The biggest challenges for Asia’s inbound agents in 2018 (part 2)

When asked what they foresee as their biggest challenge this year, it’s clear that the growing tentacles of online platforms is the elephant in the room for many inbound agents across Asia. Other bugbears include geopolitics, which affects their market mix, and a lack of destination marketing wherewithals.

China welcomed 69.5 million arrivals in 1H2017, an increase of 2.4 per cent, and tourism revenue grew 4.3 per cent to US$60.1 billion, compared to the same period in 2016, according to the China National Tourism Administration (CNTA).

Temple of heaven, Beijing

While CNTA is optimistic arrivals and revenues will continue to grow in 2H2017, geopolitical tension created by North Korea, along with low funding levels of destination marketing by China and increased bureaucracy affecting tourism operation and social media, is casting a shadow.

Sam Braybon, ambassador to Shanghai of Bespoke Shanghai, Bespoke Travel Company, said destination marketing of China in western countries is low.

“China can do more to raise its appeal in order to achieve higher growth rates – like Japan and South-east Asia, where some places are less expensive to visit.”

Aside from increasing Chinese marketing and promotion efforts, and adopting interesting and innovative approaches to make them more appealing, Braybon suggested China tourism agencies cooperate with travel agents in joint promotions.

In addition, more could be done to address the negative reports on air quality and food safety.

As for social media, Kin Qin, deputy general manager, Century Holiday International Travel Company, said while searching for information online can be done quickly and easily, what is posted is not always accurate, and can “disrupt” what travel agents recommend and advise.

Qin noted: “We are tackling this by focusing on understanding better what our customers want, and being more prepared to meet their expectations.”

Ricky Yang, deputy general manager, Easy Tour China Travel, added: “We suffered a drop in online bookings in 2017, and are in the process of upgrading our website and adjusting our online strategy.”

On the rise in bureaucracy, travel agents cited the “unpredictable” and “short notice” nature of government policy on fees, tourism zoning and development.

Examples cited include the slapping of a RMB60 (US$9) transport fee per person to enter a Guilin resort town, which was announced in August and came into effect in weeks, which affected contracts for big groups in particular.

A Beijing-based travel agent commented: “There is a crackdown, and the tightening of controls started in August. I expect more to come. For example, there are now car plate licence restrictions and we also need to submit information about the company, our guides, tour itineraries in advance, which adds a lot of work as clients of tailored programmes often do not follow a strict itinerary.” – Caroline Boey

The travel trade in Hong Kong expects a challenging year given uncertainties that lie ahead, especially political tensions that impact inbound business.

The Sino-Japanese row has resulted in the Japanese staying away from China and Hong Kong and although the situation has improved, Hong Kong now has to compete with South Korea, which is aggressively marketing to South-east Asian markets due to similar tensions with China.

W Travel Services’ managing director, Wing Wong, said: “South Korea has intruded into the South-east Asian market with very low tour prices. My Indonesian and Malaysian clients are now considering going to South Korea rather than Hong Kong.

“In order to survive, we will cut costs and expand our source of income. However, we won’t slash our prices dramatically because the cost of transportation, such as coaches, is getting dearer,” Wong said.

He is relieved to see that promotions by the Hong Kong Tourism Board (HKTB)are continuing to enhance prospects. He also looks forward to see a lowering of the travel agent licence fee this year.

Political instability, like the recent US-North Korea conflict, is also considered another big challenge, as it has dampened sentiments among North Americans to travel to Asia, according to agents.

Faces of Hong Kong’s CEO, Ivy Sung, said: “It’s quiet, with not many enquiries on Asia. Though there isn’t much we can do from the political perspective, I will not give up.”
She hopes the HKTB will have more joint promotions, for example partnering airlines and hotels to host overseas buyers.

Sung is also heartened by the board’s efforts to attract more arrivals through events.
“It’s a good sign to see the government bring in more big international events, such as the Hong Kong Cyclothon and Volvo Ocean Race. We hope for more opportunities to bid to support these events in the future,” Sung shared.

Meanwhile, expectations that online travel businesses will continue to further encroach on revenues are also weighing in the minds of traditional players.

Travolor Travel & Explore’s manager, Jo Chan, hopes to combat the trend with tailor-made products and better services.

He said: “If we can’t beat them, (we have to) join them and offer more automation and invest in online content. We can’t compete on pricing and volume, but (instead) offer a better service.” – Prudence Lui

Overall, India’s inbound tour operators fear that high taxation, along with a lack of innovation in tourism offerings and an absence of a strong government tourism policy, will haunt their business in 2018.

Ravi Gosain, managing director, Erco Travels, lamented: “The biggest challenge for us is that prices are rising without any value additions. It is therefore difficult for us to justify the price increase to our partner foreign tour operators every year.

“India faces a lot of social and political problems which we have to defend. At the same time, the unfavourable GST implementation on the tourism and hospitality sector has added to our woes.”

From a former indirect taxation regime that saw the state government levying VAT, luxury and entertainment taxes, in addition to the central government’s set of different taxes, India introduced the GST system on July 1 last year in an effort to streamline the structure. However, the new taxation has made tour prices around the country uncompetitive.

Pronab Sarkar, president, Indian Association of Tour Operators, explained: “The tourism industry in India has always borne the burden of multiple taxes and thus, has always been overtaxed and suffered losses. The average tax percentage levied on tourism industry, under the pre-GST regime, as well as under GST regime, roughly remains the same, which is approximately 25 per cent.

