ITB Asia daily report ~ day 2. Friday, 23rd October 2009 Source : ITB Asia

Lufthansa builds its Asian profile, Indonesia goes for ‘Affordable Luxury’, Asia turning to ‘Resilient’ youth and educational travel, preserving brand integrity in a price-led market and more.....

Lufthansa Builds its Asian Profile and Commits to FlyNet

German flag carrier, Lufthansa marked a significant milestone. It increased its passenger share from Asian markets to 50% this year. For the first time, the number of passengers flying from Asia to Europe with Lufthansa has matched the number of passengers originating in Europe.

Lufthansa is also marking the 50th anniversary of its first schedule flights from Germany to Calcutta and Bangkok.

Uwe Mueller, Vice President Asia Pacific for Lufthansa German Airlines, said the airline had successfully managed to sell its Asian capacity and gained record numbers in Asian corporate and leisure customers. It had consolidated its position as the largest European airline group in Asia Pacific.

“Our strategy of sustainable growth in the successful Asian markets is paying off. Today, 50% of our passengers on the Asian routes are from Asia,” said Mueller. “We provide the network into Europe. We continue to be a reliable partner for our customers and industry partners by maintaining our capacity.”

Leveraging its Europe network, Lufthansa is offering seven new connections to Africa through code-sharing with Brussels Airlines. With code-shares Lufthansa now serves 31 destinations in Africa.

Lufthansa passengers now have a choice of four additional destinations and seven new connections from Brussels.

Brussels Airlines flights from Brussels to Abidjan (Ivory Coast), Banjul (Gambia), Bujumbura (Burundi), Douala und Yaunde (both Cameroon), Nairobi (Kenya) and Monrovia (Liberia) can also be booked via Lufthansa. Moreover, Lufthansa passengers can fly to Douala and Yaunde on a codeshare basis with SWISS and to Nairobi with Swiss or Ethiopian Airlines.

Mueller also revealed that the airline would relaunch FlyNet, its on-board broadband Internet service, made possible by an on-board hotspot installed by Panasonic. Lufthansa is focusing on high bandwidth as the main requirement for unrestricted use of such services as web surfing, email/file transfer including attachments and the Virtual Private Network (VPN).

With FlyNet, Lufthansa passengers will be able to have WLAN Internet access and send SMS messages by mobile phone and transfer data via smart phones such as PDA, iPhone or BlackBerry devices. Lufthansa aims to equip a major part of its long-range fleet with FlyNet starting next year.

Indonesia Goes for ‘Affordable Luxury’ Positioning

Tourism officials from Indonesia, which is currently running its Visit Indonesia 2009 programme, told travel trade media at ITB Asia 21 October that Indonesia offers a lot more than just Bali.

I Gde Pitana, Director of International Promotions, presented Indonesia’s “endless attractions” which offer a variety of activities and experiences, from spas and wellness, diving, golf (130 courses, many of international standard), to adventure, culture and spiritual life.

With proximity to and easy access from Singapore, Indonesia offers “affordable luxury”, said Mr Pitana. The country is targeting honeymooners and MICE besides mainstream and special interest travellers.

“In short, Indonesia is safe to visit, security has been enhanced, comfort increased and we offer good value for money,” he said.

There are 10 other destinations being promoted, including Sumatra (North and West Sumatra, Batam, Bintan), Java (Jakarta, Yogyakarta and Solo), Nusa Tenggara (Komodo dragons), Kalimantan (flora and fauna), Sulawesi (marine life and adventure), Maluku (spices) and Papua (diving).

These destinations, representing the “ultimate in diversity”, are among the attractions being promoted by the 40-strong Indonesian trade contingent at ITB Asia, where the pavilion occupies 108 square metres.

Gatot Hastowo, Head of Central Java, Provincial Culture & Tourism Office, gave a preview of Central Java’s “Visit Jawa Tengah” year in 2011, which will be officially launched in August 2010. Among the natural and cultural attractions to be promoted are Karimunjawa – 27 islands with spectacular coral reefs, Dieng Plateau and caldera, coffee and tea plantations and dinner in the palace with the royal family.

Among other developments, a MICE directorate has been set up, and Manado recently successfully hosted a big international meeting, showing Indonesia is ready for business events. With the new Lombok Airport scheduled for completion in April 2010, the island’s tourism product will also be enhanced.

Sapta Nirwandar, Director General of Marketing, Ministry of Culture and Tourism, assured the media that the government’s commitment to tourism is strong, as seen in President Dr Susilo Bambang Yudhoyono’s instruction to the public sector and various other sectors to work more closely together.

