Presentation cees bosselaar - phocus wright

The Emerging Online Travel Marketplace
in China, India and Brazil
October 20, 2010 PhoCusWright
ETC e-Business Academy
Belgrade
October 20, 2010

© 2009 PhoCusWright Inc. All Rights Reserved.
2
Country China India Brazil USA UK
Population* 1,325 1,149 192 307 62
Internet* 420 50 72 228 46
Internet % 32% 4% 38% 74% 74%
Mobile* 770 410 177 286 70
Mobile % 58% 36% 92% 91% 129%
Travel $62 B $16 B $20 B $236 B $55 B
Book online $11 B $ 4 B $4 B $93 B $26 B
Book online % 18% 25% 20% 40% 47%
International % 9% 8% 9% 16% 46%
* In millions
Source: Worldbank, World Development Indicators, PhoCusWright, Nielsen. Figures are rounded. For comparison
purpose only.

3
Source: Worldbank, World Development Indicators, October 2010
Internet Users in China, US, Brazil, India and UK

4
Asia Pacific Internet vs. Mobile Subscriber Base (M) and
Penetration (%) 2Q 2009

5
ÊÚ
#
#
#
#
Beijing
Shanghai
Xi’an
Chengdu
Guangzhou
ÊÚ
#
#
#
#
Beijing
Shanghai
Xi’an
Chengdu
Guangzhou
Five Cities Were Selected to Represent Different
Regions In China
Beijing – North China
Shanghai – East China
Guangzhou – South
China
Chengdu – Southwest
China
Xi’an – Northwest China

6
• First Chinese consumer travel behavior study
• Qualitative research coupled with quantitative research
o Focus groups – 10 focus groups across key market
segments
o In-depth interviews – 15 in-depth interviews across key
market segments
o Quantitative survey – More than 2,000 respondents
interviewed face-to-face across key market segments
• Regional representation
o Five cities selected: Beijing, Shanghai, Guangzhou,
Chengdu and Xi’an, for representation of different regions
in China
• Comprehensive analysis
Comprehensive Approach to Research

7
China Has the Most Internet Users in the World – More
Than 300 Million People
More than 84%
of the Chinese
population using
Internet services
have broadband
access; this is
214 million
subscribers.
Source: China Internet Network Information Center Survey, July 2008
103 111 123 137 162 210 253
7,9%
8,5%
9,4%
10,5%
12,3%
16,0%
19,1%
5%
10%
15%
20%
0
100
200
300
jun-05 dec-05 jun-06 dec-06 jun-07 dec-07 jun-08
China Internet Penetration
Internet Users in Mn Internet Penetration

8
China Has the Most Wireless Subscribers in the World
180 214
263
312 350 368 366 341145
206
270
335
393
461
547
641
0
100
200
300
400
500
600
700
2001 2002 2003 2004 2005 2006 2007 2008
China Telecom Growth – 2001-2010 (Millions)
Wired Subscribers Wireless Subscribers

9
Chinese are extremely active in social media:
• Blogs: 221 million
• BBS: 117 million users (Tianya, Xici)
• Social Networks: 176 million users
• However, the social media landscape shows different players:
Facebook => Xiaonei
LinkedIn => Wealink
YouTube => Tudou
Twitter => Fanfou
Flickr => Yupoo
• Facebook, Orkut and Twitter are blocked

10
Respondents Who Travel Internationally are a Small
Portion of the Total Sample
Holiday Trips by Destination
Note: TB03: Of all of these holiday trips, how many were taken:
Number of Respondents: N – 2057
Source: PhoCusWright’s China Consumer Travel Report
52%
100%
33%
9%
7%
14%
5%
0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Local Domestic Macau / Hong Kong International
Any (1+)
Frequent (3+)

11
Southeast Asia is Most Popular Destination for Outbound
Holiday Travel in China
Top 10 Travel Destinations – International
Note: TB09: Please name up to 3 destinations (locally, domestically and/or internationally) you visited on holiday
travel in the past 12 months.
22%
20%
18%
9%
8%
6%
4%
4%
4%
3%
Singapore
Japan
Thailand
U.S.
Malaysia
U.K.
Australia
Canada
France
Korea

12
•International travel is state-regulated. The Chinese government
categorizes international destinations
• Travel to countries with an Approved Destination Status (ADS)
requires fewer state agency approvals.
•International travel must be purchased from government-
approved offline travel agencies.

