This latest edition of PhoCusWright’s Asia Pacific Online Travel Overview Third Edition addresses the Asia Pacific (APAC) region’s fragmentation a defining characteristic of this area of the world where economic performance has differed considerably with growth rates exceeding 6% in China and India at one end and a 4% decline in Japan and Malaysia at the other. We project that the overall slowdown will continue for the balance of 2009, especially for those countries dependent on the U.S. economy. Overall there remains a great deal of business promise across the region which has a positive impact on the travel industry, especially online.
While the economic downturn will lead to a 6% decline in the overall APAC travel industry in 2009, the online market will grow by 17% and will be well positioned to counter the recession by 2010. Countries like China, India and Australia will be the first to emerge from the downturn.
There are some significant market differences to consider when comparing this region with the U.S. or Europe. Market fragmentation, both on the supply and the demand side is one. The U.S. is characterized by a large, more homogeneous travel market, whereas the European Union (EU) is somewhat fragmented in the hotel and accommodation segments, but is deregulated on the air side. Its market integration has improved, however, due to its common currency. APAC’s regulatory environment differs starkly from the other regions: In the U.S. and EU, airlines are afforded a great deal of latitude in operations, while in APAC the degree of control and regulation varies considerably from one nation to the next. In contrast to European nations, where the entire EU market is available to low-cost carriers (LCCs), each APAC country negotiates airline rights individually.
Cultural differences both within and across APAC countries contribute to a technology climate characterized by a broad range of products, services, and distribution and marketing strategies. Australia, New Zealand, Korea, Macau, Taiwan and Hong Kong all have 60-80% Internet penetration, but these countries have smaller online travel markets than China, Singapore and India, which have comparatively lower rates of Internet penetration. The difference is attributed to the variation between consumer types, cultures, income groups and specific travel patterns, which differentiate the addressable market from the overall market.
Despite the economic slowdown, the results of which were only felt in the fourth quarter of 2008, the APAC travel market grew by 6% in 2008 to US$215.1 billion. The APAC online travel market will buck the global trend and grow from $30.5 billion in 2008 to $35.7 billion in 2009. Internet sales will continue to grow by over 20% per year through 2011.
If we look at individual markets the following brief headline descriptions apply:
* China - Under Pressure
* India - Promising Outlook
* Japan - On the Decline
* Australia / New Zealand (ANZ) - Managing the Challenge
* Singapore: Likely to Endure
We also consider the following upcoming markets to watch:
Without question, the recession has taken its toll on the Asia Pacific travel market, but APAC has still fared better than most other markets. The future of the APAC market depends in large part on the ability of governments, suppliers and intermediaries to capitalize on social diversity and region-specific opportunities that have yet to be fully tapped. Unlike other markets, APAC lacks traction in major segments like cruise and car rental, despite its large coastlines and easy ground access for travel within each country. However, major impediments to growth, such as lack of infrastructure and rigid regulatory structures, are now being addressed in most APAC countries. With improvements in these areas – and continued innovation and advances in technology – the Asia Pacific region will be better poised to surmount the challenges of the current economic climate.