“Taxation on the tourism sector is comparatively lower in neighbouring countries, which has resulted in an increase in their tourism business. However, tourism growth in India has been and remains very stagnant,” he said.

Subash Goyal, chairman, STIC Travel Group, added: “For a package tour, principal tour operators in India may have to engage one or more tour operators depending on the itinerary in the different states to provide services locally to their clients. As per the present GST system, all those tour operators involved are liable to charge five per cent GST on the same services, which results in multiple taxation.”

Goyal hopes that the government will consider the current GST loopholes and provide relief to tour operators. He said the stakeholders are engaging with government authorities on different platforms to relay their concerns.

Aside from this issue, there is also a need to focus on promoting unique tourism experiences in the destination, Gosain opined.

“We need to be more innovative in our product offerings. India has lot to offer and we need to create our own original products, rather than just highlighting the country’s monuments. India needs to look beyond the image of cultural destination, if we want to increase the number of leisure tourists,” Gosain said.

Added Arun Anand, managing director, Midtown Travels: “India’s Ministry of Tourism has been making good efforts to promote India to international markets. But the time has come to draw up a different marketing strategy to attract different tourist segments.

“For example, to attract international MICE business, we need an entirely different approach as compared to the strategy for leisure travellers.” – Rohit Kaul

The emergence of Japan in recent years as a major tourist destination may be good for the industry, but it also poses some new challenges for its operators.

High on the list of concerns remains the difficulty of securing accommodation in popular destination cities and at peak times of the year such as during the cherry blossom season each spring.

However, this problem appears to be easing as hotel chains catering to all budgets are opening additional properties in anticipation of the windfall that will accompany the Rugby World Cup in 2019 and, the following year, the Tokyo Olympic Games. Equally, more travellers are taking advantage of the spread of Airbnb-style minpaku accommodation.

More recent emerging challenges fall into the categories of too little and too much. “There is so much competition in the inbound sector now that it is getting harder and harder for us,” said Ayako Adachi, owner of Tokyo-based Japan Oriental Tours.

“Five years ago, there were not so many smaller agencies like us, but that has changed and now we need to understand better just what travellers want when they come to Japan and to meet those needs,” she told TTG Asia.

The company is increasingly looking to develop new tours in parts of the country that are less well-known, Adachi said, and is reaching out to repeat visitors who are seeking new experiences.

Denis Morozov, manager of the inbound division of Tokyo-based JIC Travel Center, agrees that agencies are being sidelined, but he believes that technology is partly to blame. “Travellers are booking their hotels and excursions online by themselves, which is making this sector tough,” he said.

“Everyone is looking forward to the Olympic Games in 2020 and I think more people might use agencies to ensure they have accommodation and tickets and so on, but it might get difficult again afterwards.

“We have chosen to focus most of our efforts on wealthy clients and the luxury market, the people who do not mind paying a little more for a guaranteed good service,” Morozov shared.

Japan’s relative inexperience in dealing with large numbers of foreign tourists is also showing up in such areas as human resources, where there is great demand for staff with foreign language skills, although the number of capable multilingual employees falls short of.

“There is simply insufficient number of tour guides with the language skills that we need,” said Avi Lugasi, owner and managing director of Kyoto-based travel agency Windows to Japan.

“Japan is a country where a good guide makes a big difference to a customer’s enjoyment of the vacation, so it is very important for us to be able to provide them with a good service.”

The government used to have a system for training guides to ensure they had a certain level of ability, but it has since relaxed the rules. “Now virtually anyone can call themselves a guide, even if they are not skilled. This is already an acute problem and will only get worse, I fear,” Lugasi said. – Julian Ryall

Sri Lanka’s tourism sector has been battling a decrease in arrivals from the Middle East and Europe due to problems such as raging flash floods and a dengue outbreak, failed marketing campaigns, as well as a three-month partial closure of the country’s main airport for urgent maintenance.

Tourism growth slowed in 2017 with just a 3.5 per cent increase in arrivals in January to August from the same period in 2016.

Sri Lanka’s prime minister Ranil Wickremesinghe announced at a recent tourism conference in Colombo that the country hopes to attract five million tourists by 2025, up from the current two million under the Sri Lanka Tourism 2017-2020 Strategic Plan which includes aggressive promotion and marketing.

Temple of the tooth in Kandy

But the key to turning the tide rests on the digital marketing and destination marketing campaigns which have eluded Sri Lanka for many years, often with false, stop-go-stop starts.

In addition, according to industry figures, 10,000 more hotels rooms are in the pipeline, doubling the 10,000 existing ones.

Warned Harith Perera, managing director of Diethelm Travel Sri Lanka, said: “If we don’t fast-track these campaigns particularly with more rooms coming into the market, prices could come down and quality could suffer.”

The industry however is warming up to yet another long-delayed digital marketing campaign in key markets. The campaign should start at the end of this month, and will be followed by a wider global destination marketing campaign later in the year.

Ahintha Amerasinghe, chairman and managing director of the Worldlink Travel Group, said that instead of solely looking at the country’s main markets of India, China and Europe, Sri Lanka should “also tap non-traditional markets like Vietnam, Indonesia and the Philippines”.

Dileep Mudadeniya, vice president-brand marketing at Cinnamon Hotels and Resorts, believed that things will “move faster with many projects in the works”, as well as 2020 being declared Visit Sri Lanka Year. – Feizal Samath

Sponsored Post