13
Internet Users in China, US, Brazil, India and UK

14
Use of Offline Methods to Search for Travel Information
Continues to Exceed Online Methods
35%
53%
35%
70%
19%
50%
14%
59%
0% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Online Offline
Air Tickets Hotels Travel Packages Train Rented Car
Note: HP02: When you planned or gathered information for your holiday travel in the last 12 months, how did you
research any of the following travel components?

15
More Younger People Used Online Methods for Search,
Showing Promise for Online Travel
45%
43%
34%
15%
48%
42%
34%
15%
25%
22%
19%
8%
19%
17%
14%
7%
0%
10%
20%
30%
40%
50%
60%
Younger DINK Family Empty Nester
Air Tickets
Hotels
Travel Packages
Train
Note: HP02: When you planned or gathered information for your holiday travel in the last 12 months, how did
you research any of the following travel components?
Number of Respondents: N – 2057; Young – 415, DINK – 610, Family – 596, Empty Nester – 436

16
Ctrip is Dominant in Travel Search, While Baidu is Way
Ahead of Google but 7Days Inn is Third for Hotel
Note: HP05: What were the top three Web sites you used the most for investigating air tickets and/or
hotel/guesthouse accommodations for your holiday travels in the last 12 months?
Number of Respondents: Air - 714, Hotel - 724
4%
5%
6%
8%
9%
14%
18%
27%
35%
41%
cs-air.com
sina.com.cn
mangocity.com
kuxun.cn
qunar.com
elong.com
google.cn
airchina.com.cn
ctrip.com
baidu.com
3%
4%
6%
6%
6%
15%
16%
17%
30%
45%
qunar.com
sohu.com
homeinns.com
kuxun.cn
sina.com.cn
elong.com
google.cn
7daysinn.cn
ctrip.com
baidu.com
Air Hotels

17
About One-fifth Of Respondents Looked for Online
Travel Reviews; A Considerable Share As Travel Reviews
Are Relatively New To Chinese Travel Marketplace
Yes
19%
No
81%
Note: HBB21: Do you usually look for any online travel reviews or experience-sharing when deciding to purchase
air tickets and accommodations for holiday travel?

18
Travel Reviews Have a Strong Influence Over Decision to
Purchase Travel Components
Influence of Travel Reviews
Not strong at all
2%
Not very strong
11%
Somewhat strong
64%
Very strong
23%
Note: HBB23: How much influence do you think the travel reviews have over your decision when purchasing travel
components?

19
Among All Factors Affecting Offline Travel Purchases for Air and
Hotel, Word Of Mouth Had Most Importance; This Underscores the
Need to Build Efficient Social Networking Platforms
53%
70%
47%
30%
Air Hotel
Travel Buying by Channel
Online Offline
25%
46%
Air Hotel
Importance of Word of Mouth

20
In China There is a Huge Difference in Travel Planning
and Travel Buying Behavior
9%
31%
28%
19%
12%
2%
12%
21%
28%
36%
0%
10%
20%
30%
40%
1-3 Days 4-7 Days 8-14 Days 15-28 Days 29 Days and more
Travel Planning Lead Time
China
Shanghai
Note: HP07: What was the lead time you typically took to plan and search for travel?

