The Year of the Deal.
By Yeoh Siew Hoon
Monday, 15th June 2009
Yes, mobile's the next big thing but not just yet; dynamic packaging is misunderstood; and meta search continues to puzzle him. Yeoh Siew Hoon speaks to Scott Blume, former CEO of ZUJI/Travelocity Asia Pacific.

As far as Scott Blume, who's just steppd down as CEO of ZUJI/Travelocity Asia Pacific, is concerned, 2009 is going to down as the "Year of the Deal".

"We are not going to get better deals than what we're seeing this year. Now's the time to travel. Air fares are down, hotels are doing offers such as stay two nights, get one free – we are seeing unprecedented deals. So if you've got the opportunity, take time off and travel."

Which is exactly what he intends to be doing. When I caught up with Blume, it was a few days after he had left the role he's had for more than six years. Looking decidedly relaxed, Blume was, well, literally blooming with happiness at the prospect of having six months (a time frame he's set for himself) ahead of doing nothing but looking for his next adventure.

What that next adventure is, he doesn't exactly know yet. For now, he is taking time out. "I will then look for some opportunities in the region. I have a few crazy ideas that may or may not come to fruition but we'll see what happens," he said.

While some might say this is the worst of times to look for a new adventure, Blume disagrees, saying, "In tough times, some opportunities arise with key roles and companies may be looking for new management to do a business turnaround or achieve faster growth than they are getting."

Asked if 2009 will also be remembered as the year of online travel in Asia Pacific – given the acceleration of consumers going online to look for the best deals, Blume said, "In economic downturns, OTAs have proven to be resilient and have grown but I wouldn't go so far as to say this is the year of online travel.

"The OTA market share will grow faster than the market average but it will take three to four years to get to the magic 30% and then players with strong brands and strong product will be in a great place to maximise the commercial value of that share."

Blume believes the current share of online travel transactions in the region – now at 15% – will double in the next three to four years. "There's still a lot of upside and ground to play with."

He added, "People believe online travel is still in its infancy in Asia Pacific. In five years, the established brands and some new brands that will come along will be incredibly successful.

"If you are an offline travel agent, you got to take this opportunity to make an online offering. It's a matter of consumer behaviour and you have to take it seriously. It's not just about having a website."

As for the key lesson learnt during his time at ZUJI, Blume said, "Expect the unexpected."

He said, "In some markets, we launched too early. It's very difficult to work out when consumers are going to be ready to try something new. The important thing however is to trust the model. Do not panic because you started marketing and no one comes.

"It's also an advantage to be an early mover because early adopters will get good share when the market moves."

Asked if he saw ZUJI as a regional brand with local presence or a local player with regional presence, Blume said, "It is a mult-country brand for the consumer, so consumers don't see it as a pan-regional brand, but suppliers see it that way."

He also sees growth in the media model for OTAs such as ZUJI. "It started as a transaction model and now it's a combined model; it's a question of monetizing the eyeballs we were getting. The reason people like spending their marketing dollars online is it's incredibly trackable."

The challenge is the lack of knowledge and talent in the digital marketing space. "One thing I am incredibly proud of is the team we've built at ZUJI. There is a need for more expertise in this area in the region, especially in the area of creative online producers who know how to build the customer interface so that more people want to open and click on the content."

On the role of travel meta search sites such as Wego, Blume remains skeptical about the value they provide. "I have personal trouble defining what meta search is. Some of the OTAs have better content and broader content than the meta search sites. ZUJI, for example, has access to Jetstar fares. Meta search is only as good as the content and provides cost-effective distribution to suppliers.

"In Asia Pacific, consumers have been relatively slow to adopt to OTAs and another layer is complicating matters. If meta search companies had bigger budgets, then maybe they'd be in a better space but it's tough to educate customers. Yes, they are a cost-effective distribution channel for suppliers but it's difficult to be able to get consumers to understand that."

Blume also believes that the concept of dynamic packaging is misunderstood by the industry. "People are discounting it right now but technology will improve and as more airlines and hotels give decent content on the understanding that only the combined price will be shown – and trusted OTAs will make sure that's the case – it will add significant value to the suppliers.

"Now people are saying ‘but you are not a wholesaler', that's an unsound argument. The Internet has brought down the walls between business models. If ethical OTAs can work with suppliers for the longterm, the industry will find great value in dynamic packaging."

Having said that, Blume said he does not see any dramatic game changes in the next three years in the way consumers plan and book their travel.

"We have suppliers trying out social media but the jury's still out on that. No one yet knows how to monetise it.

"I think the next big thing – and that's next four to five years – will be how to get transactions on mobile technology, whatever that is. We are beginning to see how it could work with 3G and that does have the potential to generate revenue upside for online marketing businesses including travel."

As for unfinished business at ZUJI, Blume cited China. "If you had asked me six-and-half-years ago when I started at ZUJI if we'd be in China by now, I'd have said yes. But the Chinese market took a long time to open up and in that time, Ctrip has developed a strong position. "

Yeoh Siew Hoon, one of Asia's most respected travel editors and commentators, writes a regular column on news, trends and issues in the hospitality industry for 4Hoteliers.com.

Siew Hoon, who has covered the tourism industry in Asia/Pacific for the past 20 years, runs SHY Ventures Pte Ltd. Her other writings can be found at www.thetransitcafe.com

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