C1_Huella online travel.pdf

Isabella Chan prepared this case under the supervision of Dr Kevin Zhou for class discussion. This case is not intended to show
effective or ineffective handling of decisions or business processes.
© 2008 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise (including the
internet)—without the permission of The University of Hong Kong.
Ref. 08/369C
1
KEVIN ZHOU
HUELLA ONLINE TRAVEL: GAINING MARKET
INSIGHT INTO HONG KONG CONSUMERS
In April 2007, Huella Online Travel Ltd,1
a Malaysian-based online travel portal targeting
Asia, including Greater China, announced its results for the financial year 2006. Since the
launch of the company’s Hong Kong site in 2000, its market share for the city had been
hovering just under 5%. Indeed, Huella’s performance in Hong Kong had been lower than in
its other markets. Previous market research commissioned by the company had found that low
consumer awareness of the Huella brand and the general risk-averseness among Hong Kong
people towards online travel purchases appeared to be the key factors behind this situation.
Jenny Leung, marketing and market research manager of Huella Hong Kong, was surprised
that the online travel industry had not picked up in Hong Kong despite the city’s high internet
usage penetration rate and the techno-savvy nature of its population, especially among young
people. In order to confirm earlier findings, Leung decided to hire MarketSense, a boutique
market research firm headquartered in Australia, to conduct a study on its Hong Kong market.
Through this study, she hoped that she would be able to devise a viable marketing strategy.
What information would Huella need? How could MarketSense help Huella achieve its goals?
1
Although this case is based on real events, certain details, including company names, ownership structure, locations and
company-related financial and market figures, have been changed to ensure anonymity.
HKU716
This document is authorized for use only in Prof. Aishwarya R's Consumer Behaviour at Indian Institute of Management - Kozhikode from Aug 2022 to Feb 2023.

08/369C Huella Online Travel: Gaining Market Insight into Hong Kong Consumers
2
The Changing Air Travel Distribution Scene
Despite downside risks facing global tourism twelve months ago—in
particular terrorism, health scares due to avian flu and rising oil prices—
2006 was another year of good growth above the long-term forecast rate of
4.1% backed up by one of the longest periods of sustained economic
expansion ... Three years ago world tourism began a historically new phase
of growth, as it broke the barrier of 800 million international arrivals,
growing more than 20% since then.
- Francesco Frangialli, Secretary-General, United Nations World Tourism
Organization (UNWTO)2
Around the world, particularly in the Asia Pacific region, the travel industry was booming
[see Exhibit 1 and 2]. Despite the dampening effects of events such as 9/11 and SARS on
global tourism, the industry enjoyed a spectacular rebound in 2004 and had been growing
ever since.
Development of the Flight Bookings Systems
The current airline bookings systems could be dated back to the late 1950s when American
Airlines began to build a system that was accessible by its branch offices and travel agents for
obtaining real-time flight data and for bookings purposes. The system was intended to
integrate and automate the company’s reservations and ticketing processes. Other airlines,
including United Airlines, followed suit, developing their own proprietary Airline
Reservations Systems (“ARS”). Since then, images of people making manual airline bookings
using physical “cards” representing seats on the airplanes were no longer seen [see Exhibit 3
for descriptions of the key industry players].
The various ARSs soon evolved into a single system—the Computer Reservations System
(“CRS”)—that connected them together and which was made available to all travel agents.
The key difference between the two systems was that while ARSs automated flight and seat
controls within individual airlines, CRSs made this possible across several airlines. In other
words, a travel agent needed to access various ARSs to book seats from different airlines, but
only one CRS to complete the same task as long as all the concerned airlines had placed their
seats on the CRS in question. In essence, the airlines had outsourced a significant portion of
their respective reservations process [see Exhibit 4]. Various CRSs, many of which were
ultimately owned by airlines companies, became available on the market, such as Apollo CRS
(US), Galileo (Europe) and Abacus (Asia). By the mid- to late 1990s, several major CRSs had
expanded into global systems—the Global Distribution Systems (“GDS”) [see Exhibit 5].3
The Air Travel Pie
During the 1980–1990s, companies that owned CRSs developed a highly profitable network
technology that not only made distribution more efficient but also supported sales in the
industry. As a result, travel agents flourished. Since flight data was constantly updated,
2
UNWTO (January 2007) World Tourism Barometer, 5(1), http://www.world-
tourism.org/facts/eng/pdf/barometer/unwto_barom07_1_en.pdf (accessed 10 September 2007).
3
Besides airlines, GDSs also collaborated with other travel service providers, including cruise operators, hotels and car rental
companies etc.

