Digital platforms: boosting bookings for hoteliers in Asia-Pacific
The Asia-Pacific (APAC) region offers a host of diverse travel experiences: idyllic nature reserves like Mount Fuji and Tasmania; the sandy beaches of Jeju-do and Bondi; sprawling megalopolises such as Singapore and Hong Kong; and the iconic skyline of Sydney.
It’s no surprise, therefore, that travellers are flocking to the region in greater numbers. Growth in APAC’s travel and tourism industry is expected to outpace that of Europe and the US thanks to rising disposable incomes and increasing international arrivals.
In a fiercely competitive environment, successful hoteliers adapt their marketing and distribution strategies to changing conditions
The last year before COVID-19, which remains a reference point for travel, a quarter of the world’s international tourists touched down in APAC and half of the top 10 most visited cities were located in the region. In the same year, travel and tourism accounted for 10% of APAC’s GDP and facilitated 185 million jobs.
Many find it surprising, but offline channels account for the lion’s share of accommodation sales in APAC
SMEs under pressure
But with this growth comes challenges for independent hoteliers. Trends in APAC have mirrored those seen in Europe and the US, where small and medium-sized independent accommodations are increasingly losing ground to chain hotels. Independent providers find it harder to capture growth opportunities stemming from international arrivals. While global chains can spread the cost of promoting a single brand name across hundreds of properties and thousands of rooms, entrepreneurs running independent properties have access to no such luxury.
Marketing and distribution channels abound, and most hospitality-sector entrepreneurs choose to utilise a mixture.
Agility, however, is one of the ways for the independent providers to counterbalance those headwinds. In a fiercely competitive environment, successful hoteliers adapt their marketing and distribution strategies to changing conditions. For instance, during the peak season, when website bookings are high, management teams often prioritise the direct channel. However, during the off-season, when direct traffic dries up, management teams may choose to increase their social media promotions, offer inventory to wholesalers, or leverage online travel platforms to sell their rooms.
The travel entrepreneur’s toolkit
This ability to roll with the punches — no matter how the market conditions shift — is how hoteliers get heads on beds everywhere in the world, and Asia Pacific is no exception. Marketing and distribution channels abound, and most hospitality-sector entrepreneurs choose to utilise a mixture. Many find it surprising, but offline channels account for the lion’s share of accommodation sales in APAC, as is often the case elsewhere in the world.
Bringing in foreign guests is a key strength of online travel platforms
According to a market research company, Phocuswright, over half of bookings in 2019 were processed via telephone, walk-ins, central reservations, and corporate travel (53%); a quarter via supplier direct online (24.5%) and the remaining share (22.5%) came through Online Travel Agencies (OTAs). Most international travellers are familiar with digital platforms such as Booking.com, Expedia, or Airbnb, but in the Asia Pacific region homegrown OTAs play a much bigger role. Trip.com in China, MakeMyTrip in India, Rakuten or Jalan in Japan, and Traveloka in Indonesia are strong local players.
When marketing and selling rooms offline and/or online, hoteliers have access to a robust distribution mix, where each channel comes with its unique set of characteristics. A recent study by Oxford Economics sheds light on what distinguishes OTAs from all the rest.
Hoteliers’ ability to showcase their properties to a vast audience of potential customers is critical to the success of their businesses.
Bringing in foreign guests is a key strength of online travel platforms, something which is particularly valuable in an increasingly internationalised tourism market. Indeed, in the benchmark year of 2019, 60% of bookings made in APAC through an online platform were from international guests. This compares to just 24% made through other channels, including direct. Online platforms have international reach and localisation features (automatic listing translation and local-language customer support, for example) which can put travellers from further afield at ease when planning a trip.
by increasing choice, transparency and trust, online platforms generate additional sales for hotels
Hoteliers’ ability to showcase their properties to a vast audience of potential customers is critical to the success of their businesses. Simultaneously, travellers are looking for personalised offerings that match their unique tastes and requirements. When these two forces converge, the market flourishes, and new opportunities get created. It should come as no surprise that by increasing choice, transparency and trust, online platforms generate additional sales for hotels. Oxford Economics estimated 70 million of incremental room-nights in 2019 alone, which would not have been booked otherwise.
When we look at the big picture, we see that online platforms are helping to boost bookings for APAC’s independent providers. But APAC is a varied region, so what do we find if we zoom in on a few individual markets?
Australia
Australian accommodation providers sold 4 million nights using online platforms in 2019, a fraction of the 259 million room nights booked overall, according to a study carried out by Oxford Economics. And like elsewhere in the world, OTAs had a positive impact on the country’s GDP in the form of additional economic activity valued at AU$1.6 billion (US$1.12), which supported an additional 12,000 Australian jobs in the travel and tourism sector.
Online platforms are uniquely effective in attracting international bookings and matching them with local providers. Per-pandemic, 69% of room-nights sold through this channel went to foreign guests.
When asked by the researchers from EY-Parthenon, 80% of the Australian hoteliers agreed that OTAs are a cost efficient way to increase their reach and source more international guests.
A hospitality entrepreneur operating a small accommodation at one of Australia’s popular tourist destinations explained that the "communication with international guests can be difficult. For example, calling with European guests is almost impossible due to the time difference. The real-time booking function of the OTA is therefore very convenient for both our guests and ourselves".
Japan
The Japanese travel sector is one of the region’s heavyweights, where sales peaked at 596M room-nights in 2019. Online platforms expanded the market, like elsewhere in APAC, and generated over 9M of incremental room-nights for the local hoteliers. This economic activity amounted to ¥256 billion (US$ 2.3B) of additional GDP and supported almost 40,000 additional jobs in 2019.
Online platforms have helped drive business to small and independent accommodations. 60% of bookings made through online platforms were for independent providers compared to 32% in the whole sector.
88% of the Japanese hoteliers, surveyed by EY-Parthenon, confirmed that OTAs helped them realise incremental bookings. And 89% acknowledged and praised the benefit from the OTAs’ customer-facing infrastructure.
South Korea
The South Korean travel and tourism market has experienced strong growth in the last decade. 68 million room nights were booked in 2019, up 44% from 2012. Much of this growth has been enabled by online platforms, which contributed over ₩1.1 trillion (US$846M) to the economy in 2019. Online platforms also produced some of the greatest savings for consumers in South Korea compared to other countries in APAC, saving travellers an average of ₩15,391 (US$11.77) per night in 2019.
Independent accommodation providers in South Korea have accrued substantial benefits from online platforms. 73% of total sales through online platforms were directed to independent accommodations with rural providers deriving benefits well above trend even throughout the coronavirus pandemic. This demonstrates the agility of South Korea’s independent accommodation sector and the fact that online platforms allow providers to rapidly pivot their strategies to changing consumer preferences.
Online platforms have helped encourage more long-haul travel to South Korea compared to the whole market, particularly from Western, Central and Eastern Europe which comprised 71% of long-haul origins in 2019.
Supporting our partners, wherever they are
Travellers around the world want to experience what APAC has to offer and the region’s travel entrepreneurs are glad to welcome them. In the increasingly globalised tourism market, brands with wide name-recognition and consolidated marketing budgets enjoy certain advantages; but small and independent properties are upping their game too. As we’ve seen above, online platforms help level the playing field. At Booking.com, we are only as successful as our accommodation partners. Whether they run a luxurious resort in Bali or an eco-friendly retreat in New Zealand, we provide the hoteliers with flexibility to pursue their entrepreneurial vision and empower their guests to expereince the world.
