East Meets West: Australia and New Zealand

East Meets West: Australia and New Zealand

Australia and New Zealand combine to form one of the standout travel markets in the Asia Pacific region. Even in the midst of a global recession, PhoCusWright’s Asia Pacific Online Travel Overview projects Australia/New Zealand’s (ANZ) online travel market will burgeon to US$7.6 billion by the end of 2009 with a growth of 23%. That is a big two digit number, especially in a year when larger markets such as the U.S. are experiencing a decline of 2%. The online travel market of ANZ resembles a western market in all but geography and population. It can easily be compared to the U.S.—if only it had a larger domestic market. Let’s review the characteristics of the ANZ travel market:

  * Culturally, ANZ comes the closest to its U.S. and European counterparts, with the spoken language being English. This is a major advantage for an Asia Pacific (APAC) country where doing business is difficult due to language and cultural barriers.
  * With a population base of just over 25 million, the country easily boasts nearly 90% Internet penetration.
  * Part of the first generation of online travel agencies originated in Australia. Travel.com.au launched in 1997, around the same time as Expedia. It was acquired by one of the largest OTAs in Australia, Wotif in 2007.
  * Benefiting from Australias interdependent economy with New Zealand, the low cost carrier Virgin Blue was among the first to gain traction in APAC before the long line of LCCs that followed.
  * Qantas became one of the first traditional airlines in the APAC region to simplify its fares in 2005. Australia is a country with high Internet sophistication and increasing broadband penetration.
  * With high credit card penetration rates, ANZ is open to innovative online products. Credit card adoption is one of the biggest impediments to online bookings in almost every APAC country except ANZ.
  * It is the only APAC market with an online corporate travel segment. Online corporate travel is touchless in ANZ and self booking tools and expense management tools are easy to find. Some domestic multinationals benefit from 99% touchless online transactions.
  * As a small and culturally isolated market, local innovation has proven successful. Local OTAs like Wotif and Webjet realized this and are finding success.

Recent statistics defy the odds. Qantas has seen increasing traffic in the past two months. The Australian lodging market actually grew in the last year with a significant amount of bookings completed online. With the Australian government’s pledge for aggressive expansion of the tourism industry, and a bounty of natural wonders, Australia/New Zealand is a market to watch.

For more detailed analysis, PhoCusWright’s Asia Pacific Online Travel Overview includes reviews of each major Asia Pacific market and projections for recovery and future growth.