Travel online booking in China: Differences between mass market Chinese tourists and affluent Chinese travelers

As China’s travel market continues to grow, with an 11% uptick in the number of travelers last year, adoption of online booking is picking up as well. While only 10% of 2009 trips were booked online, that proportion should double by 2011, forecasts China-based Internet research firm iResearch.
How best to serve the search needs of the travelers who feed what iResearch projects will be a $2.3 billion industry by 2013, was a hot topic at the recent China Travel Distribution Summit in Beijing. Presentations and discussions led by industry experts from China’s top online travel companies, as well as from the greater Asia-Pacific region, the United States, and Europe, indicated that Web-based travel search here still lags behind other markets. Travelers here still have no option for tailored search supported by broad social media tracking.
Online Booking Challenges
One reason for the slow pace of search innovations might be the lack of a well-developed Web-based market for travel products. China still has catching up to do in the automation of its online travel booking process, said Ram Badrinathan, general manager, Asia-Pacific, for PhoCusWright. He commented that China’s online travel booking options have not developed on pace with expectations, and compared online travel booking in China unfavorably to the other emerging Asian giant.
“In India, you can book, cancel and reschedule online without talking to a person,” he said. “With Ctrip and Elong, you can’t do this.” He also noted that India reached this point without a well-developed broadband market or Web penetration to rival China’s.
Badrinathan suggested that eLong and Ctrip’s shortcomings are likely largely due to China’s global distribution system (GDS) environment, which is closed to outside competition. Speaking at the Beijing conference, leaders from Ctrip and eLong steered clear of the issue of better automation. Ctrip CEO Min Fan used most of his airtime to preach the company’s commitment to customer service. His rival, eLong CEO Guangfu Cui, spoke primarily of his company’s relationship with hotels’ direct online booking initiatives.
Immobilized
In naming key coming trends for the travel search and distribution space, Glenn Fogel, executive vice president at Priceline.com, singled out an area where China lags far behind other markets: mobile. China’s smartphone market, fragmented with a number of competing platforms, has a dearth of practical apps. Fogel didn’t speculate about China’s mobile environment, but predicted that in the North American market, strong search and booking apps would be emerging soon. He noted that using an app designed for travel was “habit-forming,” and “better than going to a mobile browser.”
“Travel apps favor intermediaries,” he said. “Consumers won’t download all the apps for all the suppliers. They might download two from suppliers, plus the one intermediary that they like. People will choose the ones that work best, and are the most fun.”
Social Scene
While China’s online booking and mobile infrastructure may be lacking, it has a vibrant ecosystem in another area that holds promise for online travel marketing and distribution -social media.
“Search is becoming more social,” said Yen Lee, founder and CEO of UpTake, a California–based website, the first semantic search site for travel. He noted that from 2009 to 2010 in the U.S. market, the percentage of travelers who read a travel blog or their peers’ trip reviews, or watched a travel video online, all increased.
One of the travel industry’s biggest believers in the power of social media in China is Jens Thraenhart, partner of DragonTrail, a Beijing–based company that works with travel clients to execute social media campaigns for the Chinese market. Thraenhart notes that although globally popular social media such as Facebook, Twitter and YouTube are all blocked in China, Web users here have their own copycat sites and use them at higher rates than do their peers in North America and Europe.
Social media is very promising for travel marketing on the mainland, says Bob Cao, chief analyst of Chinese Internet research firm iResearch. “On social media, there is a lower threshold for people to acquire, share and get feedback,” Cao says. “The cost of communicating is reduced significantly.”
But China still lacks a meta search site for travel that intelligently combs various social media to deliver targeted results. All of China’s leading travel search and booking sites -including Ctrip, eLong, Qunar.com, Kuxun.com and Daodao.com- include social elements and offer searchable user-generated reviews, but their social search capabilities are limited to within the site itself. Almost five years after Uptake.com and similar sites launched in the United States, offering ways for travelers to easily tap social networks for tips on all aspects of a trip, Chinese travelers still have no such option for search.
“It’s important to note that affluent and wealthy Chinese outboud travelers are now searching directly on luxury hotels’s websites, and don’t use very much automated booking engines, because they feel they won’t have the best rate until they speak themselves to the hotel’s sales Director”, said Pierre Gervois, CEO of China Elite Focus, a Hong Kong-based marketing agency specialized on targeting affluent Chinese international travelers. “Wealthy Chinese travelers are also users of very exclusive social media networks, such as the Shanghai Travelers’ Club social media network to prepare their luxury trip abroad”, Pierre Gervois added.
China’s top options for travel search, including the sites named above and also the market’s overall search leader, Google clone Baidu.com, still focus primarily on searches for hotels and air tickets, with less emphasis on tourist attractions and restaurants, for example.
“One type of search is for the route -How can I get there? That area is relatively well served in China,” says Wei Liu, general manager of search engine marketing at Baidu. “Another is for scenic spots, and few companies in domestic China engage in that. What are the best tourist spots, best local food- as a search engine we need to provide all of this.”
Competition is Coming
With so much untapped opportunity and so many underserved needs, the leading providers of travel search in China can expect to see competition heating up in the near future. Local companies with travel search expertise are undoubtedly looking at grabbing more market share by developing the right products, and international players appear to be kicking at the tires.
Japan’s Rakuten Travel is eyeing expansion, and while Taiwan and Korea are natural next steps, the travel market that is fast becoming the world’s largest also seems like a likely target.
“We’re looking at hotels and more transportation services, then expanding outside of Japan,” says Hideaki Yokomizo, who heads up the International Business Division for Rakuten Travel. “Today, 99% of our bookings are from the Japanese market. We are trying to get to 50 percent from outside Japan in 10 to 15 years, and we’re particularly going after the Asia-Pacific region.”
Baidu is also refining its travel search options, said Liu, but she adds that travel-specific metasearch sites would always be necessary. “Baidu needs these companies to help solve specific problems for travel search,” she said.
Ivan Zhang, CEO of Kuxun.com, echoed that sentiment: “Kuxun knows that it is a rat to Baidu’s elephant,” he said. “In the long term, Baidu does not need to do metasearch but they need the technology to make their practice better.”

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