Asia set to assume global travel leadership role.
Friday, 11th February 2011
Source : Abacus International
Asia is growing to become the top travel region in the world, as soon as 2015 in some travel categories - 

After a strong showing in 2010, Asia is on target to take its spot as the largest region in terms of air transport, travel destination, business travel, utilisation of ancillary revenue models and mobile usage.

According to Abacus data, the number of booking transactions for 2010 ended on a record high, even higher than the pre-recession period back in 2007. The booking numbers were up +11 per cent year-on-year from 2009. This coincides with international arrivals into Asia, which was up by almost 13 per cent in Asia[1]. Globally, international tourist arrivals were up 7 per cent after a 4 per cent decline in 2009. Growth is expected to continue in 2011, but at a slower pace of 4 – 6 per cent.

"Asia today is an astounding force in the travel industry," said Mr Robert Bailey, Abacus International President and CEO. "It has well weathered the storm of the past few years and emerged at an all-time high, well poised to take over as the leading travel region. Despite rising fuel costs and the recent recession, the Asian travel industry has shown its resilience in its quick recovery and strong growth years in both 2009 and 2010. I foresee that 2011 will continue to be a high growth year for Asia, albeit at a slightly slower pace.

"With 62 per cent of the world's population (4 billion) and 27 per cent of the world's GDP, Asia in 2010 accounted for 2.3 billion passengers, 43 million tonnes of cargo, $545 billion in revenue and $7.7 billion in profit, the largest worldwide. Asia also accounts for 43 per cent of online usage, 3.1 billion mobile subscribers, 56 per cent of the world's 3G subscribers and more than 450 million mobile Internet users.

From the rapid growth of online, ancillary services, mobile bookings and the resurgence of corporate travel, Asia is well poised to continue its strong growth of 2010 into 2011. 

"In 2010, Abacus achieved its strongest year in terms of bookings since 2007," said Mr Bailey. "We expect the figures to increase with Asia's sharp growth in travel, although 2011 may be a year of cautious optimism for many."

Mr Brett Henry, VP Marketing, VP India, Abacus International, added, "2010 has been a record recovery year for many channels within the travel industry. Airlines have bounced back, corporate travel has picked up by 20 per cent[2]. Despite challenges such as natural disasters and rising fuel costs, travel is back, and much of that is due to the strong push corporate has made in this area. We look to work with all the various channels to best support this continued push, as 2011 looks to continue the upward trend, especially in light of growing economies throughout Asia."

According to the latest Abacus booking data, independent traveller bookings in Asia remained strong in 2010, up 11 per cent from 2009. North Asia increased by 14 per cent, South East Asia by 8 per cent and South West Asia by 10 per cent year-on-year. Hotel Average Daily Rates (ADR) were also up 4 per cent from the previous year[3], led by Taiwan, Hong Kong and China. Most markets experienced an overall hotel booking increase by 126 per cent in 2010 over 2009.

Asia Pacific international traffic accounts for 29.6 per cent of the world's RPKs, and set many new records in terms of passenger traffic. Asian aviation played a key role in the recovering global aviation industry, through its bulk of growth, speed of recovery and continued strength. By 2013, IATA predicts that Asia Pacific's market share in aviation will grow to almost one-third of total global passenger traffic[4]. Asia Pacific is poised to overtake the US and Europe as the world's largest air transport market, with Asia Pacific airlines carrying over 30 per cent of global passenger traffic and around 40 per cent of air freight[5].

"The next generation travel agent needs to be well equipped to take on the increased workload and the rapidly changing travel landscape. We at Abacus are working to deliver the new workspace for the agents, and have recently rolled out solutions such as Abacus WorkSpace and Abacus PowerSuite to cater to the sharp growth in the Asian region," said Mr Henry. "Key areas such as corporate travel, ancillary revenue and mobile growth are our priorities in dealing with today's travel growth industry."

"Growth is the name of the game in travel at the moment, and although 2011 may not hit milestone figures like we saw in 2010, it will certainly be a year of growth with the emergence of Asia as the leading travel region," stated Mr Bailey. "Led by a slowing China and a growing India, in what has been aptly dubbed as slowing dragon and crouching tiger, Asia is well equipped and set to take the leap forward in establishing its dominance of the travel industry. It is important that we understand this evolving trend and are at the forefront to address any needs for the growing industry and to provide insight to our partners and customers."

