With online travel agents (OTAs) like booking.com and tripadvisor.com making deeper inroads into the Asia Pacific travel marketplace, it’s time airlines and mid-size hotel chains found new ways to grow their direct bookings—and get closer to their customers.

Hi, I’m Mike Tansey, Travel Industry Lead for Africa and Asia Pacific (AAPAC) at Accenture. Thanks for clicking through and welcome to my short blog series featuring trends and observations on the AAPAC travel sector.

To get things started, I’m taking a look at what the AAPAC travel industry needs to do to grow profitably from now on. The objective? Growth through hyper-relevance. Consumers shop around more than ever. To win their business, companies need to offer them a consistent, responsive, highly-personalised service.

This is an urgent priority. OTAs are taking a bigger and bigger slice out of the travel bookings market. It’s not unusual nowadays for mid-size hotel groups to get more than half their bookings from OTAs. And it’s a trend that’s really picking up momentum: Aggregate gross bookings in AAPAC via OTAs are predicted to jump almost 70 percent by 20211.

Heavily reliant for bookings on inbound markets, airlines and mid-size hotel chains across the region have a huge geographical catchment area—regionally, internationally, or both. And at the moment, the OTAs are the ones making the big investments in global platforms needed to service this dispersed customer base.

Right now, airlines and mid-size hotel groups in AAPAC are struggling to do that. This could be because they’re heavily reliant on OTAs for bookings. So, in addition to paying out hefty commissions on each customer, they’re not getting the customer data they urgently need to remain relevant.

This means that they’re unable to deliver the highly relevant experiences that their customers desire—experiences through which they can sell highly profitable additional services and increase loyalty.

A rock and a hard place

Effective digital channels are vital. But outside the mega-brand bracket, the reality for most AAPAC travel companies is that they lack the resources and, crucially, the in-house digital capabilities to build and drive these channels themselves. So instead, they wind up with a patchwork of marketing agencies across their markets. They know they need to be doing much better, but they’re caught between a rock and a hard place.

Because of this, marketing campaigns are likely to be fragmented both inconsistent on the creative front and in their speed-to-market. So even with the money that they have available for digital marketing, it is not being spent as effectively as it should be.

And, of course, because their agencies are executing on their own platforms, travel companies can’t track how effective their marketing spend really is. I know from working with these businesses, including some of the most successful regional airlines, that they’re spending a significant amount on marketing—but sometimes with minimal impact. There’s little uptick in direct traffic to their sites and more importantly conversion rates remain low

Unless travel companies change their approach, things will only get worse. As they evolve into one-stop travel shops, the big OTAs are growing more and more powerful. That means more leverage on commissions, more undercutting on prices and even more OTA access to consumer data.

Redressing the balance

So, how on earth can travel companies fight back against this relentless pressure on their bottom line? And that’s leaving aside the customer intimacy play. After all, apart from the legal minimum of requirements that have to be passed on by hotel guests or airline passengers, these companies don’t have any in-depth insights. And without those, there’s little chance to build and sustain relevance.

It may sound counter-intuitive (given the impact of OTAs on hotel groups), but it’s a situation that’s crying out for an outsourced service. A third-party provider can collapse all that digital marketing capability into a single location and centralise the effort. Onshore support can work with the travel companies’ own marketing teams—analysing data, creating campaigns, identifying target customers and so on. The offshore component provides pure execution—at speed and scale, with added quality, all at the same time.

And because all of this is being run from a common platform, the data gets captured too. That brings analytics-driven digital marketing within reach. And with the added bonus that it can be delivered at a lower cost than any existing network of marketing agencies.

There really is everything to play for. The point is, once travel companies move decisively into digital marketing, they’ll gain access to a mass of data on their customers that simply wasn’t available to them before. And as soon as they start to take control of that data, they’ll be ready to reap the benefits of far greater personalisation, with better conversion rates and new ways of interacting with their customers.

Stay tuned for my next blog when I’ll introduce "Contact Centre 2.0", a new way for travel companies to get closer to their customers, that we believe will be a game-changer for the industry in AAPAC. Meanwhile, thanks for reading.

Mike Tansey

Managing Director – Strategy & Consulting, Travel, Growth Markets

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