3
airlines could create sophisticated pricing strategies for seats, leading to the emergence of
many reservation classes, compared to only three initially.4
While CRSs or GDSs tended to charge a flat fee, usually based on the number of segments
per trip,5
travel agents charged a commission rate, which could be as much as 10%, based on
ticket prices6
[see Exhibit 6]. Many airlines complained that this commission was too high,
arguing that it was less work for travel agents to sell a higher-priced ticket to a business
traveller rather than to a leisure traveller since the business travellers usually knew which
airline to travel with and did not need advice from the agents. Yet, airlines continued to pay a
10% commission, which would undoubtedly go up with the price of the tickets, to the agents.
For the airlines, distribution costs could account for as much as 15%, or more, of their total
operation costs. Indeed, by the 1990s, distribution costs were growing even faster than
passenger revenues.7
Since such costs were among the most controllable expenses, airlines
began pressuring travel agents to change their compensation system.8
In some cases, airlines
companies even eliminated travel agents’ commissions9
and replaced them with pay-for-
performance incentives. The proliferation of low-cost carriers had exacerbated the problem,
forcing full-service carriers to cut costs further.10
Similar phenomena could be observed
among CRSs/GDSs. 11
All these would not have been possible without the advance in
technology and the availability of alternative sales channels.
Online Travel
The travel industry was one of the earliest to go online. Since travel had few
geographical boundaries, and, thanks to the widespread adoption of e-tickets,
which airlines aggressively pushed, the airlines faced none of the logistical
issues of online product retailers such as shipping and variable tax-collection
schemes, the travel industry was uniquely suited for the Web.
- Harrell Associates12
The advent of online travel had revolutionised the travel industry by offering a cheaper
alternative to CRS/GDS technology for travel service providers. It had created new business
models, changing the relationships among the key players which had become less
interdependent but more competitive [see Exhibits 7a and 7b]. Airlines increasingly reduced
their dependence on travel agents and CRSs/GDSs by selling directly to consumers via the
internet.13,14
For example, Cathay Pacific Airways offered deeply discounted airfares that were
4
Harrell Associates (6 June 2002) The Internet Travel Industry: What Consumers Should Expect and Need to Know, and Options
for a Better Marketplace, http://www.consumerwebwatch.org/pdfs/internet-travel-industry.pdf (accessed 10 September 2007).
5
The above example assumed a 2–3 segment trip at the cost of US$3.50 per segment.
6
Credit card companies typically levied a 2–3% service charge.
7
Harrell Associates op. cit.
8
Ibid.
9
In Singapore and Hong Kong, for example, airlines had reduced travel agents’ commission to virtually zero.
10
ASIATravelTips.com (15 December 2005) “New Cendant TDS Research reveals impact of Rising Costs and new Technology
on Travel Agents in Asia”, ASIATravelTips.com, http://www.asiatraveltips.com/news05/1512-TravelAgents.shtml (accessed
16 August 2007).
11
Cendant Travel Distribution Services (2006) “The changing travel distribution model in Asia”, Presented at the Travel
Distribution Summit, Singapore,
http://www.eyefortravel.com/research/Data/Files/The%20changing%20travel%20distribution%20model%20in%20Asia.pdf
(accessed 11 September 2007).
12
Harrell Associates is a consultancy company specialising in the travel industry. Source: Harrell Associates (6 June 2002) op.
cit.
13
Besides high commission fees charged by travel agents, another reason for airlines to find alternative means of distributing
their products and services was the hidden bias in CRSs/GDSs. For instance, only a limited number of airlines’ flight
information could be displayed on a screen each time a search was made—ie, screen position bias. The fact that CRSs/GDSs
were often owned by airlines implied that these systems could be abused easily at the expense of those airlines which did not

