TRAVEL companies are at a pivot point, with two industry luminaries warning the dangers for those who stay the course or are just “tweaking”.

PhocusWright’s founder, Philip Wolf, said the need to pivot is on the rise across the industry’s value chain, affecting everyone – daring upstarts, media darlings, local players, global powerhouses, OTAs, TMCs, Asia or the Americas.

“TripAdvisor and Yelp rule the day, not Frommers and Zagat. Priceline and Expedia rule travel, not American Express or Thomas Cook. Google, Yahoo, Ebay, Facebook and Twitter rule the Internet, not Microsoft.

“So I ask: Who will be the new travel players to rule the day?”

His list of pivot examples includes Priceline, which transitioned from a US, air, opaque-centric business, to an international, hotel, retail-centric business; and TripAdvisor, from a B2B white label search engine, to a B2C banner ad model and, again, to a CPC (cost per click) model with reviews. American Express is pivoting, spinning off its corporate travel business. Meta-search comprises many pivots in the works, said Wolf, who was keynoting ITB Asia’s opening on Wednesday.

“Companies should evaluate whether their current skills and assets can adequately deliver what their new customers want. Do you still provide the products and services that matter the most?”

Quoting Eric Ries, author of The Lean Startup, Wolf said the litmus test for when firms should pivot is when their experiments – say, repricing – have stopped being productive.

Citing befallen Kodak, Dell and BlackBerry as examples, he warned: “The pain of embarking on a critical course correction may pale in comparison to the cost of not pivoting.”

In a related call,  Ho Kwon Ping, executive chairman, Banyan Tree Holdings, keynoting National Association of Travel Agents Singapore (NATAS) Travel Conference Wednesday, addressed the issue why so many travel agencies are struggling to survive despite millions of new travellers enlarging the market.

Describing the Internet as the single most disruptive change for the travel agency business, Ho said the only way travel agencies in small markets can survive is “to specialise and globalise or regionalise at the same time”.

“In what seems to be a contradiction but is completely rational, it (travel agency) must narrow its product focus and widen its market focus. It must become a specialised, niche player with value-add, in a very large market,” Ho said.

“If you focus, for example, on cultural tours, or the even more niche markets of, say, wine tours, or adventure tours, you have to reach out to more than the Singapore market. The problem of course, is that competitors exist in other national markets and they may have more local market knowledge and linguistic capabilities.

“The Singapore travel service provider in a regional market must leverage through better services and products, stronger branding, higher use of technology, to create a more seamless, efficient and memorable travel experience for consumers in the entire Asian market.”

Ram Samtani, secretary-general of NATAS and general manager of Ramesh Travel Service, agreed that the market is borderless today and the agency market should be global. But the challenge for agency owners is fear. “They are afraid of the risk, afraid it is at the expense of something else, etc. But to a certain extent, that has changed, as they realise there is no choice really. It’s not just travel agency businesses. A lot of people in the industry understand that things cannot be done the same way.”

THE fluctuating rupee has hit Indian outbound, with some Asian sellers reporting discouraging figures this year.

The Traveller Malaysia director/general manager, Jessica Koh, has seen a 20-30 per cent dip from the market year-to-date, with trading down occurring. To avoid competing on price, the tour operator is offering differentiated products such as themed hotels and city villas.

“Malaysia is being squeezed as Indian travellers are keeping their budgets for Singapore…plus with Genting’s theme park closed for renovation, they are now doing day tours or skipping us altogether,” she said.

Wildlife Reserves Singapore also noted a drop of 15 per cent in tourists from India during the summer months.

However, director of its sales department, Liang Wern Ling, hopes that winter bookings would “match last year’s level”, given that the attractions operator had launched its River Safari product in the Indian market last week.

“We hope to see a twin package combining Night Safari and River Safari, especially with our boat ride opening soon.”

Meanwhile, outbound market leaders like Thomas Cook and Kuoni said they are heartened that the rupee has now stabilised.

Read more in TTG Official Show Daily – ITB Asia

INDONESIAN and Malaysian outbound tour operators are seeing a shift in travel patterns due to their weakened currencies.

The Indonesian rupiah has dipped against the USD since end-May from 9,817 rupiah (0.90) to 11,300 to-date.

While the upper middle class travellers are unfazed by the rupiah’s depreciation and continue to favour Europe, operators interviewed said the middle class is either shifting destinations or shortening their travel duration.

Travel executives expect business would be challenging next year. GTA Indonesia FIT country manager Andreas Sulaeman said: “The Lebaran holiday next year is back to back with the school holiday (July) so there will be one peak season instead of two separate ones.

“Secondly, with the general and presidential elections, travellers may want to wait-and-see; if the currency still fluctuates, they may be more cautious in spending.”

To keep the business afloat, tour operators said they will be offering attractive products by teaming up with airlines, cruise companies, overseas NTOs as well as banks in Indonesia, as they have been doing this year.

Meetings and incentives are also impacted. MICE agencies such as Panorama Tours managing director – Corporate Incentive Management, Vidya Hermanto, said: “Some of our clients actually have postponed their incentive programmes till early next year.”

In Malaysia, promotional airfares to Europe are helping to mitigate the impact of the weaker ringgit on longhaul travel. Carol Sum, senior operations manager, Parlo Tours Malaysia, expects a 20 per cent increase to Central Europe and 30 per cent increase to Scandinavia and Eastern Europe in the second half of this year.

Similarly, Cooper Huang, CEO of Malaysian Harmony Tours & Travel, said packages to Central and Eastern Europe are expected to increase 25-30 per cent right up to June 2014, thanks to promotional airfares.

Additional reporting by S Puvaneswary

VISIT Finland will launch a marketing campaign next year for its top two Asian markets, China and Japan, which accounted for about 10 per cent of total foreign arrivals to Finland last year.

This is the first time the NTO will invest in an image campaign for both markets, targeting consumers in Greater Tokyo and Greater Shanghai. It will spend 600,000 euros (US$825,240) for destination promotions in Japan and one million euros for China, said its director for trade relations, Anne Lind.

The 2014-2016 campaign will include print, online media and outdoor advertising, in addition to product campaigns, which the NTO will partner with suppliers and Finnair for roadshows to China and Japan next year.

Lind added: “Through the campaign, we hope to increase the average overnight stay of Chinese travellers from 1.7 nights to three or four nights in 2016 and to have a steady 10 per cent growth per annum for Japanese visitors. We are targeting the well travelled and nature lovers from both markets.”

Visit Finland also wants to promote beyond popular destinations such as Helsinki and Lapland and introduce new destinations such as Lakeland and Coastal Areas and Archipelago.

Coastal Areas and Archipelago boasts cities, old towns, historical manors and stone churches, lighthouses and national parks.

In 2012, Finland received 176,936 visitors from Japan and 100,075 visitors from China.

Nina Tahtinen, regional sales manager, international sales at Tallink Silja Line, said the company has seen a four per cent year-on-year growth from Japan and double-digit growth from China for its Baltic Sea cruises.

She added that Japanese cruise tourists tend to be a seasonal market, while the season for Chinese cruise tourists is more spread out. The company has prepared promotional materials in the local languages.

Anna-Mari Valtonen, marketing manager at City of Helsinki Tourist & Convention Bureau, said the bureau focuses on online campaigns for the Chinese consumers and travel trade on its Chinese website.