21
Frequency of Trips Differ by Region
3,32
2,6
2,37
5,18
3,58
2,92
0 2 4 6
Total
Beijing
Shanghai
Guangzhou
Chengdu
Xi'an
Mean # of Trips
Note: TB01: How many holiday trips did you take in the last 12 months?
Note: Totals may not add to 100% due to rounding
Number of Respondents: N - 2057: Beijing - 405, Shanghai - 420, Guangzhou - 410, Chengdu - 408, Xi’an - 414
Guangzhou = Travelholics
2%
49%
71%
1% 11%
48%
48%
29%
99%
89%
52%
0%
20%
40%
60%
80%
100%
Frequent (3+) 2 Trips 1 Trip

22
More Respondents in Guangzhou Used Online Methods
to Search for Travel Information Than Other Cities
37%
30%
54%
45%
8%
44%
23%
65%
41%
4%
26%
19%
27%
19%
2%
21% 20%
12%
16%
3%
0%
10%
20%
30%
40%
50%
60%
70%
Beijing Shanghai Guangzhou Chengdu Xi'an
Air Tickets Hotels Travel Packages Train
Note: HP02: When you planned or gathered information for your holiday travel in the last 12 months, how did you
research any of the following travel components?
Number of Respondents: N – 2057; Beijing - 405, Shanghai - 420, Guangzhou - 410, Chengdu - 408, Xi’an - 414

23
Tudou and YouKu

24
Taobao is the Biggest Player in the China C2C
Marketplace; Has a Market Share of Over 80%
Taobao is stepping into
travel distribution, with
airlines like Hainan
Airlines opening shops
on the online retail site.
Other players in the C2C
space are
Dangdang.com and
Joyo.com, which is
owned by Amazon.

25
SEO/SEM in China: eLong Keyword is Hijacked by Ctrip

26
Meta Search in China

27
China Travel Marketplace – Key Findings
• The China travel market is huge! However…
• International travel is state-regulated. In addition, international travel must be
purchased from government-approved offline travel agencies.
• International travel only counts for 9%, mostly to Asian destinations . UK gets 6% of
these international travelers.
• 80% of travel is sold by traditional (offline) travel agencies
• Most travel searches are offline. Online bookings for international travel = 0%
• Air segment dominated by three state owned carriers (Air China, China Eastern
Airlines, China Southern Airlines).
• Social Media is huge and growing but very different than in the West

28

29
Key Characteristics of Two Emerging Markets in Asia –
China and India
Characteristic China India
Airline Market Highly Regulated
Completely
Deregulated
Lodging Market Deregulated
Deregulated but
Construction Highly
Licensed
Airport Infrastructure
World Class; Highly
Developed
Poor; Developing
Road Infrastructure Excellent Poor
Broadband Penetration High Very Low
Credit Card Penetration Good Poor

30
Key Characteristics of Two Emerging Markets in Asia –
China and India
Characteristic China India
Global Distribution
Systems
Monopoly
All Global GDSs Are
Operational in India
Airline Ownership Government Private
Travel Retailing Chain Regulated Deregulated
LCC Airline Penetration
Very Low; Less Than
2%
High; More Than 50%
Touchless
Transactions – Air
Low; Around 5% Very High; Around 80%
Travel Management
Culture and Practices
Chinese Global

31

32
Methodology
First Indian consumer travel behavior study
Multi-prong approach
• Telephone interviews
• In-person interviews
• Email surveys
September – November 2007
• PCWI-developed survey with critical client input
Total sample = 2,524
Participant criteria
• 18+ adults
• Primary earner in SEC A1, A2 or B1 classifications
• Have traveled on holiday by A/C train, air or car/van in the past 12 months
Quotas:
• Past 30 day email/Internet vs. non email/Internet user (48%/52%)
• Domestic vs. International travel (78%/22%)

33
Internet and Broadband Subscribers in India

34
Teledensity in India, 2006 - 2010

35
Social media a new phenomenon in India but taking off very fast.
• Orkut and Facebook: 20 million users
• Orkut and Facebook: 90% of total social media sites
• 70% of internet users visited social Networks sites
• 5% of all users on YouTube are from India (globally ranked fourth)
• Social Media will be mobile based (except perhaps in urban areas)
• the number of mobile social network users in India is expected to reach around 72
million by 2014
• Introduction of 3G, “cheap” smartphones, innovative data tariff pans, reduction in
data charges

