Asian Tourists Love to Click and Go

Expect huge growth in the region's tourism through the end of the decade, thanks to rising incomes and the popularity of travel booking sites

by Xiang Ji

• View Slide Show

When 29-year-old Sabrina Fu decided to spend a week exploring the ancient temple ruins of Angkor Wat in Cambodia, she turned to Chinese online travel site Ctrip.com (CTRP). She long ago became sold on the convenience and ease of researching and booking her vacations online. "The first thing I do when I decide to go somewhere is to log onto the worldwide Web," says Fu, who works at a multinational company's Shanghai office.

With its emerging middle classes and rising disposable income, Asia has one of the fastest growing tourism sectors in the world. Still, the industry has endured some rough luck this decade, with the region's 2004 earthquake and resulting tsunami, sporadic terrorist incidents, and uncertainty about the direction of Avian flu.

Even so, plenty of destinations such as the Maldives, Bhutan, Thailand, and Cambodia saw their tourism businesses expand more than 10% last year, according to figures compiled by the Pacific Asia Travel Assn. Indeed, the tourism sector accounts for more than 10% of the economic output of Australia, New Zealand, Hong Kong, Singapore, Thailand, and Malaysia (see BusinessWeek.com, 4/23/07, "Guiding Tourists to Asia").

One-Third the Size of the U.S. Market

Not surprisingly, a number of regional online sites and established international ones hope to prosper from the Asia travel boom. To be sure, the size of the region's online travel market is still small compared to mature markets such as the U.S. Online travel sales in Asia Pacific are estimated to reach $25.6 billion this year. That's only about one-third of the U.S. market forecast, according to New York Internet research firm eMarketer.

Yet online travel in the region is likely to experience explosive growth the rest of the decade. From 2006 to 2010, India is expected to grow at 271.6% annually, while Vietnam's online travel sector is forecast to expand 202% and China's and Indonesia's in the 70% to 83% range. (The biggest markets in revenue terms outside of Japan are India at $300 million and China at $200 million.) The U.S. online travel biz, by contrast, will grow 17% on an annual basis during the same time.

Another crucial difference in the U.S online travel market, where sites such as Travelocity.com, Expedia.com, and Travelport.com are big players, is that the growth in new customers is quite slow, given most Americans already have Net access and are familiar with online travel planning.

Planting Seeds for Growth

In Asia, the race is on to capture the interest of the first-time user and build up some brand loyalty to sites. "In the U.S., companies are fighting to take over consumers. But in Asia Pacific, there is opportunity to acquire new users who are using the Internet for the first time," says Jeffrey Grau, senior analyst at eMarketer. "You want to plant the seeds now because that's going to be the future growth engine."

That's why the big international online travel sites are now ramping up their marketing and online service efforts in the region. Paris-based Carlson Wagonlit Travel, a worldwide business travel management company, has big aspirations for Asia. "The big four markets in Asia Pacific, Australia, Japan, China, and India will see their online (managed business) travel adoption rate go up to 40% in three or four years," says Nicolas Pierret, director of global accounts for Asia Pacific.