China online travel market, promising but difficult

CHINA’S travel online travel market is growing rapidly and is one of the world’s most promising for expansion. However, it is difficult for e-companies to tap this market, and one must be prepared “to get your hands dirty” to get a share of it.

The insight into this booming market was given by two leading players in China, Ctrip and Qunar.com, in a session at the Web in Travel Conference held in Singapore in October.

Alfred Chang, Director of Business Development of Ctrip, one of China’s largest online companies, said that e-technology is still in its infancy in China with 80 percent of all bookings conducted offline for business travellers (the “road warriors”) as they generally only travel with a cell phone. Call centres are thus important to them, and there are over 4.000 such centres throughout China.

Business travel is characterised by last-minute decisions, with 80 percent of bookings done with a 72-hour time frame.

“This means good opportunities for online booking companies. A major challenge, however, is the dominance of local Chinese online company Travelsky. com. The reservation system is present in 229 Chinese cities, 79 international ones and connects 5,200 business units through 20,000 terminals located in China.”

The independent travellers, who have “been there, done that” spend a lot of time on the Internet looking for information, but they are constrained by tight travel budgets. Only vacationers have discretionary spending power and represent an interesting target for ebooking companies, he revealed.

Another major obstacle for ecompanies is the influence of the Chinese government on travel.“You have to do as you are told. The government can easily discourage travellers to a destination or block travel if necessary. This happened during the Beijing Olympics when the government restricted the issuance of visa for business travellers as well as MICE activities,” said Chang.

Fritz Demopoulos, CEO, Gunar.com, a major online travel provider, shared the view that China presents huge opportunities as it has 1.6 domestic trips in 2007, with 41 million outbound tourists expected in 2008.

“About 60 percent of internet users have indicated they want to travel abroad soon. In some ways, China offers the best consumers.”

China’s potential is immense as it is the world’s biggest market for almost anything, said Demopoulos. It has the largest number of Internet users in the world with 250 million, 600 million mobile phone subscribers, 75 million broadband accounts and 300 million TV households.

Despite such staggering statistics there is still room to grow, “For example half a million air tickets are sold a day, with six to seven percent booked online” cited Demopoulos.

He described the Chinese as websavvy, as 60 percent of them use internet for travel research and about 50 percent are buying online.

However, the obstacle in tapping this web-savvy market is the Chinese travellers still feel reluctant to embrace online travel, especially online payments.

“It is easy to lure the Chinese into subscribing to a web provider or to become a client of a credit card company. However, it is hard to make them pay online or use credit cards for e-services.”

Demopoulos concluded: “There is no secret about selling China. The energy and dynamism is certainly fun - but you must get your hands dirty. It’s very difficult, very hard.”