4
available only on its website for a limited period each time.15
Findings from the Airline IT
Trends Survey16
indicated that of the total seat sales, average online sales had grown from
24.4% in 2002 to 32.4% in 2006. In the same year, sales via airlines’ own websites alone
accounted for 24.4% of the total ticket sales, compared to only 5.1% in 2002 [see Exhibit
8].17
Travel agents responded by reviewing their revenue structures, unbundling their services,
offering special or tailor-made travel packages, such as spa holidays and “medical
vacations”, 18
and charging service fees for flights and hotel bookings, among other
measures.19
A number of online travel agents had also sprung up around the world, competing
with traditional agents for customers; some of the more well-known ones were
lastminute.com, Orbtiz and Priceline. There were three main types of online travel agents:20
• Online stores set up by brick-’n-mortar agents—an extension of traditional travel agents.
• Online travel portals that not only sold travel products and services but also offered
destination information and other services. Some of these were “pure” online travel
agents without any physical stores (eg, Orbtiz and lastminute.com).
• Online travel bidding sites21
(eg, Priceline).
The entrance of online travel agents, especially those belonging to the second and third
categories, into the market had made the travel environment much more competitive for
traditional agents. Due to the structural, scale and purchasing arrangements of online agents,
they were able to offer “dirt-cheap” airfares and hotel room rates.22
Different Takes on e-Bookings of Air Travel
According to Harrell Associates,23
the key advantages of online travel purchases were:
• Convenience—eg, 24-hour and year-round availability
• Speed
• Access
• Control—eg, ability to make one’s own arrangements online.
own the CRSs/GDSs through which they distributed their seats. In addition, individual CRS/GDS operators also paid
incentives to travel agents to book through their systems.
14
They were thus able to drastically cut, or even eliminate, the commission paid to travel agents.
15
Coleman, Z. (18 February 2002) “Ready for Take-Off?” Asian Wall Street Journal.
16
The Airline IT Trends Survey 2006 was an annual survey launched in 1999. Target respondents included the top 200 passenger
carriers, including low-cost carriers as well as other key operators in the cargo, regional and leisure markets. The final sample
for the survey represented an estimated two-thirds of the world’s airline revenues.
17
Airline Business and SITA (2007) Airline IT Trends Survey 2007, http://www.sita.com/NR/rdonlyres/2C464901-6574-4AA0-
B4E3-17199B9B8D45/0/AirlineIT07Booklet.pdf (accessed 11 September 2007).
18
“Medical vacations” refer to those that are taken for the purpose of medical treatment. This phenomenon is dubbed “medical
tourism” by the travel industry. It has become increasingly popular among people from places where the cost of healthcare is
often inaccessibly high—mainly in developed countries like the US, UK and Australia. This kind of tourism has been growing
rapidly over the past decade due to rising medical costs, an increasing population with little or no medical insurance and the
appeal of combining an often exotic vacation with surgery. Travel agents not only provide flight and hotel bookings or
concierge services to the customers but also help them find doctors and arrange for consultations or surgeries. Some agents
may even assign a staff member to wait with customers at the hospitals. Source: Yager, F. (29 January 2007) “Cancer Surgery
in India, Dental Work in Costa Rica”, ConsumerAffairs.com,
http://www.consumeraffairs.com/news04/2007/01/medical_vacations.html (accessed 11 September 2007).
19
20
Ibid.
21
There are various types of bidding sites available on the market. A typical bidding site allows travel service providers to sell
their unsold products or services (eg, an unused seat or a surplus room) as quickly as possible—ie, the clearance rack for
sellers. It also allows buyers to “name (bid) their own prices” by entering their preferred dates of travel, destinations and the
price range they are willing to pay, without letting them choose the precise times, airlines, hotels or rental car companies. The
site will then search for whatever matches. Only after their transactions are completed will buyers be notified of the details of
their purchases—eg, airlines, flight times or hotels. The refund and exchange policies of such sites are usually quite inflexible.
22
Kolsaker, A., Lee-Kelley, L. and Choy, P.C. (2004) “The reluctant Hong Kong consumer: purchasing travel online”,
International Journal of Consumer Studies, 28(3), pp. 295–304.
23

5
Air passengers from North America seemed to be the most receptive towards online air travel
purchases, with 59% of their ticket sales made online. This was followed by Europe, where
online seat sales amounted to 35% of total seat sales, compared to 19% in Asia Pacific.24
According to a study conducted by market research company MarketShare, the Asia Pacific
market was fragmented, unlike their US and European counterparts.25
While the online travel
industry prospered in some countries, such as Australia, Japan, South Korea, Taiwan and
Singapore, it had not picked up in others, either because of a lack of adequate infrastructure or
general concerns over internet shopping.
In terms of air travel bookings, many Asian consumers seemed less inclined to purchase
tickets online than Americans or Europeans,26
despite the popularity of e-bookings of hotel
rooms amongst Asians. In Asia, online vendors of hotel rooms were able to offer discounted
rates and useful information on facilities and service quality. In contrast, very few online
airline-ticket sellers could offer similar deals to consumers. While most of the discount tickets
in the US were offered by online travel sites like Expedia.com, Asian consumers did not have
such a privilege. Indeed, discount airfares were only a recent development in Asia.27
Thus it
would seem that in order to be persuaded to purchase online, consumers needed more than
just novelty.
Another hindrance to online ticket sales in Asia was the requirement for airlines in most parts
of the region to adjust their retail sales prices only after official consultations,28
unlike in the
US where airlines could set their own fares, with changes being reflected instantly in their
centralised database (ie, CRSs/GDSs). Indeed, the situation in Asia was such that many online
retailers did not invest the time and manpower to update airfares frequently and could only
list full-fares on their websites, whereas traditional, brick-’n-mortar travel agents could offer
more up-to-date and lower prices. Therefore, there was less incentive for Asian consumers to
purchase online. On the other hand, hotel room rates did not change as often.29
Hong Kong Air Travellers
Despite its high internet usage penetration rate of 59%, online purchases of air tickets in Hong
Kong were among the lowest in the world30
[see Exhibit 9]. A typical Hong Kong consumer
used the internet only to check information, making actual purchases from traditional, brick-
’n-mortar travel agents. Several reasons could explain this:31
• Perceptions of risk outweighing the perceived convenience associated with online travel
• Better offline alternatives—ie, traditional, brick-’n-mortar travel agents—which Hong
Kong consumers tended to believe could offer better deals such as best rates and more
flexible itineraries—than online travel agents, without the hassle of searching for one
themselves
24
Airline Business and SITA (2007) Airline IT Trends Survey 2007, http://www.sita.com/NR/rdonlyres/2C464901-6574-4AA0-
B4E3-17199B9B8D45/0/AirlineIT07Booklet.pdf (accessed 13 August 2007); Internet World Stats’ 2006 data:
http://www.readwriteweb.com/archives/worldwide_inter.php.
25
Agence France Presse (21 April 2004) “Asia-Pacific Travel E-Commerce to Reach 16 Billion Dollars by 2006”, MarketShare
corporate website, http://www.marketshare.com.hk/press/apr04.html (accessed 14 September 2007).
26
Coleman, Z. op. cit.
27
Ibid.
28
In some parts of Asia, such as Taiwan, there are tariff regulations governing passenger or cargo transportation, including
passenger fares, luggage and cargo rates. Source: Ministry of Transportation and Communications, Taiwan (Date Unknown)
Regulations Governing Tariffs for Passengers and Cargo Air Transportation, http://www.caa.gov.tw/en/download/pliad/03-
22A%20en.doc (accessed 19 September 2007).
29
Coleman, Z. op. cit.
30
Data pertains to users aged 15 or above.
31
Kolsaker, A., Lee-Kelley, L. and Choy, P. C. op. cit.