36
Almost 4 in 10 Don’t Know How/Have Interest in Using
PCs or Internet
Top 3 Factors* Preventing (More) Online Purchasing
Base: Holiday travelers
Note: (HBB10) What will prevent you from purchasing your holiday travel online or online more often?
*Reflects “Total Mentions”
Source: India Travel Marketplace: Technology and Transformation
Not Interested/No Use for
Do Not Trust/Not Reliable/Secure
Don’t Know How to Use Internet/PC
6%
37%
2%
3%
9% 5%
6%
27%
12%
Total
Lack Facilities (Not Connected/Do
Not Own Computer/Credit Card)
Too Much Time Required/Difficult/
Inconvenient to Use
Easier To Do Myself/Through Others
Prices Too High/Not Able Negotiate
Misc.
Don’t Know/Refused

37
Top International Destinations
% Trips Taken, by
Continent
0% 20% 40% 60% 80%
Africa
Asia
Europe
N. America
Oceania
% Trips Taken, by Country/City
Singapore (23%)
Dubai, Malaysia (each 11%)
England/UK/London (9%)
Bangkok (5%)
Nepal (5%)
Europe, Australia (each 4%)
Hong Kong, New York,
Thailand (each 2%)
International Destinations Visited (Past Year)
(TOTAL MENTIONS)
Base: International Holiday Traveler
Note (TB6-1) In the past 12 months, what three countries or destinations have you visited/traveled to on holiday?
Source: India Travel Marketplace: Technology and Transformation

38
Indian Total and Online Leisure/Unmanaged Business
Travel Market (US$M) and Online Share (%), 2008-2012

39
Market Share by Channel
Increase in Online Agency Share at the Cost of Traditional
Agencies
2010
10%
29%
61%
Source: PhoCusWright Inc.
2007
58%
27%
15%
Supplier OTA TTA
2007
58%
27%
15%
Supplier OTA TTA

40
India Travel Marketplace – Key Findings
• The India travel market is huge!
• Chaotic growth, not regulated
• International travel only counts for 9%, mostly to Asian destinations . But no limit to
growth (no government-imposed limits as in China)
• 25% of travel is sold online, grows by 30% annually
• Social Media is huge and growing but … low internet penetration. Social media will
likely be Mobile based

41

42
Internet Users in Brazil
Source: World Bank, World Development Indicators, 2010

43
Brazil Outbound Travel
International Travelers (9%)
Europe 32%
USA 14%
Latin America
54%
Source: PhoCusWright Inc. PRELIMINARY DATA, SUBJECT TO CHANGE

44
2,2
1,8
2,4
3,1
3,5
0,3
0,5
0,9
1,4
2,0
17,2
16,4
19,5
21,9
23,6
0 5 10 15 20 25
2008
2009
2010
2011
2012
The Brazilian Travel Market (US$B) and Online
Growth Rates (%), 2008-2012
Supplier Web Site OTA Total Gross Bookings
Brazilian Travel Market

45
23%
77%
OTA vs Supplier Direct Shares (%), 2009
OTA
Supplier Direct
Brazilian Online Travel Market

46
submarinoviagens.com.
br
40%
decolar.com.br
35%
Priceline/ Booking
6%
Expedia/ Hotels.com
6%
malapronta
4%
rapi10
2% viajanet
4%
Travelocity
1%
Others
2%
Top OTA - 2010
Brazilian Online Travel Market

47
Social media in Brazil is huge!
• (Australia and) Brazil are the top Social Media users in the world.
• 85% of Brazilians age 15 and older who accessed the Internet from home or work
computers visited a social networking site
• Main social media site: Orkut (80% market share) followed by Facebook
Brazilians spend an average of 30.2 hours/month online (work+freetime),
(worldwide average of 25.7 hours/month), about 8 hours are spent on Orkut
• Brazil is the fifth-largest nation of Twitter users and the highest percentage of users
of all of the non-English speaking countries. The top Twitter-using countries are all
English speaking: the United States leads with 62.1 percent of Twitter users,
followed by the UK, Canada, and Australia.
Source: Nielsen, comScore

48

49
Understanding this age
difference is critical for
European NTOs

50
So what are the Take Aways:
China….
India….
Brazil….

51
Thank You!

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