Asia's Leadership in Key Travel Segments

Corporate Travel
Business travel is set to increase further in 2011, with Asia again playing a key part in its resurgence. According to a survey by Deloitte, 80% of business travellers said they would take more or the same number of business trips as in 2010 and 79% indicated they would spend more or the same.

With increased passenger demand for air travel, prices to these markets are set to increase for both airlines and hotels. Based on Egencia's 2011 Global Corporate Travel Forecast and Hotel Negotiability Index, average ticket prices (ATPs) for corporate travellers to top business travel destinations are expected to increase in Asia-Pacific in half the markets including Sydney, Beijing and Mumbai, with the largest increases forecast for Shanghai (up 9%), Singapore (up 8%) and Tokyo (up 7%).

China and India are the two leading countries among global emerging economies, with strong economic growth helping to drive travel demand. Investment and expansion within these two markets continue at a rapid pace, according to Euromonitor Travel and Tourism Forecast Update.

India corporate travel is expected to outpace Asia Pacific in 2011, with business departures from India accounting for 33% of all travel, versus 23% for Asia Pacific. India departures are expected to consist of 7.4% of Asia's overall outbound travel in 2011[6]. In addition, India is set to attract inbound tourist and corporate travellers and expected to account for 9.57% of Asia Pacific tourism expenditure.

Hotels are also set to see an increase in both demand and pricing.  Advito 2010 Industry Forecast Q3 Update also predicts that increased demand for hotels in China and Singapore will drive average daily rate (ADR) price increases of between 2.5 to 6 percent across all regions in 2011 and in some major markets such as Hong Kong there could be as much as 10 to 13 percent increase. 

Mr Henry stated, "2010 was a highly favourable year for hotel growth in Asia Pacific, we saw a whopping 126 per cent increase in hotel bookings through our system. 2011 will see sustained vigour in hotels, but perhaps not at such the torrid pace that we witnessed this past year."

However, as prices increase and corporate travel increases, corporations are still monitoring their business travel expenses and having to adhere to corporate travel policies. Corporate travel policies and guidelines are now expected to be more strictly enforced. Among the top five guidelines, pre-trip approval for business travel and required booking accommodation in advance are at the top.

Mr Henry stated, "Ancillary will also have an impact on corporate spending, whereby companies will need to develop new regulations and policies for their employees. Each airline is different, and depending on the needs of each market's and airline's corporate travellers, items such as meal allowance and baggage allowance may be limited. Although the costs are low for each individual traveller, they add up to be quite significant when totalled among all staff and frequency of flights."

Travel Hotspot Destinations

Asia Pacific is the most intended place to visit in the next two years according to Visa and Pacific Asia Travel Association (PATA) Survey 2010 of 6,714 travelers from 13 source markets including China, Thailand; India; Japan.

According to the most recent Abacus data, intra-Asia travel in 2010 remains strong versus long-haul travel. The top five destinations of choice based on Abacus bookings included Hong Kong, Taiwan, China, Philippines and Malaysia.

New places, natural scenery and affordability were key factors in choosing a destination. Almost one third (32%) planned to travel to domestic holiday destinations at least 4 times in the next two years over and above their international holidays with travellers from China aiming to take an average of at least five domestic breaks in the next two years[7].

Robert Bailey stated, "Asia Pacific is now a key global hub for both corporate and leisure travellers. The diversity of cultures; accessibility and range of travel carrier options for travellers to choose from means that travel to the region is increasing at breakneck speed and it is important for agents to keep pace with the latest offerings."

Ancillary revenue has been growing by a factor of 3 since 2009 and is estimated to do so through 2012[8]. 89% of network carriers and 24% of Asian carriers plan to implement new products such as car, hotel and insurance by the end of 2012[9].

US carriers have pioneered the way of ancillary revenue, airlines in Europe are starting with this now and Asian carriers are showing keen interest this new business model. The Asian traveller is quite different from the Western traveller, and this further differs per market. They are more discerning, in that expectations are higher – although Asian airlines may choose to charge for the ancillary services, passengers would then expect the base fare to be lower. With differing needs and requirements, the airlines are taking an independent and cautious approach so to not alienate its loyal customers.

Ancillary revenue earnings by Asia-Pacific legacy carriers currently represent up to 12% of total revenue. For budget carriers, they make up 15 to 25% of total revenue[10]. A Sabre survey found that for 58% of carriers merchandising and ancillary revenue would help airlines' bottom line results. Baggage fees, travel insurance and vacation packaging were rated among the highest revenue generators in the survey.