6
• Familiarity with traditional, brick-’n-mortar travel agents, some of which had been
established for a few decades, such as Hong Thai, Wing On and MorningStar32
• Geographical proximity and efficiency of the city’s public transportation, thus reducing
the need to shop online.
In a research study commissioned by Cendant Travel Distribution Services (“TDS”) on the
Asian travel business, it was found that 54% of Hong Kong travellers were uncertain about
the price competitiveness between online fares and those offered by traditional agents.
Moreover, 57% found traditional agents extremely efficient and 48% claimed that they
needed assistance from the agents to make travel arrangements. The same study also found a
widespread concern about the security of online booking sites as well as the transaction
capabilities of the sites, for example, in terms of their ability to make multiple bookings or to
obtain instant confirmation of their reservations.33
Nevertheless, the future appeared to be less gloomy. In 2006, the total size of the Asian online
travel market was estimated to be US$20.9 billion and continued to grow rapidly.34
According
to eyefortravel, an online information portal for the travel industry, Hong Kong’s online travel
market could expect an annual growth of 97.9% during 2006–201035
[see Exhibit 10],
compared to 17% for the US.36
Huella Online Travel
Founded in 1999 in Kuala Lumpur, Malaysia, Huella Online Travel was an Internet travel
portal targeting Greater China and the rest of Asia. Huella was a subsidiary of Blue Rock, a
US-based private equity firm which owned a majority stake in the company, and Your
Journey Partner, an online travel agent headquartered in Australia. Blue Rock also owned
stakes in some of the major passenger carriers in Asia Pacific, such as Cathay Pacific, Japan
Airlines, Singapore Airlines, Air China, China Airlines, EVA Airways and Korean Airlines.
In less than a decade, Huella had expanded into ten markets across Asia, including Hong
Kong, China, Taiwan, Singapore, Japan and South Korea, among others, and each had its own
localised websites [see Exhibit 11]. By 2006, its total revenue across all markets had reached
US$100 million.
Business Model
Promoting itself as a “full-service travel guru”, Huella featured a user-friendly design for both
its main and regional sites, making them easy to navigate, as well as a strong selection of
attractive deals. The company offered not just flights from major airlines worldwide but also
hotel rooms and car rental services. Using its highly-acclaimed search function, which was
considered to be one of the strongest in the industry, consumers could search for any
combinations of the above offers as well as pre-packaged tours from a wide variety of
suppliers—eg, airlines’ package tours like Cathay Holidays. Huella’s sites also allowed users
to modify their search parameters to include their intended dates of travel and displayed
results that were up to three days around the preferred dates. Moreover, users were also able
to look for best fares within a self-chosen date range. Huella only accepted online bookings
and charged a fee of US$4–11. Although the majority chose to use e-tickets for their travel,
customers could also opt for paper tickets and would be required to pay for postage. Besides
32
Hong Thai, Wing On and MorningStar are three of the most established brick-’n-mortar travel agents in Hong Kong, each with
more than 20 years of history.
33
ASIA Travel Tips.com op. cit.
34
HOTELMARKETING.COM: http://www.hotelmarketing.com/.
35
eyefortravel: http://www.eyefortravel.com/.
36
HOTELMARKETING.COM: http://www.hotelmarketing.com/.

