Pandemic leaves Asia’s tour operators scrambling to reinvent

To diversify or not to diversify has become less of a luxury and more of a necessity for tour operators across Asia, as the travel halt spurs them to forge new money-making roadmaps.

• Squeezed by fiscal woes, travel providers across Asia turn to diversification
• Revenue from pivots stands in stark contrast to tour sales, but proving a lifeline in uncertain times
• Pivots poised to outlast pandemic, say agents

To diversify or not to diversify has become less of a luxury and more of a necessity for tour operators across Asia, as the travel halt spurs them to forge new money-making roadmaps.

From selling produce to providing proxy shopping services, these innovative pivots in the face of the pandemic are raking in vital income, while at the same time, surfacing long-term growth opportunities.

Philippines-based tour agency MAD Travel’s employees packing bottles of honey sourced from local farmers for delivery to consumers across metro Manila, as part of their pivots amid the travel slump

For South Korean agency, Trazy – Travel Crazy Korea, it has opted to cast the net wide, offering since March a diverse range of services such as proxy shopping, food and grocery deliveries, as well as interpretation and translation.

Kristine Um, co-founder and CMO at Trazy, said those diversifications came about as the pandemic paused travel, adding that it was a breeze to pivot into these fresh revenue streams as they already had the basic infrastructure and skillsets in place, not to mention the necessary platforms to market these services to their target customers worldwide.

Though she declined to reveal income numbers, Um let on that these services are “gaining some traction, leading to actual sales”. A quick browse on Trazy’s website show that their food delivery service has grabbed some 2,600 eyeballs, while their proxy-buying service which ships internationally have been checked out by nearly 4,000 users.

Trazy’s staff leverage the agency’s social media platforms to plug their pivots, including their proxy shopping services. While foreigners may not be able to travel to South Korea during this time, via Trazy’s proxy shopping service, they are still able to snag everything from popular Korean snacks to Starbucks Korea’s coveted Cherry Blossom collectibles.

Um said the bulk of their customers hail from South-east Asia – Singapore, Indonesia, and the Philippines – and North America, with a smattering of Europeans.

As well, the agency is offering food delivery services in select cities across the country, targeting foreigners seeking to skirt the hassle of conversing in Korean and the complex Korean payment system. More recently, the agency has rolled out translation and interpretation services, facilitated by its English and Korean bilingual staff.

Over in the Philippines, eco-tour operator MAD Travel has started the MAD Market, an online marketplace that sources from local farmers and SMEs, while delivering fresh produce to doorsteps across metro Manila.

“This new service came about when people in the metro were searching for means to have fresh fruits and vegetables delivered to their doorstep. So, we did what we’ve always done – bridge farmers and communities to guests – just this time, through an online delivery market instead of tourism,” said MAD Travel co-founder Rafael Dionisio, adding that the initiative partners 60 farmers, four small businesses, and 10 market vendors.

“At the MAD Market, we’ve started selling some of the produce from our partner communities – earning them income critical at this time. We plan to continue our MAD Market even when travel bounces back as it’s another channel to pump up village economies and engage even more tribes and communities.”

Additionally, MAD Travel has expanded their online social enterprise courses, which were first started in 2019. These online courses offer experiential learning to students by connecting them with social entrepreneurs, explained Dionisio.

“With travel currently off the agenda for most schools around the world, we had to rethink our approach to service learning by ensuring experiential, inspiring and thought-provoking experiences without compromising student safety,” he said.

“We do this through virtual tours, where students will have authentic interactions with local communities and social entrepreneurs which broaden horizons and enhance understandings of what constitutes impactful service. Once travel lifts, we plan to fuse online and on-ground learning.”

Already, their pivots are bearing fruit. Since its April launch, the MAD Market has chalked up more than 600 orders, while the agency is catering custom-made online courses to over a dozen school partners.

Dionisio said: “We have already begun running programmes with international schools and universities in Europe and South-east Asia, especially for our existing partners.”

“Fortunately, we have in our team foreigners who are equally passionate about the Philippines, and this enables us to connect to new markets in Australia, France, Malaysia and the UK, to name a few.”

For Japan-based Joy Paradise Solution, the pandemic saw the Malaysian tour agency pivoting to commercial food exports. Its co-founder, Dominic Teh, said the idea was born when a movement control order (MCO) disrupted the travel plans of their returning Malaysian clients, who began asking the agency to send some Japanese goods their way.

