James Reed, CEO and group managing director of Destination Asia, is no stranger to the ever-changing travel trends and mix of visitors to the region. He tells Xinyi Liang-Pholsena where he thinks the opportunities are for the DMC
Destination Asia rolled out several B2B portals in recent months. Why the big focus on online?
Our client base wants immediate confirmation, but our offices are six, seven hours ahead of Europe and 12 hours ahead of the US, so we need to give immediate access and represent all hotels. Also, new customers can see that they can book through one source to all 11 countries – we actually own all 11. Few competitors (can claim that) as they actually sub, sub, sub-contract, but we have our own licenses.
Another reason is that we are among the last few independent companies of our size. Tour East is owned by Qantas Airways; Diethelm Travel is owned by a Swiss international trading company; and Asian Trails is owned by Kuoni.
Tour wholesalers…have used other inbound DMCs and found that part of these companies are owned by their European competitors, and they don’t like that. Independence has helped us tremendously.
What benefits have been reaped?
B2B first came in on straight single-destination bookings – somebody in London booking Thailand only or somebody in Sydney booking Bali. But now the technology allows more sophisticated software, so that we can now offer multiple countries. It has helped us to grow our business into a one-stop shop.
For tour wholesalers, it’s better economies of scale and quality standards if they use the same DMC in as many countries as possible.
Are you targeting any new markets?
The US, the UK, Australia, Scandinavia; and the German market is growing, while South America is growing a lot.
As for Asia, currently we have only inbound India and inbound China, both of these (divisions) are owned by us. We have no Singapore, Malaysia, Japan or Hong Kong business, simply because we believe those markets are very mature, saturated and tight. We see 10-20 years of growth in India and China, particularly the latter.
You opened earlier this year an inbound India division in Thailand. Will you also do the same for other destinations?
Singapore, Malaysia, Hong Kong and Vietnam are probably the next four countries to have inbound India divisions. By the end of this year we will have Indian inbound everywhere; maybe not Japan because the market is very small there as it’s very expensive for Indians.
Is there already an inbound Chinese division for all your countries?
Not all, because some Chinese business is into Thailand, Bali, etc, but some is into Australia, Europe and America. We would love to get all the (Chinese) business into Asia, but that’s not possible, plus the main destinations for Chinese outbound (in the region) are Bali and Phuket. Our main business in China is still inbound – inbound opened eight years ago, outbound two years ago. We will do outbound next in Indonesia.
Which segment of the Chinese business are you most excited about?
The leisure business. However, Chinese outbound incentive business is growing. Like Western companies, Chinese companies do see travel as a kind of reward, for example, a trip to Hawaii/Thailand. (Similar to what you’d find in) Western countries, there’s also families and honeymooners, but you also have dancing groups, jazz clubs, art clubs, sport clubs – all kinds of hobbies and associations.
What about new offices overseas?
We do have expansion coming, which we will be announcing in January (2015).
Hardly a week goes by without us getting a request from India asking if they could join our group or if we could buy them, but we will not be expanding west of Myanmar.
Why not India?
All sorts of operational, legal issues, etc. There are other countries in Asia where the entry is easier and more transparent, so we will never do inbound in India.
Which of your 11 destinations has the greatest potential?
Thailand is currently the largest, but in two years it will be overtaken by China. Coming behind is Indonesia, Japan, Vietnam and Singapore. Myanmar, however, has phenomenal potential. We are very bullish about it (because of its) stunning historical sites and geography. There’s huge demand from Europeans, Americans and Chinese.
Asia has seen an unplanned recipient travel business diverted from the Middle East. In the last two years, we have been asked by almost every (international tour wholesaler) and their customers to increase the tours and capacity into Asia to help them compensate the loss of business to Egypt, Jordan, Turkey, etc. It’s sad what is happening in the Middle East. How long would that last? Nobody knows.
MICE business will also continue to grow. The future of the world economy is Asia, and that means there will be more corporate meetings required, training meetings, product launches, incentive travel, so we see MICE growing by leaps and bounds. The upcurve is never-ending.
We are very bullish about the future in Asia – we see double-digit growth every year for the next 10, 20 years in all markets.
How do you foresee Thailand’s tourism development?
Twenty years ago, Thailand had 95 per cent of the business to the Indochina area. It’s inevitable the area has opened up, first Cambodia and now Myanmar. (Development) has been good for all these countries, but Thailand has also benefitted because it’s currently the hub. Eventually Myanmar and Vietnam will become standalone destinations, but that won’t come for at least another 10 years because they don’t yet have the infrastructure. In 10, 15 years, that will change, absolutely.
Protests in Thailand had only really affected MICE, but leisure, no – it hasn’t grown but it’s only down four, five per cent. We have been able to transfer approximately 35 to 40 per cent of the MICE groups that were booked in Thailand to other Destination Asia countries, mainly Hong Kong, Singapore, Bali and Malaysia. We are hopeful the business will come back once they lift the martial law. But it will come back, and everyone knows this – Thailand has got great infrastructure and hotels.
What are some of your biggest challenges today?
Finding qualified staff with a good service mind, and training and keeping them. But the problem in most parts of Asia is, the unemployment rate is one per cent, half a per cent.
There could be more outbound if there are fewer visa restrictions. For example, up until six months ago, Thais still needed a visa to Japan, but it has been cancelled and now Thais are going to Japan in hundreds of thousands, and Japan has benefitted in real actual economic activity.
I also believe Asia has to continually expand its infrastructure. Travel in Asia is still at a baby stage, and it’s going to grow. There are still a lot of poor people in Asia, but in 10 years’ time they will become middle class and travel. China has built this phenomenal fast-train system and Thailand’s going to do it. What I would like to see is Singapore to Bangkok, and Bangkok up to Beijing, and this will come in the next 20 years. Rail traffic is definitely a growing part of the business.
We’re the biggest handler of inbound cruise ship passengers (in Asia), but apart from Singapore, Hong Kong and Tokyo, the port facilities in Asia are geez…For Thailand, Malaysia, Vietnam, Indonesia, there really needs to be investment. And if they build it, more ships will come.
This article was first published in TTG Asia, October 24, 2014 issue, on page 11. To read more, please view our digital edition or click here to subscribe
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