Indonesia Travel Landscape (Reposting from Dailysocial and TravHQ interview)
Salah satu industri yang cukup berkembang pesat di era digital ini adalah perjalanan atau travel. Cakupannya cukup luas…dailysocial.id
We spoke to Larry Chua, who is the co-founder at Caption Hospitality an Indonesian travel startup providing easy to use…www.travhq.com
To further elaborate, travel is a very huge industry to start of with. Let me start from the beginnings of travel, way back in the past travel is usually for business purpose which is now what we call corporate travel. When people travel there are few fundamentals involved
i) Mode of traveling — Airlines, Trains, Bus, Mini Vans, Taxi, Ojek
ii) Accommodation — Hotels, Hostels, Guesthouse, Motels, Homestay, Kost
These are the basics. Eventually when modes of traveling becomes more affordable, people travel more for leisure purpose. In the past, suppliers of accommodations and public mode of traveling appoint agents to sell their inventories for them which we call them distribution. Why is this so because they have business accounts and allows credit terms to certain agents. This system is also to prevent overbooking and handling too many calls from agents
So what is online travel agent, it is a new channel / form of distribution for the suppliers. Their value the provide is a 24hrs channel where they spend huge amounts of money to market and drive traffic into their website and in return converts into sales for the suppliers. With this effort most OTA charges from 17% — 30% of the selling price of the accommodation suppliers.
OTAs example — traveloka, pegipegi, tiket.com, rajakamar etc…
Do you agree with this statmenet: “Hospitality business is the fundamental of OTA. So there is dependence”?
I guess the best question to ask is “Can hotels survive without OTAs?” the answer is yes. Reverse the question “Can OTAs survive without hotels” the answer is no. OTAs are just a marketplace like “Hypermart” without the suppliers there will not be any business for them.
The problem and issue is most hoteliers are very good at running the business of hotels. However they are mostly clueless about technology and the digital world.
Technology within the hotelier side of things fail to evolve fast enough. It is only recently that we notice some hotelier software moving towards cloud and slightly incremental improvements. If hoteliers have proper knowledge of digital space and technology, they would not need OTA to do their marketing for them.
Example: Most hotels do not have a well equipped marketing team. Public Relations, Branding, Digital Marketing, Offline Marketing. These are important functions that helps properties to differentiate against competitors finding the points of parity versus their competitor. Hence in the absence most hotels start engaging into a price war to win customers / guest.
There are some international chain hotel groups that do not list their properties in OTAs and are still surviving and doing very well. This is a good example in this context.
The third wave of online travel evolution is coming soon. Google have been experimenting lots of stuff within the travel space and those who can see it would stand to benefit greatly from this change.
Nowdays, I think, travel industry is being fragemented. I mean, each player doesn’t only head-to-head with one level competitior, like some e-commerce are selling hotel ticket etc. How do you think?
Being experienced heading up travel departments of ecommerce company (Ensogo, Deal.com). Travel was one of the most profitable verticals all along within such ecommerce / deal sites. At one point, the nett revenue of the travel department was covering up the entire company’s monthly expense. So having what have been happening within indonesia travel space, I m not surprised at all with recent acquisitions of tiket.com by blibli. E-commerce companies such as Bukalapak and Tokopedia will start moving into this space and also will not be surprise that another unicorn such as Gojek will start to play within this space.
These are very gradual moves when your company controls huge amount of customer database. They all operate as a market place. The next question is what can i sell these customers which yields the most margins and the highest ticket item. Lastly, travel products does not require actual storage of inventories.
Specific in hospitality, how do you see the opportunity in Indonesia? Is the existing player sufficient?
In hospitality, I am bullish on the opportunity with Indonesia. There are still a lot of problems and challenges faced by property owners. Indonesia need to learn from regions like Bali and replicate this level of service and model towards other region.
Technology can definitely play a part in this to help properties be more marketable, reduce bottom line expenses and more efficient. There are also many area of hotel problems that yet to be solved. Just to name a few:
i) Meeting Incentives Conferences Exhibitions
ii) Corporate Travel
iii) Swimming pool under utilised etc
There are couple of companies that I do know of are tackling the space some areas. On a marco perspective, I would love to say existing player is not enough. On a micro perspective, quality players is the key.
To elaborate on this, most people think that all websites are the same. However, think again, hotel websites needs to think of being designed to inspire and convert traffic into reservations. Another important fact is that most people in indonesia view travel on their mobile phones and transact on mobile phones and i can actually go on with more facts and data. So can we conclude that websites are different?
Reality is most hotels still engage some website development company or freelance designer to develop their website whom have almost zero knowledge of travelers behaviour etc. We are not longer living in 1998 where websites are for informative purpose.
What are the challenges in the hospitality business? We think the business is directly related to the service providers (Hotel etc).
As mentioned above, continuous education is much needed in Indonesia about digital and technology space. Hoteliers and owners are still having the 1990s mindset. We can still see properties using manual pen and paper for check in, we can still find property that does not have a proper website.
Once we can educate hospitality, the activities providers will soon follow suit to evolve too.
Is hospitality always a B2B?
No. Hospitality has always been the reverse B2C. When traveloka or tiket.com guest arrives at the property, the property see them as all guest of the property.