7
credit cards, the sites also offered various payment options, such as bank transfer or bank
draft, to cater to different needs.
Security of Huella’s Websites
Huella made security its promise to customers. The company believed that trust in the process
was crucial to its success. Using SSL certificates and security services, its websites across its
ten markets were all VeriSign37
secured. It also offered Verified by VISA and MasterCard
SecureCode services as an additional security measure.38
In order to ensure effective back-end
fraud control and efficient website administration, Huella adopted a centralised security
control model for all its websites, using the secured server of its parent company, Journey
Partner, which was based in Australia.
Huella Hong Kong
Huella’s Hong Kong site—Huella.com.hk—was launched in 2000. The site mainly served
consumers from Hong Kong and Macau. Despite a few setbacks as a result of events such as
9/11 in 2001 as well as the SARS and avian influenza outbreaks in 2003 and 2004,
respectively, the company had been enjoying growing revenues since its inception [see
Exhibit 12]. Nevertheless, the revenue growth in Hong Kong had been less than expected.
There were market intelligence and industry reports that estimated Huella’s market share in
Hong Kong to be only 4%, compared to 9% in Singapore. Its market share for air travel was
even lower—2% in Hong Kong versus 10% in Singapore. These reports also revealed that
online travel had not picked up in Hong Kong, with the city’s adoption of online shopping for
flights being one of the lowest in the world.
Jenny Leung, marketing and market research manager for its Hong Kong office, had been
with Huella since it first opened its office in Kuala Lumpur, Malaysia. In 2000, she was
transferred to help set up the company’s Hong Kong operations. With a marketing degree and
20 years of agency experience39
in market research before joining Huella, Leung was a firm
believer in “research-based marketing”—ie, effective marketing strategies were those that
were founded on facts and insights gained from the market. Moreover, being an experienced
market researcher, she also understood that any market understanding began with qualitative
research that was used by the industry as a means to gather preliminary information about the
market—information that was not yet known and was therefore exploratory in nature. On the
other hand, quantitative research was normally used in the industry to confirm findings from
the qualitative stage as well as in contexts where there was a need to test representativeness
[see Exhibit 13 for definitions of market research terms].
37
VeriSign is a payment gateway that uses a highly automated system, offering round-the-clock, real-time access and
authentication with all major credit card providers and banks worldwide.
38
Both Verified by Visa and MasterCard SecureCode programmes provide strong identification for online payments. Before
using these services, cardholders need to pre-register with their respective card issuer. Thereafter, each time the cardholders
use their cards on retailers’ sites that participate in the programmes, they will be requested to verify their identity by entering
their previously registered usernames and passwords. This is to ensure that the cards are being used legitimately.
39
Market research professionals generally work in one of two types of companies—agency or client-side. While agency market
researchers work in market research companies (ie, agencies) that conduct market research as their main business, client-side
market researchers work in companies that undertake market research to facilitate their main business (eg, sales of milk
powder in a milk powder manufacturer). The latter may either conduct market research in-house or outsource to professional
market research companies, hence the term “client-side”. If the decision is to outsource a study to an agency, a typical client-
side market researcher will normally take a monitoring role, overseeing the progress of the agency, in addition to a decision-
making role that decides on matters such as when to conduct a market research, whether to outsource it or to conduct it in-
house as well as which agency to choose. Moreover, many client-side researchers also undertake a strategic management role
for their company and use findings from market research to devise viable business strategies.

8
Qualitative Research
Leung was puzzled by the discrepancy between Hong Kong’s low interest in online travel and
its high internet usage penetration and techno-savvy population, especially the younger
generation. She wanted to find out the reasons behind this. She was also interested in knowing
how Hong Kong consumers were taking the Huella brand. Therefore, in 2002, she hired MGO,
a Hong Kong-based market research company with offices across the Greater China region
that included Taiwan and several major cities in China (eg, Guangzhou, Beijing and
Shanghai), to conduct a study for its Hong Kong market.
The objectives of the study, which was based on focus groups, were to understand the
following:
• General purchasing habits and attitudes of Hong Kong consumers towards travel and
vacations, in particular online travel
• Awareness of the Huella brand among consumers in Hong Kong
• Attitudes and perceptions towards the Huella brand and its Hong Kong website vis-à-vis
its competitors’
• Actual or intended usage pattern of Huella vis-à-vis its competitors.
The study seemed to echo other research that had been done in the industry regarding Hong
Kong consumers’ purchasing habits of travel products and services as well as their concerns
about online travel purchases. Overall, the study revealed the following key findings:
Key Findings:
• Brand Awareness: A majority of the respondents had never heard of Huella, whether it
was before prompting (unaided awareness) or after prompting (aided awareness). The few
who had heard of the brand tended to have a vague impression of it [see Exhibit 13].40
• Brand Image: Using the collage technique, all respondents perceived Huella as risky and
unreliable, mainly due to their concerns about the security and stability of Huella’s
website.41
Brand personification revealed similar results (in respondents’ own words) [see
Exhibit 13]:
“Huella is a 15-–20 year-old male. He’s a teenager, a thrill-seeker and a
risk-taker. He also likes to joy-ride. Thus, he’s not reliable.”
They were wary about making online purchases:
“My credit card details may be stolen by hackers.”
“My card may still be charged even if the transaction fails.”
“I’m worried that my transaction won’t go though as the internet may go
down all of a sudden.”
Nonetheless, their worries were mainly towards the internet in general, rather than
Huella’s website per se, as typified by the following respondent:
40
Among respondents who were not aware of the Huella brand before they participated in the study, a brief description of the
company was provided before proceeding to the next stage. A demonstration was also given by the group moderator to all
respondents, including those who were aware of the brand before the study and those who were not, to show them how to use
Huella’s Hong Kong website.
41
The study pertained to Huella’s Hong Kong website only.

