Asia Rising: Travel Industry Bets Big on Asia-Pacific Market

Photo by Deanna Ting

The Asia-Pacific (APAC) online travel market has reached a tipping point, said PhoCusWright research. With the region's online leisure/unmanaged business travel market surpassing 20 percent of the total market in 2010, online travel is no longer in its infancy. 
Double-digit growth is projected through 2012, and momentum is building, said PhoCusWright in its Asia Pacific Online Travel Overview Fourth Edition, which analyzes online growth dynamics in each of the region's varied markets.

For travel companies banking heavily on APAC's online travel prospects, auspicious signs abound. Here are five reasons why PhoCusWright says travel industry insiders can count on robust growth in emerging markets. 

1. Emerging economic engines: The ascendance of powerful emerging markets is powering travel's growth across the region. China and India bucked global recessionary trends in 2009 as their gross domestic products (GDPs) grew 9.1 percent and 5.7 percent, respectively. Economic growth means rising disposable income and a growing middle class with an increasing demand for travel services. 

2. Fortuitous fragmentation: While branded hotel chains are investing heavily in APAC and account for a significant amount of the future pipeline, their share of supply remains small versus independents. Fragmentation beckons online intermediaries, signaling a major opportunity for the online channel. 

3. Low-cost carriers lead the way: Although traditional airlines continue to garner the lion's share of APAC air bookings, low-cost carriers (LCCs) are steadily transforming the region's air market – and luring travelers online. Air will be the fastest-growing travel segment across APAC through 2012, fueled by the rapidly expanding LCCs. 

4. Hello, world, I am ready to travel now: In the U.S. and Europe, the rise of online travel required marketers to overcome the inertia of well-established offline booking patterns, and offline share shift accounted for the majority of online growth. In APAC's emerging markets, however, online travel growth is largely fueled by first-time travelers, many of whom will have their initial travel booking experience online. Travel demand has long outpaced supply, and a growing population of new travelers, with rising disposable income and a strong desire to travel, is enthusiastically embracing online booking. 

5. No computer, no problem: Just more than one in five people in APAC currently have access to the Internet, and infrastructure challenges and low credit card penetration have slowed online travel's march. But for some prospective travelers, the rise of mobile technology offers a solution, as 3G and wireless broadband access surge ahead and innovative mobile payment gateways empower bookings. While significant mobile booking volume is still several years away, the coming game of mobile leapfrog will ultimately yield a win for online travel. 

PhoCusWright's Asia Pacific Online Travel Overview Fourth Edition provides a detailed overview of the APAC travel market, including market sizing and projections for the total and online leisure and unmanaged business travel markets through 2012. The report provides in-depth analysis of five markets: Australia/New Zealand, China, India, Japan and Singapore. In addition, Hong Kong, Indonesia, Macau, Malaysia, South Korea, Taiwan and Thailand are reviewed in aggregate. The report highlights marketing, distribution and consumer trends for major travel segments (air, hotel, car rental and rail) and online channels (suppliers and online travel agencies).