Once trailing its Western counterparts in innovation, Asia’s travel tech companies are now the ones to beat, says Simon Akeroyd, vice president, corporate strategy and business development, Amadeus Asia Pacific
Traditionally when people think ‘tech hub’ or ‘innovation hotspots’, San Francisco, Seattle, London or Berlin are likely to spring to mind. It is no secret that the West has been strong on tech superiority for decades. Historically we have seen developed economies in the West lead on technology innovation, and then introduce it to the East for adoption.
However, the early to mid-2000s heralded an extraordinary shift. Many Eastern markets, particularly China, transitioned from “cheap and cheerful manufacturers” to markets producing quality technology to rival or outclass that of its Western counterparts. Today, Asian countries are spearheading new technologies to solve contemporary challenges.
The rise of the Asian traveller
With the shift to service-based economies, emerging and developing countries in Asia are seeing some of the strongest GDP growth globally. They are forecast to grow at around 6.5 per cent over 2018-19, and continue to contribute to more than half of global growth annually.
Strong economies and Asia’s increasing wealth have led to the rise of an affluent middle class. The travel industry has been a clear beneficiary: Today, China is the largest travel market globally and by 2020 two in every five travellers will be Asian.
Accelerating innovation capacity
Along with its increased wealth, Asia’s capability to innovate has accelerated and will push digital transformation in the travel industry forward. The region is already ahead in several critical factors that support tech advancement. Four out of the top 10 countries boasting the fastest Internet speeds globally are in Asia; South Korea is leading the charge with the highest average connection speed in the world, followed closely by Hong Kong, Singapore and Japan.
Meanwhile, China is leading the push for 5G mobile technology, and is shaping up to have the biggest 5G market by 2022. By 2025, China will account for more than 40 per cent of the world’s 5G connections. Companies in Asia are also truly ‘mobile-first’, developing for mobile before desktop. Finally, but increasingly importantly, the cost of maintaining cloud infrastructure in Asia is much cheaper than in the West, helping them to push ahead.
There’s also an abundance of STEM skills coming out of Asia, coupled with an entrepreneurial spirit. Notably, Asia was home to more than 47 per cent of all international patents filed in 2016, almost the combined total from North America and Europe. We launched the travel tech startup community Amadeus Next for Asia-Pacific to support the thriving ecosystem of ‘next gen’ travel technologies in Asia, and to learn from some of the region’s most innovative travel startups.
Asia also has a strong commitment to investment in research and development (R&D). China’s R&D investment will surpass that of the US by 2020, with companies dedicating phenomenal amounts to research. For example, 40 per cent of Chinese ICT solutions company Huawei’s 170,000 staff is purely focused on its research efforts. Even Amadeus, despite being a European company, has a large R&D centre in Bengaluru with nearly 1,800 employees.
Asia needs to innovate for itself
A large part of Asia’s success is, and will increasingly be, a result of its ability to address its own market needs. A lot of what happens in the West isn’t relevant, therefore the region must develop its own ideas and technologies to solve its unique challenges.
Examples of Asian innovations include travel and expense management company Baoku, among the first to develop a SaaS solution to cater to China’s growing business travel market, which surpassed the US in 2016 and is now worth upwards of US$300 billion. Another is 12GoAsia, which supports ASEAN’s complex transportation networks on both the B2B and B2C sides by providing online ticketing services for inter-city bus, train, ferry, transfers, flights and hotels.
BorderPass was developed to enable the large number of business travellers that frequently cross Asia’s borders to ‘pre-clear’ airports’ immigration check-points, speeding up the passage for frequent travellers. In India where travellers often have to book a long-distance rail ticket up to four months in advance for confirmed travel dates, ConfirmTKT shortens the time between booking and confirmation of rail tickets and assists travellers to identify alternative travel routes using its app.
Companies in emerging Asia are also actively pursuing opportunities to capitalise on the rise of the Asian traveller. One example is air ticket, hotel reservation and car rental platform Flymya.com, founded to capitalise on Myanmar’s emerging tourism industry and help travellers plan trips to the country. Another is startup Huangbaoche, which provides tour packages and travel guide booking services for outbound Chinese tourists, processing more than 1.5 million transactions in its first two years of operation.
We’re also seeing robotics being rolled out at a terrifying pace in Asia. In Singapore, M Social was the first hotel to have a front-of-house autonomous service chef robot that prepares perfect eggs for guests. In Japan, H.I.S Co employs more robots than humans in some of its hotels.
Chinese travel platform Mafengwo, popular among younger travellers for the ‘independent’ information available through its traveller communities, is developing a concept for world’s first intelligent travel robot Mafeng. This robot will accompany travellers throughout their trip and use the big data to provide users with personalised travel experience. For instance, the robot will create itineraries and recommend activities based on a user’s past trips and personal preferences.
Asian innovators have also been quick to put blockchain into travel technology. Singapore Airlines’ KrisFlyer has launched the world’s first blockchain-based digital wallet, which will allow its membership base to use digital KrisFlyer miles for point-of-sale transactions at participating retail merchants. A Chinese project, Go Globe Chain, is applying blockchain technology to build up decentralised B&B booking systems to avoid false trading and credit risks. These blockchain developments have the possibility to revolutionise the travel industry.
It is impossible to speculate where the next Uber or Airbnb will come from, but it is clear that Asia has been bitten by the “tech bug”, and is on the cusp of a tech boom. The innovation we are seeing is almost overwhelming, and highlights just how agile Asia is when it comes to developing new technologies to address unique market challenges and explore new ideas. Asia’s relatively young tech environment, which is not weighed down by legacy systems, coupled with a rising tech-savvy middle class, all point to a future where Asian travel innovations will thrive.