9
“Whether it is Huella or other online travel agents, my worries will still be
the same.”
Moreover, a majority of the respondents, particularly business travellers, also shared the view
that the losses incurred from a travel-related purchase that went wrong would be difficult to
compensate. The perceived risks would outweigh any potential benefits, thus discouraging
them from buying their flights, hotel rooms or other travel-related products and services
online, as exemplified by the following comment:
“For purchases like air tickets or hotels, I definitely don’t want to see
anything go wrong because it may be almost impossible to compensate me—
not just for the time that has been spent on preparing my trip, but also for
wasting my vacation.”
“I agree with her! Also, the losses will be even bigger for business trips as I
may miss an important client meeting that may often mean the life or death of
my company! I certainly won’t use Huella, or any of the likes.”
• Brand Positioning: Using card-sorting technique, virtually all respondents categorised
Huella with other online travel agents/retailers (Group A) [see Exhibit 13]. No one
perceived Huella as similar to traditional, brick-’n-mortar agents, such as Hong Thai,
MorningStar and Wing On (Group B). The reasons were:
“Group A is what I won’t buy from. At the most, I’ll only use them to check
prices. ”
“I’ve known Group B since I was a kid so I’m very familiar with these agents
and trust them more. Also, I believe I can get better deals from them. And I
don’t need to do anything, just let them do the job for me.”
• Usage Pattern: Due to the low brand awareness, a majority of the respondents had never
used Huella’s Hong Kong site before, nor had they used any other regional sites of the
company. Among the few who had heard of the brand, they normally only used it to
obtain information about available products/services and to compare prices, with their
actual purchases being made with traditional, brick-’n-mortar travel agents. With regards
to how they intended to use Huella, all respondents claimed they would only use Huella
as an information provider and would purchase from traditional, brick-’n-mortar agents
instead.
Lastly, MGO cautioned that the qualitative nature of the study did not justify inference of the
findings to the target population. In other words, these findings were not statistically
significant [see Exhibit 13]. It also suggested a second-stage, quantitative research to gauge
representativeness.

10
The Future
Leung had decided to commission another market research study both to confirm the earlier
findings and to test their representativeness. She would outsource the study to MarketSense—
a boutique market research firm headquartered in Australia that had offices across Australia
and New Zealand as well as in Hong Kong and Singapore. Through this study, she hoped that
she would be able to devise a viable marketing strategy. The goal was to ease consumers’
concerns regarding online travel purchases and ultimately to increase Huella’s market share in
Hong Kong.

11
EXHIBIT 1: GLOBAL TOURIST ARRIVALS (1995–2006)
Year Arrivals (million) Year-on-Year Growth (%)
1995 541 —
1996 575 6.3
1997 599 4.2
1998 617 3
1999 640 3.7
2000 687 7.3
2001 687 0
2002 707 2.9
2003 694 -1.8
2004 765 10.2
2005 806 5.4
2006 842 4.5
2007* 876 4
* Figures for 2007 are projected estimates.
Note: A note of caution needs to be taken when reading the table above. Not all countries are covered while figures
for some countries are based on 9–10 months of arrival data only.
Source: United Nations World Tourism Organization (UNWTO).

12
EXHIBIT 2: GLOBAL TOURIST ARRIVALS BY REGIONS (2006)
Location
Arrivals
(million)
Growth Rate
(%)
World Average 842 4.5
Europe 458 3.9
Northern 56.3 6.6
Western 148.7 4.3
Central/Eastern 88 1
Southern/Mediterranean 165 4.2
Asia Pacific 167.1 7.6
North-East Asia 94 7.4
South-East Asia 53.8 9
Oceania 10.5 0.3
South Asia 8.8 10.1
Americas 136.3 2.1
North America 90.3 0.5
Caribbean 19.5 3.2
Central America 6.9 6.1
South America 19.6 7.2
Africa 40.3 8.1
North Africa 14.7 5.8
Sub-Saharan Africa 25.6 9.4
Middle East 40.8 3.9
Source: United Nations World Tourism Organization (UNWTO).

