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Navigating the next phase of travel and tourism: Alliances and collaborations

The seventh part of Travel Daily Asia's series exploring the growth of Asian travel, in association with the STB's TravelRave 2013

More often than not, businesses, organisations and governments working together achieve far more than separate entities who attempt to go it alone.

It is certainly true in the travel industry and during his recent closing speech at the 13th World Travel & Tourism Council (WTTC) Global Summit, David Scowsill, president and CEO of the WTTC urged the private and public sector to work together to ensure that the travel and tourism industry stayed ahead of the growth curve.

David Scowsill, president and CEO of the World Travel & Tourism Council (WTTC)
David Scowsill, president and CEO of the World Travel & Tourism Council (WTTC)

Such collaborations are especially crucial in Asia as the tourism and travel sectors continue to grow at a rapid rate.

At the by-invitation Asia Travel Leaders Summit (ATLS) 2012, a joint-study by STB, The Boston Consulting Group (BCG) and Visa revealed that by 2020, two out of every five travellers are expected to be Asian and will account for nearly half of global tourism expenditure.

China’s outbound travel market is expected to make 100 million trips amounting to US$300 billion in spend by 2020. This of course means more travellers, flights, jobs, revenue and importantly, more consumer needs.

So in a diverse market like Asia, it is critical that businesses are equipped with a deep understanding of the region’s multi-faceted environment, adopting sensitivity to the specific needs and cultures of local markets. And the best way to do this is by collaborating and forming alliances to leverage specific skills, networks and expertise.

This strategy allows all involved to develop long-term strategies and initiatives that can drive sustained tourism growth in Asia.

Industry alliances

Intra-industry

A prime example of collaboration is found within the aviation industry, where airlines have started forming alliances to leverage the growing opportunities in the Asian travel market and increase their footprint in the region.

To address the challenges of providing flights to meet the increasing demand in air travel, tailoring offerings to a diversifying clientele, maintaining operational standards and efficiency among others, Asian carriers have been increasingly seeking commercial partnerships with other airlines to ensure their long-term viability.

While Asian airlines have traditionally taken a more conservative approach towards alliances compared to their Western peers, there has been a push for new generation partnerships in recent years due to factors such as an increase in airline revenues in large markets like India and China, as well as a surge in the use of e-services for booking, accommodation and tour packages.

One example is Air New Zealand’s recent securing of a rare partnership with highly independent Cathay Pacific, which signals a shift from its previous hands-off approach to alliances.

Even Singapore Airlines, which has traditionally preferred to access markets on its own mettle to ensure brand and experience consistency, is now taking baby steps towards alliances such as the development of their partnership with Virgin Australia.  It led to the ‘Visit Australia Airpass’ in April 2012, which offers travellers going ‘Down Under’ more destination options beyond the main cities, courtesy of Virgin’s strong domestic network.

The alliance between Qantas and Emirates in particular, has set a prime example of the possibilities in aviation when two giants meet.
This collaboration shows how airlines are increasingly finding partners that best suit a specific need or strategy compared to a generalised approach offered by established global marketing alliances.

In Qantas’ case, the airline not only gains a virtual network, but is also able to refocus its efforts on competing more effectively in the Asian market.

Alliances also provide a unique opportunity for airlines looking to gain first mover advantage in the growing Southeast Asian market.
All Nippon Airways’ investment in Asian Wings Airways Ltd (AWA) – a small Yangon-based carrier – is one example of how an airline can do so in order to increase its market share.

For AWA, this results in a win-win situation through which the fledgling airline gets to benefit from improvements in its operational and on-time performance, and expansion into markets outside of Myanmar.

The impending implementation of the open skies policy in 2015 is also impacting the increasing needs for alliances within the aviation industry in ASEAN.

While this offers travellers more travel options, it means airlines need to collaborate in order to avoid offering similar packages to travellers which would simply be a competition of attrition.

Inter-industry

One of the most notable joint-ventures in the travel and tourism industry is that between Expedia and AirAsia in 2011.

It exemplified how organisations can leverage each other’s strengths as the partnership gave Expedia exclusive distribution rights beyond AirAsia.com, providing it with access to the airline’s flights and packages throughout Asia Pacific. This in turn gave Expedia a competitive advantage on long-haul destinations to and from the region, while AirAsia benefited from Expedia’s vast online reach.