“But we need to improve in implementation,” he admitted, such as in airport and customs handling, or taxis in Bali. “These are operational matters, and we have to work harder.”

Like many Asian countries, Indonesia saw a decrease in visitor arrivals for the first half of this year, with numbers down by 7%. However, a turnaround in July and August has now produced a small growth of 1% per cent from January to August 2009, with total arrivals reaching 4,125,684 visitors. Significant growth came from Australia and Malaysia.

Yayan G H Mulyana, First Secretary, Information, Social & Cultural Affairs at the Indonesian Embassy in Singapore, said the government had three key roles to play: as facilitator for travel operators, airlines, hotels and other suppliers; to encourage innovation in marketing and tourism management; and to introduce legal, institutional and administrative measures conducive to the development of the tourism industry.

Asia Turning to ‘Resilient’ Youth and Educational TravelSector

Demand for international education, backpacking adventures and cultural exchange has remained high throughout the recession. The social benefits of youth and educational travel combined with the sector’s financial resilience have led national tourism boards throughout Southeast Asia to focus on the youth sector, said the World Youth Student & Educational Travel Confederation, which is attending ITB Asia in Singapore, 21-23 October.

The confederation reported that ASEAN (the Association of Southeast Asian Nations), is promoting 2010 as the year of youth travel with global branding and promotional efforts focusing on attracting young travellers from all over the world.

The Singapore government is promoting work and study abroad opportunities to improve the language and cultural skills-set of its students. The Ministry of Education is establishing satellite campuses in cities such as Beijing in order to achieve its goal of sending 50% of Singaporean students abroad on educational exchanges.

Singapore Education has also embarked on a new initiative across western markets aimed at attracting foreign students from Europe, North America, and Oceania interested in Asian business and language studies.

In Thailand, a forthcoming government campaign will promote Thailand as a regional hub for international education by attracting foreign students.

Over the next year, the confederation will host a series of events to promote
youth and student travel throughout Asia. Beijing has been announced as host city
for the World Youth & Student Travel Conference in 2010.

A workshop hosted by the International Au Pair Association will take place in Bangkok this month to help local au pair agencies build relations with the international industry. In Vietnam the Association of Language Travel Organisations (ALTO) will host a roadshow in November to introduce language agents from around the world to local language schools.

The World Youth Student & Educational Travel Confederation has 550 member organizations in 120 countries. Its mission is to increase international understanding through the promotion of travel and educational opportunities for students and youth. Further information: www.wysetc.org

ITB Asia to Strengthen MICE Component in 2010

SINGAPORE, 22 October 2009 – Messe Berlin (Singapore), the organiser of ITB Asia will next year hold a two-day “Associations Programme @ ITB Asia 2010.”

As a first-ever in Asia, the initiative will work with international experts such as the American Society of Association Executives (ASAE), The Center for Association Leadership, and Suntec Singapore. With a high percentage of regional and international association representatives expected to attend, Associations Programme @ ITB Asia 2010 will attract exhibitors such as convention centres, resorts and hotels, professional conference organisers (PCOs), destination management companies (DMCs), solution providers and convention and visitor bureaus (CVBs) from the Asian region.

The Associations Programme @ ITB Asia 2010 will be built on two key elements: pre-scheduled appointments between exhibitors and association representatives, and an exciting speaker line-up for the Associations Programme.

“The MICE world is very large,” said Dr Martin Buck, Director of Messe Berlin (Singapore). “Within it, our focus will be on expanding ITB Asia by introducing the growing associations meeting sector. We will invite a compelling international group of speakers. They will share their real-case experiences with the industry and it should greatly benefit everyone joining the programme,” he said.

ASAE & The Center for Association Leadership will provide valuable content for the Associations Programme through their expertise on topics such as global trends in association management and resource development for small to medium associations.

Discussions with other international and regional associations are in progress to further strengthen the Associations Programme.

The Associations Programme @ ITB Asia is a joint collaboration among industry leaders such as Messe Berlin (Singapore), ASAE & The Center, Ace:Daytons Direct and Suntec Singapore. The initiative is supported by the Singapore Tourism Board.

Ace:Daytons Direct, a leading Singapore-based PCO, is currently working closely with Messe Berlin (Singapore) on ITB Asia. Ace:Daytons Direct will apply its expertise on the Associations Programme @ ITB Asia 2010. “Messe Berlin’s senior executives are making a serious commitment to develop ITB Asia’s association profile and Ace:Daytons Direct is proud to be a part of this initiative,” said Nancy Tan, Managing Director, Ace:Daytons Direct.