He said their export business which launched in March has since grown from word-of-mouth and social media publicity including livestreams, and the company now has a distribution warehouse in Osaka. The firm’s main markets for its exports are Malaysia and Singapore, but it also services customers in Hong Kong, Taiwan, and China, according to Teh.

The company exports mainly food items like Japanese instant ramen, and Calbee’s breakfast cereals and snacks, but also Japanese anti-virus products like surgical masks and sterile hand sanitisers that have become coveted commodities in the pandemic’s wake.

Dominic Teh, co-founder of Japan-based tour agency Joy Paradise Solution, promoting Japanese instant ramen, which are among the food items exported by the company, on its Facebook page

Teh claimed that their products are sold at lower prices from those found on the local online market. Moreover, he noted, there is a shortage of food items across Asia due to supply chain disruptions, and that they ship their goods by air, the swiftest mode of transport.

Building on that demand for Japanese goods, the company has recently started pushing Japanese luxury watches to its Malaysian clients, citing a surge in interest from local watch enthusiasts.

Silver, long-term lining to coronavirus

The short-term downturn may have thrown up long-term growth prospects, with tour operators adopting a far-sighted perspective in their pivoting strategies, even as they tackle short-lived headwinds posed by the pandemic. As businesses are driven to pad up their portfolios, reinventions made in light of evolving realities could prove long-lasting, including a greater focus on e-commerce and virtual experiences.

For MAD Travel, Dionisio said that the agency’s diversifications form part of its long-term strategy, and are poised to outlast the pandemic.

“Through offering virtual tours, an online marketplace and, eventually, on-site tours once more, we hope to be able to support communities in different ways. They are actually part of a long-term plan to diversify our income streams, and also to support our communities in a more holistic manner,” he said.

“All our plans are flexible or can be done online as we don’t know how long it will be before people feel comfortable to travel again – and that’s a big part of what we considered with our strategy.”

That deeper dive into virtual engagement has necessitated the reskilling of their workforce, which may very well be a linchpin to thrive in a new normality.

Dionisio elaborated: “For online education, we are focused on training the travel team to market virtual experiences instead of on-site ones. The team learning how to become teachers and facilitators online is a challenge. After all, what works in person doesn’t necessarily work online.”

Also thinking long-term is Teh, who stressed that the seven-person company plans to continue its newfound venture even after travel resumes, especially since business has grown by 30 per cent over the past two months. “At most, we will hire more staff to continue maintaining this business,” he said.

On the other hand, Um said it remains to be seen how long her company’s pivots will persist, as uncertainty abounds.

Still, she sees a silver lining amid the Covid-19 cloud. “(These pivots are) a way to see things in a new perspective. Perhaps, it may be a great opportunity for us to expand and diversify our business,” Um said. “We’re at a stage where we’re trying to increase awareness (of our new services) so as to provide something beyond the travel industry.”

Short-term losses, long-term gains

Though agents reported that the revenue from their pivots so far pale in comparison to their tour sales, they claim that it is still vital income nonetheless.

Teh called the company’s export sales a “far cry” from its pre-pandemic tour business income, matching only 10 per cent of the former. But he said that the earnings are helping to cover their losses during the MCO period, especially given Japan’s high living costs.

Likewise, Dionisio shared that MAD Travel’s pivots are raking in merely 20 per cent of the agency’s travel revenue before the crisis hit, but declined to reveal the actual numbers.

Still, he is optimistic about the future outlook of the market. “In times like these, 20 per cent is plenty, and much better than zero. It has allowed us to keep parts of the company operational, in a world where most travel companies are at zero. We think that we can get back on track within a year,” he said.

Joy Paradise Solution’s Teh (left) and fellow co-founder Hugo in talks with their local supplier partner for luxury watches, which they plan to market to Malaysians during the travel downturn

Looking ahead, both Dionisio and Teh reported that this diversification of revenue streams feeds back into their core travel business.

Dioniso said: “Long-term, we see that the education programme can feed into the travel programmes, and that the online marketplace allows us to continuously connect with customers before or after they travel.”

Similarly, Teh said that the company’s export venture has raised awareness about its main tour business. He added: “We tap into new markets for our export enterprise. Occasionally, we will also distribute some tour vouchers with our products, so more people come to know that we are in the travel business. This is to pave the way for our future recovery.”

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