Just as its hotel partners had to go to domestic hubs during the pandemic, when it restarted resources to reinvest resources into domestic content, closed its Taiwan offices, and strengthened its domestic distribution network in partnership with local travel agencies. Apac President Kok Sheng Sun talks to the web in Travel Founder Yeoh Siew Hoon to explore the changes Bedbank has seen in the hotel distribution landscape and the emergence of new social channels in certain markets such as Indonesia and how it See it in the new world.
WebJet Limitedyour parent company resumes profitability in 2H22. Similarly Cloth loomThis is profitable in 2H22 driven by North American and European markets. How is APAC tracking at the moment?
We have already started to see a significant impact on the opening of Asia (Australia and Southeast Asia) in April, and the business has recovered strong returns. Compared with the previous quarter, from April to June, there has been a lot of progress in the quarter. Remember that one of our biggest markets is that China, which accounts for a large portion of its Asia-Pacific business, is still not open, so there is great potential for the future. Although China has not yet opened, the reopening destinations are still at a near-mix level, and some markets such as Australia have already exceeded the level of prosperity.
You see signs of recovery, what key trends are you seeing in your booking model? Have there been obvious changes in customer behavior?
I think the trend will transition over the next few months. The landscape has changed a lot, and travel now depends on border restrictions, getting there and how easy it is to be. During the pandemic, everything is last minute and family. In the initial stages of reopening, people are booking further due to the additional documentation required for the trip. We see long lead times bookings, especially during peak hours – demand for December is very strong. In fact, capability has not caught up with the suppressed demand for certain destinations.
Things will continue to be unstable for some time. If China opens up, it will greatly undermine the trend. Then there is Japan – we saw bookings even though it is not fully open yet, so we were looking forward to rushing when their borders are fully open.
For us, the strategy is to make sure we have enough supply (whether it’s last minute or booking) and match the demand. The advantage we have is being able to spot trends – for example, we saw strong demand in India and the Middle East in July and we want to help our hotels prepare for this.
How many of your inventory are direct contracts?
Of the more than 400,000 hotels we provide to our customers, we signed contracts directly with more than 30,000 hotels. While most of our transaction volumes are through direct contracts, we see the value of third-party distributors – they connect us to places we can’t reach.
Traditionally, Bedbanks like Webbeds rely on inbound and outbound businesses. During Covid, this stopped and the domestic plays a role. How does this affect you? What changes have you made to your business – Are you entering the country more deeply now? How does this change inventory procurement and management?
Covid is an opportunity to work with domestic experts. During the pandemic, the country accounts for about 11% of our business. During the pandemic, we have turned our resources domestically. We have changed the role of some team members – from selling to signing more products for the domestic market. We went to Level 2 and Level 3 cities and were close to boutique hotels that attracted the domestic market.
Subscribe to our newsletter below
Current domestic sales account for approximately 37% of our business and as travel resumes, we are helping these partners expand their business to international inbound. For example, in Indonesia, some domestic agents are now our top international sellers.
In terms of layoffs, our workforce has dropped by 22% at the group level. For Webbeds Apac, we closed our offices in Taiwan and managed our clients and hotel partners from Hong Kong and Singapore offices. (Currently, its team at Apac is about 250.)
An old challenge is rate parity across different channels – has the situation got worse during the pandemic? Will it be worse now to recover and hotels rush to recover?
It didn't get worse. During the pandemic, rate parity issues are small due to low bookings. Most hotels still value equality – how they allocate interest rates according to the rules. Over the past few years, we have improved the way we manage this problem – how we segment our customers, how we distribute and now have better control. The hotel acknowledges and appreciates the efforts and now has more trust in us.
But there is still a leak – where should the wholesale rate not be?
Yes, even with strict inspections and controls, there will inevitably be some leaks. But, frankly, yes, the rate parity on the hotel agenda is high, but that's not the highest. The highest item on the agenda is resource tightening – manpower turns to restore capacity. I'm in Malaysia and hotels and tell me the issues they have with getting staff and staff fees.
Have you ever seen the problem of rate parity solved?
It depends on how the hotel develops its business. If you look back for 10 years, then Rate Carity is not the same thing. But online distribution has changed all of this, and prices have become open and transparent. Agent partners are also expanding sales channels – Instagram social trade is very large in Indonesia. In Korea, you will see an increase in distribution through online and e-commerce players such as Naver and Tmon.
I don't think the interest rate leak will be completely eliminated. If you want to sell the product in quantity, there will be some flaws.
I see that you have signed a partnership with the Airasia Super App. Do you want to work with an e-commerce platform like Lazada?
We have not used the e-commerce platform yet, but we have been exploring new channels for sale to consumers. We can work with any business that can distribute products. On the backend, we have to make sure we split the products we have and assign the right products to the right channels.
Online (including social media) is part of the business, but wholesale and retail are still growing. In fact, wholesale and retail industries are recovering strongly, their recovery is as strong as ours, they are also evolving and using social channels to connect with customers.
Another key issue for Bebanks and hotels is credit – the pandemic has been tough on cash flow. How has the pandemic affected the credit conditions of hotel partners? What new arrangements do you see when every player in the value chain is working to maximize their cash flow and credit conditions?
For Webjet Limited, when the pandemic hit, it affected our share price and we went to the market and increased by A$346 million. This fund puts us in a comfortable position to invest in our employees, technology and business. We are able to trade normally with our partners, instill confidence and allow us to strengthen our relationships.
Before the pandemic, we were using a virtual credit card system to conduct transactions. Partners will pay when check-in, but no changes are made.
Credit control is indeed more tight now, and hotels are not keen on giving credit. If anything, they are looking for a deal for pre-purchase – you pre-purchase the room and pay directly. They are looking for fixed safe deposits and floating sediments from intermediaries. These are essentially quite manual, and we prefer the virtual credit card system because it is more automated.
Some say that bookings to hotels have become more direct during the pandemic, but as travel resumes, OTA distribution is if not more powerful. What key trends do you think will affect hotel distribution over the next three years?
The pandemic has destroyed some players, but those who stay will be stronger. Intermediary business is still growing, which is an important part of the ecosystem. The recovery of intermediaries is very strong – they have low costs, have long operations, have a good reputation, are dormant during the pandemic, but they are flexible enough to start businesses soon.
New startups now offer hotels the opportunity to connect directly with their customers without going through intermediaries such as OTAs or traditional travel agencies. How do you think these startups will change the distribution landscape and how will the Bebanks respond?
Hotels explore different distribution methods and see if they can get higher yields, which has attracted a lot of interest. We are monitoring these developments, but we will focus on what we do well. We address hotel pain points by leveraging our technology and data to allow hotel access and make better business decisions.
What do you think has been dealt with in the past two years on travel technology, distribution and marketing in different sectors such as aviation and hospitality? As a tourism leader, what trends are you looking at?
Traveling was not easy in the past. You need more plans, more travel agency help. Technology helps make things easier and provides consumers with more self-help. The pandemic moved it backwards in some ways. Often those who are confident in traveling will experience setbacks.
In my own experience, I recently went to Kuala Lumpur and it took me a long time to download and fill out the local app. Currently, consumers may not be as confident and powerful as they do, but as things normalize, power will return to consumers.
This trend will affect our strategy, including the types of distribution players we work with. Hotels are at our core and will be a very important accommodation option, but trends have changed, such as alternative accommodation. We are very passionate about exploring opportunities to work with startups and invest, especially in travel technology.
*This article first appears on the Internet on Travel.