Dr Buck added, “Over the next couple of months, we will put top-level partnerships in place. The objective is to have a strong association programme that will add an exciting new component to ITB Asia from 2010 onwards,” he said.

“Suntec Singapore is proud to play its part in enhancing associations’ know-how through this programme,” said Pieter Idenburg, CEO of Suntec Singapore. “As a venue that hosts an average of 1,500 events annually and with many of them association driven, we are thrilled to be able to contribute constructively to the industry,” he said.

ITB Asia 2009 has this year attracted 679 exhibitor organisations to the Suntec Singapore International Convention & Exhibition Centre. The majority of exhibitors are from the leisure travel segment, with MICE exhibitors and corporate travel coming in second and third respectively.

Preserving Brand Integrity in a Price-Led Market

In an economic downturn many companies cut prices. Do you cut prices for all segments of the market, or just some? And how do you preserve brand integrity if you take a yo-yo approach to pricing?

Travel industry experts debated these thorny issues in a session called “Positioning Your Business for the Recovery.” The debate took place 22 October during Web In Travel at ITB Asia in Singapore.

In the debate, Karthik Siva, Chairman, Global Brand Forum, advocated the branding mantra, saying that the recession was not just about cutting prices. “There is a huge difference between cutting prices and raising value,” he said. “The worst thing you can do is to dramatically cut your price…. It signals you are not confident of your market.”

Patrick Imbardelli, CEO, Pan Pacific Hotels Group, said the majority of customers look at value-added and types of packages. ““Beijing and Shanghai are supply driven, but RevPAR across Asia Pacific tends to be rate driven,” said Imbardelli.

Nevertheless, while acknowledging the need to protect rates for one’s core market – or more importantly, “maintain the perception of the rate” – he also called for flexibility. “Ask individual customers what they want, especially corporate customers,” he said.

Hedy Mok, Managing Director, Euro Tours & Travel, said that among travel agents, some simply cut rates while others did not. “Customers in Asia are generally looking for value-add.”

On how to recession-proof the future, Imbardelli suggested looking at how costs could be grouped together or centrally managed, citing the positive results that their hotel group has seen.

Siva said: “If you don’t know what you stand for, then the only response is a tactical knee jerk. Be clear about your brand proposition is…. Clarity is power.”

Mok advised: “Find your niche. Have something different from what other people offer, and build rapport with your regular customers.” Her agency, for instance, gets a lot of business from referrals.

To Simon Nowroz, President & Managing Director, Asia, Travelport GDS, “the real issue is people”.

“Move from managing to coaching,” he said, and pay more attention to “imagination” – often overlooked by more traditional managements.

Nowroz also suggested collaborating with third parties: partnering, outsourcing and even freelancing.

Navigating Stormy Skies: The GDS-Airline Face Off

In the face of challenging times, airlines would do well to work closely with GDS companies, not only to manage cost and increase revenue, but also to build customer loyalty. That was the advice of Asian travel industry professionals addressing a 22 October session called “Stormy Skies” during Web In Travel at ITB Berlin in Singapore.

Session moderator Gerry Oh, Regional Vice President of Jet Airways (India), painted a scenario in which airlines had developed computer reservations system (CRS) to conduct transactions related to air travel. The airlines then subsequently divested their direct holdings to dedicated global distribution systems (GDS) companies, who in turn were putting the financial squeeze on airlines. Members of the panel, however, were keen to present themselves as partners to the airlines.

“While increasing revenue and reducing costs is among the most significant challenges for carriers over the next 18 months, it is customer loyalty and retention that are considered to have the most positive impact on business,” said Gordon Locke, Vice-President, Airline Marketing and Strategy for Sabre Airline Solutions.

Locke cited a recent Sabre survey which suggested that airlines were changing their business model. Previously, the biggest concern had been how to control costs, now decisions are made on how to increase revenue and entrench loyalty.

There are three things that a GDS can bring to an airline, said Locke. He cited market reach, increased revenue building, and the facilitation of customer research. “The cost would be crippling for airlines if they chose to go on their own, especially in new markets,” he said.

Ho Hoong Mau, Director of Airline Distribution Division for Abacus International said that Abacus stimulates the market’s interest in travel and provides travel suppliers with more products to sell.

“There are many areas in the Asian region which still offer opportunities for rich business and cultural links. We can launch attractive promotional campaigns where Abacus-connected travel agencies are rewarded for each booking made,” he said.

