“True international travel in South-east Asia needs a vaccine”, says Agoda’s Hughes
Travel businesses in Asia should not pin their hopes on “travel corridors” and “green lanes” generating any substantial volume this year, with Agoda’s Timothy Hughes calling it a “dangerous” strategy.
The reality is, he said, businesses have to accept that it will be a domestic world for the rest of the year.
Speaking at WiT Europe’s panel on “Pockets of Recovery”, Hughes, when asked by moderator WiT‘s Yeoh Siew Hoon to predict “a moment when you think the first international border or regional borders might open in Asia”, said, “It comes down to one word, one word only, and that’s a vaccine. I think anything else is going to be minor and not at scale.”
Saying he used to be excited about those words “travel corridors” and “green lanes”, he noted, “… those are just proven really difficult to negotiate and it looks like they’re just not at scale. So we may get an opening, maybe start across the Malaysia-Singapore border – that seems the most obvious in Asia, which would allow some sort of crossing. But I think, at scale, true international travel in South-east Asia needs a vaccine.”
In the meantime, he said, Agoda is adapting to the domestic shift and he pointed out that the company, while dependent on cross-border travel, has a “solid domestic business” across North and South-east Asia.
With changes in trends such as shorter lead times in bookings, it is working with hotel partners to make rates available on a Friday for booking on the same day.
He said flexibility is crucial and it is working with hotels to remove the non-refundable option and “accept the fact that free cancellations are critical”.
Mieke De Schepper, executive vice president online travel & managing director APAC, Amadeus, also said that while the GDS is also dependent on cross-border travel, it does have domestic business in a few of the Asian markets it is operating in.
The company is supporting hotels, airlines and travel agencies on both the distribution side and other areas.
“We’re also helping hotels, through seeing how are they going to manage the change in their rate plans, their structures, how to reach the new type of consumers because most of them don’t have experience in dealing with domestic consumers, and how to adapt their media strategies.”
Meanwhile, South Korea which recently saw a resurgence in coronavirus infections, has managed to stem its spread “quite effectively but with some hiccups,” said Jun Shin, chief strategy officer of TIDESQUARE.
South Korea’s domestic travel was one of the first to recover following successful containment earlier. Shin said domestic travel was still happening but had been dampened somewhat by the recent resurgence.
Shin said restrictions like physical distancing and wearing of mask are still in place. “The spread looks like it’s contained, but the government will still keep the guidelines in place, and when these are lowered, travel demand will resume.”
The good news is, Hughes said, demand comes back almost as fast as it drops, which shows positive sentiment that people want to travel as soon as they can.
China, first in, first out – trends pave the way for the future
This has certainly been played out in China where travel businesses are reporting business levels back to 2019 levels. Said De Schepper, “The summer holiday was a massive boost in all domestic travel and, from a survey done by Trip.com, 80% of the people want to travel again.”
There are changes in travel trends – more young people hitting the road, individual leisure travel trumping the once-popular groups, holidays within short distances and a preference for more luxury products.
Mieke noted that China is also ahead in terms of new technologies adoption such touchless technologies in hotels, temperatures scanning and artificial intelligence used at airports. ”It is really taking a leapfrog in terms of technology advancements, so it is super interesting to look at China and how they’re really getting out of this (pandemic) on a strong note.”
Lufthansa Innovation Hub’s head of business development for Asia, Christine Wang, highlighted two trends unfolding in China, which could be a sign of things to come for Asia, and other parts of the world.
Around “the future of work” which is a big topic around the world, she said, people are back in the offices unlike companies like Google, whose staff are working remotely until probably next year. “I think that’s one interesting trend, which is very different from perhaps the conversations we have here in Europe.”
Business travel is also back, with companies sending employees back on the road, she said.
The second is digital acceleration. “It’s unlocking new customer segments. For example, the older generation is now going on online platforms to buy their groceries. We also see how travel companies are responding to it, so live streaming in the selling of hotel packages is really strong.”
She cited Trip.com, which has been expanding its livestreams to South-east Asia and said it would be interesting how this trend plays out.
Expect innovation from startups that survive
Wang was also excited about what this crisis could do to spark innovation among startups in Asia.
“For startups that are already out there, this is definitely a very tough time like for everyone in the travel sector. But we do see positivity coming out and resilience, especially from the travel startups that have really been quick in pivoting either in terms of their customer segments, their product features or their business model.”
Wang sees the biggest challenge for many startups as the current “conservativeness” of the VC community, noting that big established startups within the travel sector do have funding. “But of course, it becomes even more important to really manage your cash burn as a startup in these times.”
Asked how startups can get through this crisis, De Schepper said,“It’s really all about flexibility and versatility, being able to pivot and be quick. I would say typically startups are much better at these things than the bigger corporates.
“I think there are already some great ideas out there. I know that people are working with cameras making that into temperature screening. So, a crisis like this really stimulates innovation. I’m really looking forward seeing some great ideas out there of new thinking.
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