|China Goes Into Overdrive as Price War Erupts and New Players Sprout.|
By Yeoh Siew Hoon
Monday, 24th September 2012
If, at times, I felt like a rabbit caught in the headlights of an oncoming car last week in Shanghai, I think it was not just due to gazillion-watt spotlights trained on the stage but also the overwhelming universe of change that is China’s online travel market.
True, the spotlights made every speaker turn red from heat – talk about being in the hot seat – but going from a market like Singapore to one that’s China is like, well, going from a tiny pond where ripples are man-made and managed to a huge ocean with breaker waves coming from every direction despite government attempts to erect barriers.
There’s just so much to take in – an OTA price war that’s getting many people very worried, new players coming in to disrupt the space – from vacation rental to car sharing to voice recognition technology, powerful media companies entering travel, partial GDS deregulation (hooray, at last), oversupply in air and hotels …
Here’s a small bite of what I took away from last week’s Travel Distribution Summit in China.
One, the price war that's going on between the two leading OTAs – Ctrip and eLong – in the battle for market share. Both say they didn’t start it but ask industry observers and they point to eLong as the feisty number two, stirring up the pot.
And guess what happens when two elephants fight? A lot of ants will get trampled in the grass and during the panel discussions, it was clear there are a lot of worried players with one saying “we shouldn’t be working for a price war, we should be working for profitability”.
Two, Ctrip and eLong have staked their futures on two different strategies.
Ctrip’s CEO Fan Min (left) sees Ctrip evolving from an OTA (Online Travel Agent) to an OTP – an Online Travel Platform where a customer can buy everything he desires in a trip.
He wants Ctrip to be like a “gas station”. Ctrip will provide the platform, distribution and support services and he wants suppliers to partner with him in realizing this vision of creating a one-stop shop for travel.
“We are focused on the middle to high end marketplace but we do not have enough travel products to provide a greater portfolio and we need to leverage from other partners to satisfy customers.”
He cited the partnership with booking.com, part of the Priceline Group. “Most people ask me why we are working with them, aren’t they your competitors? I see them as our business partner – if both of us win, everyone wins.”