OTAs to metasearch on”.
“For a meta with flights, the addressable market is small as there’s enormous brand recognition of low-cost carriers and a meta needs to do lots of educational work to capture this brand-loyal audience,” he says.
So, although flight metasearch is JetRadar’s game elsewhere in the world, from its regional headquarters in Thailand, today it operates as an OTA.
For a meta with flights, the addressable market is small as there’s enormous brand recognition of low-cost carriers and a meta needs to do lots of educational work to capture this brand-loyal audience
Max Kraynov, CEO, JetRadar
However, not everybody holds this view. Anna Trushkina, commercial manager of hotel metasearch play Wego, for one, disagrees that there are a dearth of OTAs in Southeast Asia to compare rates from.
“If you take Indonesia, by far the biggest point of sale for Wego in the region, as an example, the OTA market is led by local players such as Traveloka, Tiket.com, NusaTrip, and PegiPegi, which have both hotels and flights – and flight volumes are even bigger. What is more, global OTAs and hotel brands are actively acquiring customers online in the region and local media conglomerates have either launched or are launching an OTA of their own.”
To Trushkina’s latter point, last year media investment conglomerate MNC Media spawned Mister Aladin, a hotel metasearch. At the time, CEO Teddy Pun was quoted by Tech in Asia saying that far more differentiation and innovation is needed in the region’s online travel sector – a gap he hopes to fill.
Pun believes that being part of a media conglomerate also gives Mister Aladin the marketing edge – where many local firms’ resources are often stretched. As Kraynov points out, the high cost of paid search makes it particularly tough for aggregators in the region which rely mostly on SEO and rentention mechanisma like email subscription, mobile app installs, Facebook likes and so on.
Local and mobile edge
For Trushkina, Wego’s edge in Southeast Asia, and elsewhere, has come from localised investment in mobile apps that have proved “very sticky for metasearch” where users are being sent down the funnel.
On the localisation front, Wego has also placed particular emphasis on providing users with rates from local and global players, and direct hotel rates on all key points-of-sale.
Trushkina cannot stress enough that Wego’s growth in the region is coming from mobile where usage continues to grow by 15% year-on-year according to digital agency We Are Social. Indeed, mobile connections in the region today now number over 700 million, the agency reports. At the same time, the number of people using Facebook and Twitter in the region is expected to surpass the US in 2016.
With a fast growing digital landscape, coupled with rising incomes and discretionary travel spend growing as a result, online travel in Southeast Asia looks set for takeoff.
Where the real money is to be made may remain a moot point but it’s clear that while metasearch may start with flight search, brands will continue to add higher margin hotels, transfers and other ancillaries going forward.
That has been the story elsewhere in the world, and it’s unlikely to be any different here, says Kraynov.