13
EXHIBIT 3: THREE MAIN FUNCTIONAL ROLES IN THE TOURISM INDUSTRY
Direct Travel Service Providers (Suppliers)
Direct travel service providers invest in products such as planes, properties and vehicles and
provide services for travellers. Examples include: airlines, hotels and car rental or cruise
companies.
Distributors
Both CRS and GDS operators are travel distributors for the industry. They are technology
companies that consolidate supplier information, inventory and pricing data, and offer a
means for travel agents and other vendors to electronically search for, book and issue tickets.
Travel Agents
Travel agents typically provide one-stop shopping services to leisure and business travellers
by offering guidance on choosing the right travel products or services and helping customers
book and issue flight tickets or make reservations at hotels, among other things. In addition,
travel agents may also offer ancillary services like passport processing and visa application.
They operate in various segments of the market, including wholesale, retail, business as well
as leisure and special packages.
Source: Harrell Associates.

14
EXHIBIT 4: COMPUTER RESERVATIONS SYSTEM (CRS)
Travel Agents and Travelers
Reservations + Ticketing and Accounting Information
Various Airlines
Computer
Reservation
System (CRS)
Schedule and Seat Availability

15
EXHIBIT 5: FUNCTIONAL COMPONENTS OF GDS TECHNOLOGY
Inventory Management and Display
The inventory management and display captures inventory (ie, seats, hotel rooms, cars etc.) of
travel service providers and, through sophisticated algorithms, displays them on computer
screens according to the key-in-requests made by travel agents. Such algorithms are critical
due to the physical limitation of the number of flights that can be displayed on a computer
screen.
Pricing- and Fare-Search Engines
Pricing- and fare-search engines are systems that will take an itinerary request and determine
the fare according to pre-set rules which may in turn depend on factors such as routings, stop-
overs, advance purchases and length of stay. Such factors are ultimately based on supply and
demand in the market.
Ticketing and Document Generators
Ticketing and document generators enable travel agents to generate a physical or electronic
ticket as well as to queue them to remote locations (eg, an airport in another country) for pick-
up.
Database Reporting Engines
Database reporting engines allow airlines and travel agents to report transaction activities for
various purposes, such as financial and accounting, trend analysis or passenger searches.

16
EXHIBIT 6: COSTS/REVENUES ALLOCATION FOR AIRLINES (US$)
$30
$254
Net Airline Revenue
Travel Agent
Credit Card
Companies
$6
$10
ARS/CRS/GDS
Ticket Price = $300

08/369C
Huella
Online
Travel:
Gaining
Market
Insight
into
Hong
Kong
Consumers
17
EXHIBIT
7A:
AIRLINE
BUSINESS
MODELS—PAST
AND
PRESENT
Conventional
Airline
Business
Model
Source:
Van
der
Zwaag,
F.
(March
2004)
“Evolving
eBusiness
Airline
Information
Systems”,
Bulletin
of
Applied
Computing
and
Information
Technology,
2(1),
http://www.naccq.ac.nz/bacit/0201/2004derZwaag_airlineIS.html
(accessed
13
September
2007).

08/369C
Huella
Online
Travel:
Gaining
Market
Insight
into
Hong
Kong
Consumers
18
EXHIBIT
7B:
AIRLINE
BUSINESS
MODELS—PAST
AND
PRESENT
New
Airline
Business
Model
Source:
Van
der
Zwaag,
F.
(March
2004)
“Evolving
eBusiness
Airline
Information
Systems”,
Bulletin
of
Applied
Computing
and
Information
Technology,
2(1),
http://www.naccq.ac.nz/bacit/0201/2004derZwaag_airlineIS.html
(accessed
13
September
2007).

19
EXHIBIT 8: ONLINE AIRLINE SEAT SALES
Year
Percentage of Tickets
Sales Made Online
2000 5.2
2001 6.0
2002 10.1
2003 18.9
2004 14.5
2005 20.1
2006 32.4
2007* 35.2
* Figures for 2007 are projected estimates.
Source: Airline IT Trends Survey 2007.
EXHIBIT 9: INTERNET USAGE IN ASIA PACIFIC (AGE 15+)
Location
Internet Usage
Penetration (%)
South Korea 65
Australia 62
New Zealand 60
Hong Kong 59
Singapore 58
Taiwan 50
Japan 49
Malaysia 45
China 9
India 3
Average* 10
*Includes countries not listed above.
Note: Updated in May 2007. Figures exclude traffic from public computers (eg, internet cafes
etc.) or access from mobile devices (eg, mobile phones or PDAs etc.).
Source: comScore: http://www.comscore.com/.

