The travel market is booming: Asia Pacific now has the largest tourism industry globally by GDP contribution and employment. This growth is also accelerated by technology, where the region’s online travel market is expected to double from its size in 2013 to USD161.6 billion by 2017.
Interestingly, the diversity of Asian travellers undermines a prior reliance on standard splits to understand the market. Not only does travel in AsiaPacific consist of huge volumes of people; thevast richness in whom and how travel takes place sees the need for new approaches in market segmentation.
These factors are useful as a starting point in the changing travel landscape:
- Rise in the number of those who ‘can’: Strong macro-economic performance has resulted in the spectacular growth of the middle class in some Asian markets, which is translating into more trips taken: Indonesia will be the fastest growing travel market in the region with its gross bookings increasing by over 50% from a small base in 2014 to $17.5 billion by 2017.
- More affordable travel options: People can get financing support as airline providers and travel agencies offer payment by instalments in collaboration with the local banks.
- Travel no longer seen as a luxury: Aspirations are changing. People are now more likely to prioritise time off work and holidays are planned for and experienced with greater frequency and pleasure.
- Increase in “bleisure” travellers: Business travellers are a key and evolving target audience in Asia, thanks to the convergence of business and leisure needs. The majority of “bleisure” travellers come from Asia and are young working professionals who are increasingly accompanied by spouses or family members.
- Growing desire for experiential escapes: With increasing urbanisation has come the adoption of busy modern lifestyles. Consumers now seek relaxing experiences and are keen to seize the moment to squeeze in travel, the new life essential.
- Open window to new cultures: Improved connectivity has made it easy to share ideas and aspirations quickly and widely. In big cities and beyond, people now have greater exposure to new ways of living. This has sparked a desire to experience new cultures further and more fully.
- Technological leapfrog: Markets in the region are making rapid advances in their adoption of technology. For example, Indonesia has some of the highest levels of penetration and usage of social media amongst internet users globally.
- Increased government support: The easing of visa restrictions – most notably in the US, UK, Morocco, Indonesia, Philippines, and Korea – has broadened the spectrum of travel options available to Asian travellers. Places that were not even on the wish list a few years ago have become hot spots. Governments are also taking other steps to facilitate travel, taking note of the economic potential of boosting tourism.
Power in the hands of the consumer
These trends have driven a powerful shift in dynamics, where consumers in Asia today weld significant control. An industry shift from B2C (Business to Consumer) to C2C (Consumer to Consumer) means consumers are able to bypass big business brands and tap into the resources of individuals in situ – think airbnb and equivalents, as well as other forms of the sharing economy.
Vietnam-based Triip.me helps locals to create tours through which they share their knowledge and can act as tour guides on demand. Rather than using only official or expert sources, consumers are learning from each other.
“Choice and transparency are key. There is a greater reliance on peer-to-peer communication. People are more likely to make decisions based on their peers’ recommendations than from an airline directly. The number of platforms facilitating peer-to-peer recommendations is increasing rapidly and the airline industry will be as affected as other sectors,” said Toby Smith, General Manager, Sales & Distribution, Cathay Pacific Airlines.
Technology reconfigures consumer journey
With the advent of technology and access to a wide range of information and applications, new elements are appearing in the journey. Search and Shop now sit between Dream and Book as consumers are likely to invest time and effort in hunting around for the best option, not just in terms of price, but also in terms of options that meet personal aspirations. And the journey does not end with the experience itself; sharing the experience through social media has become an integral and important part of travel activity.
These steps are becoming less linear and sequential, requiring us to rethink how we engage with the consumer. The different phases of the journey are now more fluid, likely to merge one with another, and no longer mutually exclusive. Technology has an important role to play here as it allows us to do anything anywhere.
40% of respondents in our survey say that they share their trip on the go during their travels. The idea that tourists will proudly compile a real photo album to show friends and family on their return is now redundant. Sharing with intimates can happen instantly on social networks, whilst more elaborate and inspirational records might be displayed on Instagram, Pinterest, Steller and the like.
Changing travel landscape creates new needs and expectations
For many consumers in Asia Pacific, travel used to be limited and a challenge due to practical considerations and narrow aspirations. The changing travel landscape and morphing customer journey means these challenges no longer hold consumers back and limit their experience. New needs, along with increased expectations, have come in their place.
Travel has become the new social currency. When asked, respondents in our survey resoundingly agreed. And to prove that they have indeed done something amazing, consumers don’t delay in making it known.
The big challenge for travellers today is not a deficit of information, but how to navigate through the extraordinary breadth of options now available, whether established brands, new types of travel solution providers, peer-review sites or individual bloggers.
These new needs have implications for the industry too: in part responsible, it must respond.