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Travel Distribution Summit Europe 2007

India and China can be unforgiving environments to new entrants

As two of the fastest growing travel markets in the world, India and China are, by definition, highly attractive markets. However, it is a mistake to approach India or China lightly as they are…

As two of the fastest growing travel markets in the world, India and China are, by definition, highly attractive markets. However, it is a mistake to approach India or China lightly as they are highly competitive with complex regulations and can be unforgiving environments to new entrants.



The most critical factors are adequate capital and strong political support within the start-up or expanding entity in order to meet the challenges of a prolonged entry phase. It is also advisable to ‘buy’ local knowledge through on-the-ground partnerships as this can assist in negotiating the many cultural intangibles.



Providing his perspective on two of the most attractive markets, Don Birch, President and CEO, Abacus International, said, “At this point of their evolution I would characterise both India and China as high risk/high return markets, with one key difference between the two, being the central role of the regulator, the China National Tourism Administration (CNTA) in the evolution of the Chinese market.”



“India’s quantum growth in on-line bookings (up by 17 percent from US$295 in 2005 to US$796 in 2007), suggests the growing role of technology in the Indian travel supply chain, especially as Internet and credit card penetration push on towards the 30 million and 40 million mark respectively alongside a growing middle class. It would be a mistake to underestimate the Chinese market on technology however. With the support of the regulator, China is already the first country in the world to report 100 percent e-ticketing which is music to the ears of IATA, who is pushing for 100% e-ticketing globally by the end of this year.”



Birch, one of the speakers for EyeforTravel’s Travel Distribution Summit Europe 2007 to be held in London in May, said, “Both countries offer enticing and intriguing opportunities as investment and development shifts to the ‘B’ and ‘C’ level cities.”



Overall, about Asia, Birch recently shared that considering its diversity and geographically huge structure, managing scale-to-scale differences in maturity across the region, while changing the distribution channel mix are among the major issues for the travel distribution business in the region.



Birch said it is critical to “up-skill resources, especially distribution capabilities”. Among the other factors of being utmost importance to the travel distribution business, he referred to the reduction of cost of content collection to enable effective distribution choice.



“Travel is an emotional buy, so relationships are important ~ how to get the hybrid mix right,” he said.



Referring to diversity in Asia, from socio-geographic perspective he referred to factors such as the region being geographically huge, culturally diverse, extremes of literacy and short decision timeframe. In terms of infrastructure, he acknowledged that there are immature payment systems, restricted IT business platforms and the credit culture is in its early stages, though broadband has really taken off in Asia.



“Rule of the law is immature in this region. In Asia, by and large it’s relatively new, unlike in the West,” he said of the commercial environment. He also spoke about aviation being highly regulated, and factors such as corruption, immature retail and procurement.



So what does all this mean for travel in Asia?



“The social model is preferred and it definitely affects business. Distribution is immature, SMEs are predominant and there are few large players. As far as the nature of travel is concerned journeys are more complex and there are many first time travellers. Also, LCCs are constrained by regulation,” he said.



TravelDailyNews International is the Media Partner of the EyeforTravel`s Travel Distribution Summit Europe 2007. For more information on this event please click here or visit www.eyefortravel.com/tds2007/conference/agenda.shtml

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Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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