ASIA’S fragmented travel industry is witnessing a period of consolidation, mirroring what occurred in the West years ago, said trade observers, who described one of the region’s latest transactions – JTB Group’s purchase of six Tour East Group offices – as a “natural progression”.
Targeted for completion by year-end, the acquisition would help JTB grow its non-Japanese inbound business, JTB global inbound general manager Dennis Law told TTG-ITB Asia Daily.
JTB will take over Holiday Tours & Travel’s stake in Tour East’s offices in Singapore, Australia, Hong Kong, Indonesia, Malaysia and Thailand, the last of which is still being negotiated.
Earlier this year, JTB also bought Dynasty Travel Singapore and, in 2010, Star Holiday Mart and Singapore Alive.
Manuel Ferrer, founding partner & chairman, QOS Consultancy, who will be moderating a panel on consolidation today as part of ITB Asia Clinics, reasoned that with the exception of Japan and South Korea, the travel market in Asia is still very fragmented and not mature, similar to North America or Europe 15 or 20 years ago. At work are also huge forces such as technology, transparency, client preferences, emerging middle classes and young affluent Asians, necessitating major changes in the business.
“Over the past 10 years, big global players have entered or grown further in Asia…It is understandable that big regional players like JTB want to compete (directly) with them. Maybe, in a few years’ time, in a globalised world, JTB could move the battlefield to Europe and North America, and compete there too,” Ferrer predicted.
Nicholas Mulley, COO, Destination Asia, also saw the move as “a natural progression for (competitors) to acquire companies across the region to further expand their footprint, product and service offerings”.
But big doesn’t always mean best. Said Maarten Groeneveld, incoming CEO, Diethelm Travel Group: “Of course it could be beneficial to own the entire value chain. But one plus one does not always make one very big one. In our view consolidation is good – it gives room for more specialised agencies to grow in niche markets where large corporations cannot deliver.”
Ferrer agreed: “In reality, it doesn’t matter whether you are big or small. What is important is to have a good strategy and to serve your clients well…If I may guess, I would say (the losers will be) those who fail to adjust and deliver to the Asian new middle classes and/or to the Asian young generation.”
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