"Although Asia Pacific carriers in general have been more cautious to the ancillary business model, it is an area of revenue that simply cannot be ignored. Both budget airlines and network carriers alike want a piece of this pie – it's simply a matter of when and how," said Mr Bailey.

Airlines will also need to spend time to be prepared, as IATA has set a deadline of 2012 for airlines to comply with electronic miscellaneous document (EMD) standards, which would be used to track the sale of ancillary services. The EMD would serve as an e-coupon attached to a specific trip for ancillary purchases like checked baggage, inflight Wi-Fi and lounge access. EMDs would be used on ancillary purchases made directly through an airline and via travel agencies.


Asia is the world's largest mobile phone market, with an astounding growth in smartphone usage – Asia Pacific accounts for 30% penetration of smartphones worldwide, and 54% of all devices sold in Asia are expected to be smartphones by 2015, up from 5% in 2009[11], driven by social media networking.

Seven out of 10 mobile users are members of online social networks and a third of them are influenced by comments by people in their online social network when making travel purchase decisions. By 2012, it is expected that there will be around 123 million mobile payment users in APAC.

With the large number of people on smartphones, the number of apps has also taken off recently, with all the major app providers including Apple App Store, Google Android, Blackberry App World and Nokia Ovi Store increasing by triple digit percentages from a year ago[12]. iPhone, Android and Blackberry are the primary platforms that companies have developed native apps for, but this increasing number does not necessarily mean an app is required for every company.

"The APPs opportunity is one that is being scrutinised at the moment," said Mr Henry. "With millions of travel apps across all the various platforms, it is difficult to wade through the good and bad apps. However, Abacus is working with our customers to better inform them on how to best leverage in this arena."

Apple iPhone leads the way with almost 300,000 applications, while the total the number of applications available for Google Android Market is 130,000. Blackberry App World and Nokia Ovi Store grew significantly to nearly 18,000 and 25,000 applications respectively. Both iTunes and The Android Store have over 1000 travel-related apps, and Blackberry lists 468 apps.

Mr Henry continued, "My suggestion is to take it one step at a time. Many agents have yet to even get onto a mobile platform at all, let alone start on apps. With both Abacus Mobile and Abacus WebStart for Mobile, we provide essential tools for agents to cater to the growing mobile traveller with smartphones. They put important information at the agents' fingertips to provide ease of booking, even when on the go."

One of the leading tour operators in the Philippines since 1994, Shroff International Travel Care provided testament to Abacus Mobile's functionality and usefulness.

"Abacus Mobile has really made life easier for our company – it really works wonders and I am enjoying using it. The convenience, ease of use, reliability and efficiency is simply remarkable," said Ms Sheena Shroff, Business Development Director, Shroff International Travel Care.

Asia's emerging markets are poised for explosive digital growth. China and India alone boast some 500 million Internet users, with nearly 700 million more added by 2015, and more than half those accessing the Internet via their mobile device[13]. Other emerging Asian nations have the potential to grow at a similarly torrid pace. Within five years, this billion-plus user market may generate revenues of more than $80 billion in e-commerce.

"Airlines and travel providers see the value in mobile. They are setting up mobile websites and developing apps," said Mr Henry. "With its vast population and mobile usage, Asians will pave the way in determining the future face of travel through mobile, especially with the dominance of smartphones in the region, serving as a one-stop repository and access to all the touchpoints travellers need when on the go."

75% of business traveller in Asia use smartphones, as do 50% of leisure travellers[14]. Asians continue to lead the world when it comes also to mobile transactions, with 7 in 10 users reporting some mobile purchase activity, including travel bookings[15].


[1] UNWTO World Tourism Barometer 2010
[2] Asia corporate travel picking up; HRG Singapore; 24 December 2010
[3] Abacus booking data 2010
[4] Asia Pacific offers 2010/11 opportunities: Qantas AGM – Dec 2010
[5] Airlines in Asia Pacific to Acquire 8000 New Aircraft Over Next 20 Years – Dec 2010
[6] Travel and Tourism: Euromonitor from trade sources/national statistics: 2011
[7] VISA PATA Survey 2010
[8] Airlines to earn USD58 billion in 2010 – CAPA 
[9] Airlines to earn USD58 billion in 2010 – CAPA 
[10] Orient Aviation, March 2010
[11] networkasia.net (August 2010)
[12] Distimo Report 2011
[13] McKinsey Quarterly Sep 2010
[14] PhocusWright – Asia Pacific Mobile Trends Feb 2010
[15] Motorola/Emarketer 2010

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