20
EXHIBIT 10: EXPECTED GROWTH IN RETAIL TRANSACTION SALES FOR ONLINE
TRAVEL (2006–2010)
Location Growth Rate (%)
India 271.6
Vietnam 202.8
Hong Kong 97.9
Indonesia 82.8
Malaysia 82.1
China 71.4
Source: eyefortravel: http://www.eyefortravel.com/.

08/369C
Huella
Online
Travel:
Gaining
Market
Insight
into
Hong
Kong
Consumers
21
EXHIBIT
11:
HUELLA
ON
THE
WORLD
MAP
(As
of
January
2007)
Note:
The
map
above
contains
disguised
information
for
case
illustration
purpose
only.

22
EXHIBIT 12: NET REVENUES FOR HUELLA HONG KONG (2000–2006)
Year
Net Revenues
(HK$ million)
Year-on-Year
Growth (%)
2000 48.4 —
2001 51 5.4
2002 57.4 12.5
2003 52.3 -8.9
2004 68.1 30.2
2005 75.2 10.4
2006 80.7 7.3
Note: The table above contains disguised figures for case illustration purpose only.

23
EXHIBIT 13: GLOSSARY OF MARKET RESEARCH TERMS
Aided Awareness is what respondents say they have heard of when a list of pertinent brands
is read out to them. It is always tested after unaided awareness and the brands that are read out
exclude those that have already been mentioned—ie, brands that respondents can think of
without assistance. [Also see “Brand Awareness” and “Unaided Awareness”.]
Brand Awareness is a measure of how readily a brand springs to consumers’ minds. [Also
see “Aided Awareness” and “Unaided Awareness”.]
Brand Image refers to the overall impression that consumers or potential consumers have of
a brand together with all the functional and emotional associations they make out from the
brand. The overall or total image may constitute various aspects, such as a specific product or
service a brand represents, users of the product, occasion of use, personality of users of the
product and service provided by distributors or sellers of the product.
Brand Personification is a common market research technique used to elicit a brand’s
“personality”. It is a type of projection technique whereby researchers may ask respondents
questions like: “Let’s suppose Huella is a person and Huella is the person’s name. Imagine
yourself at a party and meeting Huella. What kind of a person do you think Huella is?” The
reason for posing this kind of questions is because it is much easier to talk about tangible
objects such as people or cars than intangible, abstract concepts like brands about which
respondents often find it difficult to articulate what they think. [Also see “Brand Personality”.]
Brand Personality is defined by ESOMAR42
as an “expression of the fundamental core
values and characteristics of a brand, described and experienced as human personality traits,
eg friendly, intelligent, innovative etc. It is an expression of the relationship between the
consumer and the brand”.
Brand Positioning is defined by ESOMAR as the “location of a brand in relation to its
competitors in some pre-defined space. The space may be defined by criteria used by
consumers, such as ‘value for money’ or ‘age of consumer’ etc.”
Card-Sorting is another projection technique commonly used in market research. In a
simplified sense, card-sorting is a technique for exploring how people group items—brands,
products etc. A typical card-sorting exercise involves respondents grouping different cards
together, with each card having a different brand name written on it. Respondents can group
the cards into as many separate groups as they want and based on any rationale as long as
they can explain it afterwards. Discussion will then follow.
Collage is a projection technique commonly used by market researchers to help identify
respondents’ perceptions of a brand, product or service etc. In a typical collage exercise, a
researcher (focus group moderator or in-depth interviewer) may hand out a collection of
images, usually cut-outs from magazines, none of which are directly related to the topic of
discussion (eg, the brand that is being tested). The researcher will then ask respondents to go
through the images and pick as many images as they perceive to describe the brand. A
discussion of how the chosen images may describe the brand will then follow. The purpose is
to help respondents think broadly about the topic or concept, with the images acting as visual
stimulants to help elicit ideas and emotions.
42
ESOMAR is a global association for market research professionals.

24
Representative Sample (Representativeness) is a “sample that contains units in the same
proportion as the population of interest”. It is representative of the target population it
measures.
Statistical Significance refers to whether or not the research results “genuinely reflect a
population of interest in some way or whether the results could occur by chance. Statistical
significance is determined by comparing the research results with the values defined by the
confidence interval”.
Unaided Awareness refers to what respondents can think of without any assistance. [Also
see “Brand Awareness” and “Aided Awareness”.]
Source: Adapted from dobney.com’s corporate website:
http://www.dobney.com/Strategies/brand_personification.htm; ESOMAR’s website:
http://www.esomar.org; Johnson, W. (December 1999) "The collage", Quirk's Marketing
Research Review, http://www.quirks.com/articles/a1999/19991206.aspx?searchID=2888319
(accessed 19 September 2007).

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