Chris Wilding, Vice President, Airline Distribution Marketing, Sabre Travel Network, cited a recent survey by Sabre, which showed that customer experience was ranked as the primary issue related to customer loyalty and retention.

“The importance of developing customer loyalty is part of the crisis airlines face today, as charging additional fees is viewed by them as one of the top tactics to increase revenues,” Wilding said.

Among the potential solutions offered at the session was merchandising and ancillary revenue to help improve airlines’ bottom lines. According to research by Phocuswright, airlines generated US$660 million in ancillary revenue last year.

In the session entitled, “The Changing World of Travel Distribution & Marketing,” a panel of experts shared insights on the big picture of travel distribution and marketing.

They analysed changes in respective sectors and how they would impact hotels, airlines and travel agencies.

Brett Henry, Vice President Marketing, Abacus International, advised panellists to keep an eye on three areas: mobile phones as post-booking tools, the potential of China, and social media.

Martin Symes, CEO, Wego.com, said social media and search tools were “natural bed partners” – they went naturally together.

New media advocate Ram Badrinathan, General Manager-Asia, PhoCusWright Inc, pointed out that while mobile phones were used extensively in India, this was mainly due to limited infrastructure. Online travel agencies and ecommerce were unlikely to grow as quickly as seen in Northeast Asian markets, for instance.

Henry said the mobile was perhaps more valuable in the post-booking phase, such as for instant updates on flight delays or changes, additional information and destination-related services.

Challenged by a question from the audience that the hotel sector was becoming commoditized, and mostly based on price, the panel agreed.

Sascha Hausmann, Chief Operating Officer, eRevMax, commented: “The first thing the consumer wants to know is, ‘What is it going to cost me?’”

However, the panel detected signs that even in a price-sensitive market, there were people who sought other criteria first, such as location or category, and then compared prices.

Middleman Beware – Consumer Empowerment on the March

The Internet has changed consumer habits by empowering individuals and families to personalise their leisure trips. They are no longer bound by packaged tours, tour operators and travel management companies that may be slow to adapt to the changing needs of travellers.

“The trend to empowerment, flexibility and networking will continue to develop in the travel industry,” predicted Greg O’Neil President, Asia-Pacific Region, BCD Travel. He was addressing the audience during a session called “The Middle Kingdom: Changes in the Value Chain,” that took place 22 October during Web in Travel at ITB Asia in Singapore.

Consumer empowerment is a key driver. Travel trade intermediaries are under pressure.

O’Neil pointed out that flights, hotels and car hire can all be booked online. Destinations, accommodation and dining can all be researched online. Visa requirements and medical advice are published online.

Adrian Currie, Chairman of Agoda, said: “In Asia we are seeing early success and aim to develop a sizeable business for Agoda both inside China and by building our Asian travel business outside China over the next decade. By meeting the needs of our existing customers and increased levels of marketing spend, we expect Agoda to grow organically in China over the coming years.”

According to Currie, the current challenges in Asia include developing technology infrastructure, increasing Internet usage, broadening credit card usage and providing alternative payment mechanisms, and driving e-commerce adoption over the medium term.

“The biggest draw for me continues to be just how big the market opportunity will be in Asia over the coming decade,” said Currie. He noted that large global brands and international chains have begun to use technology to promote their hotels through their own websites. The also work closely with websites such as Agoda, and distribute their content through online channels.

“Independent hotels have been slower to adopt these trends but are increasing their use of the Internet as a marketing channel,” he said.

Laurent Kuenzle, group managing director of Asian Trails, one of the leading inbound tour operators in Southeast Asia, said that simplicity was the key to success. “We have to recognize that we are migrating from a supplier controlled business to a customer controlled business. Social media is an important source of information for us. We are looking into information from the point of view of consumers and analyzing how influential the opinion is.”

Vinay Gupta, Founder of Via, India, however, felt that the scope for expansion was vast and under utilized. "We have a team of 25 software developers and it took about 15 months to develop our product. We are presently reaching out to about 16,000 tour operators across India but the potential number of suppliers is about 30,000-40,000," said Gupta.

The Via portal site allows agents, hoteliers, tour operators, guides, cab operators, foreign exchange and ticketing players to connect with one another and to do business “with ease and transparency”, said Gupta.

“For the future, we believe that knowledge service and product distribution has to be improved. Presently, 30,000-40,000 airline seats are unsold daily. To have that many air seats unoccupied in a country as big as India is a crime,” he complained.