There’s a lot of chatter out there in the world about how technology is making it easier than ever before to shop, get your hands on the latest entertainment content and feed yourself in the middle of a busy workday. However, there is little doubt that the industry which has experienced the biggest technological shake-up has been tourism, especially as travel becomes increasingly affordable in emerging Asia.
According to Deloitte’s 2018 Travel and Hospitality Industry Outlook, travel and tourism is one of the world’s fastest-growing sectors, raking in a cool US$1.6 trillion in 2017. Travel in Asia-Pacific continues on an upward trajectory and Southeast Asia is set to experience the strongest growth thanks to contributions from China and South Asia’s huge outbound markets, especially to regional favourites like Indonesia (8.5 percent) and Thailand (10.7 percent).
The rise of both travel and tech has led to an exciting intersection of the two. Digital platforms are making it easier than ever before for customers to connect with the immense wealth of the internet’s information repository. They are also making it easier for businesses to reach markets they would have otherwise found difficult to crack. This is especially true in Asia Pacific, which leads the global travel market, but still lags a bit behind in terms digital adoption, as per Phocuswright’s 2017 July report on digital travel.
This adoption gap is making way for plenty of opportunities up and down the travel industry supply chain. Businesses are beginning to leverage the power of this digital disruption. Major players in this period of transition are the large online travel agencies (OTAs), which have emerged and been around on the scene for the last few years. OTAs facilitate online transactions for a variety of travel products, including but not limited to flight tickets, car rentals, attractions, tours and activities, and more. Southeast Asia has a number of homegrown OTAs with growing influence such as Indonesia-based Traveloka and its contenders.
The emergence of the OTA has had a particularly powerful impact on Southeast Asia’s highly-mobile and tech-savvy travellers. Travel market research agency Phocuswright said that today, OTAs represent the fastest growing online distribution channel in Asia Pacific, with an expected 68 percent growth margin between 2017 and 2021.
There are important lessons to be gleaned from giants such as Traveloka. As the travel industry is growing exponentially, there are plenty of benefits for offline vendors to gain from adopting digital channels.
Digital platforms are uniquely positioned to expand reach and capabilities by helping offline businesses improve their mobility, access and exposure.
This is especially true when it comes to the tours and activities segment of travel, which remains largely untapped by online players. Deloitte estimates that this segment could reach US$1 billion in revenue by 2020, figures which lend context to many hotelier operators moving into the tours and activities market.
This is where tour and activities operators have a chance to get ahead. The tour and activities industry is generally comprised of disconnected, digitally-untethered vendors who lean heavily on physical communication channels and paper ticketing for managing bookings.
Tour and activities operators can take notes from the experience of OTAs, which have transformed the hotel and flight industries with the indisputable power of convenience. By adopting digital platforms and solutions, brick-and-mortar tour operators can learn from Asia’s OTA giants. They can harness the power of digital tools in order to connect “adjacent spaces” such as hotels with related activities like city walks, wellness packages, and more.
Connecting the dots
Tech providers have made it easy for businesses to pull together information about and access to adjacent activities in a single digital space. OTAs have spoiled travellers by placing the power of choice in their hands, which is a principle that traditional tour operators can also use for themselves. New tech solutions for businesses are now also making it easier for traditional operators to use, be seen, and be accessed via mobile devices. This undoubtedly aligns with the preferences of Asian travellers on the whole.
Following this model then, tour and activities operators can take advantage of digital platforms to feature their products and services without needing to rely on much physical infrastructure or the limitations of in-person communication. This means offline travel vendors have the potential to multiply their revenue streams and reach.
As more and more consumers across the world get plugged into the internet, the value of digital advertising and marketing is becoming increasingly apparent. One reason why OTAs have gained so much ground in the industry is that they have managed to build outsized brand influence and digital networks by connecting directly to their customers via social media. This helps place their products and services in a wider context of their company’s ethos, a lesson that offline vendors can also apply to themselves.
Up until now, tour and activities operators may have largely relied on word-of-mouth and reputation for commercial pick-up. Looking into digital solutions providers could help them connect with a larger pool of customers through online brand presence, but also by connecting with other vendors within a wider ecosystem. This might help to ensure that their customers don’t get stuck at any point in planning their trips.
Certain tech providers have integrated with various suppliers of all sizes in order to cater to a wide range of demands from Asia Pacific’s diverse travellers. Indonesia’s Traveloka recently introduced more on-the-ground transportation offerings (such as bus and airport-travel options) to create a more cohesive experience in a country where travel can be complicated.
What is becoming evident in the travel industry is the increasing importance of personalising experiences. Personalisation is something that small tour and activities operators have shown they can do well. For customers, part of the magic of tours and activities is the sense of “human touch” from the vendor. Travellers want experiences to be a reflection of their beliefs and individual tastes.
A huge factor in the success of OTAs is their platforms’ abilities to display a large number of products and services. This offers customers a huge range of options to suit each of their individual needs. The platforms have revolutionised the way artificial intelligence (AI) and big data tech can be used to ensure their customers are provided with the best options at the right time. These technologies can ensure that their businesses remain user-intuitive and convenient to keep people coming back to them.
Tour and activities operators have an opportunity to capitalise by bringing the best of their hands-on approach to bookings together with the capabilities of new digital solutions. They often have to cope with matching the right products and services to the right customer, and digital platforms greatly streamline this process.