Beyond leveraging each other’s strengths, inter-industry alliances also provide the parties involved with a more in-depth insight on trends in the partnering industries.

Earlier this year, Thailand-based regional hotel group Dusit International partnered with China-based real estate developer Chanzhou Qiaoyu Group to establish a joint venture hotel management company to spearhead Dusit’s continued expansion in China, which, according to STB’s market insights, is a prime destination for both leisure and business purposes now and increasingly so over the next decade.

The resultant company, Dusit Fudu Hotels and Resorts, is looking to develop the Dusit brand throughout China and expects to operate at least 30 properties within China over the next three years.

For the Chanzhou Qiaoyu Group, the partnership offers them insights and reach into ASEAN markets, many of which are favoured destinations for Chinese travellers.

 

Aviation Outlook Asia
Airline partnerships and alliances which leverage the growing opportunities in Asia continue to be a pertinent discussion topic at TravelRave event, Aviation Outlook Asia

Industry collaboration

When it comes to addressing common challenges and finding effective ways to ensure sustainable growth, collaborative efforts could bring positive impact to the industry in the long run.

The annual TravelRave, Asia’s most influential travel and tourism festival which brings together business events within the entire travel ecosystem, offers an unprecedented platform for industry leaders to discuss pertinent issues and develop solutions to collectively address industry-wide issues.

Following the Asia Travel Leaders Summit (ATLS) 2012, leaders re-convened in working groups involving representatives from companies such as VFS Global Group, TAUZIA International Management, and Patina Hotels & Resorts to explore concrete ways to cooperate on strategic human capital and executive development issues.

These initiatives are part of the vision to steer ATLS as a platform for action-driven dialogue, harnessing opportunities while addressing pertinent industry-wide issues in Asia.

Zubin Karkaria, CEO, VFS Global Group and member of the executive board, Kuoni Group asserts that the right partnerships provide access to invaluable cross-sector insights and expertise while driving dynamic business growth in the longer term.

“Kuoni has been successfully leveraging partnerships across the region with tourism boards and industry stakeholders to create specialised and exclusive products targeted at various traveller segments,” he elaborates.

Furthermore, recognising the importance of engaging Gen-Y talent in sustaining industry collaboration, the Singapore Tourism Board will be partnering ITB Asia and Nanyang Technological University at TravelRave this year to curate a for-students-by-students initiative.

Held at ITB Asia, the conference, ‘Future Leaders- Building Quality Tourism Careers’ is aimed at cultivating future talent for the travel and tourism industry in Singapore and will be a platform that brings together local students with the industry to bridge the gap between job-seekers’ aspirations and what the industry has to offer as employers.

Madhavan Menon, managing director of Thomas Cook (India) Ltd and Asia Travel Leaders Summit attendee agrees with this approach to engage Gen-Y talent.

He sees Thomas Cook (India) Ltd’s membership in the post- ATLS working group as a meaningful endeavour that equips industry leaders with fresh new insights and key learning opportunities in collaboration with highly reputable institutions.

“Looking forward, it would be ideal to develop similar programmes that target the junior and middle management levels too,” he adds.

TravelRave: Unlocking invaluable opportunities and insight

It is clear that partnerships are the order of the day and by gathering industry professionals and business leaders from the entire spectrum of the Asian travel and tourism industry, TravelRave generates strategic networking and business opportunities while setting the stage for potential collaboration on important areas of growth.

At Aviation Outlook Asia 2013, the topic of ‘Profitable Partnerships’ will be covered by speakers such as Dermot Mannion, deputy chairman of Royal Brunei Airlines as well as Anand Lakshminarayanan, divisional vice president route planning & economics of Emirates Airline. The Asia-Pacific Tourism Destination Investment Conference (APTDIC) will provide a platform for business collaborations through the meeting of potential investors and will delve into the best practices in master planning for upcoming tourism destinations and how the investment potential in Asia can be unleashed.  At ITB Asia, ‘The Trade Show for the Asian Travel Market’, offers a platform for more than 750 buyers and 8,500 trade delegates searching for new business opportunities in Asia, and meeting potential partners from across the world at the exhibition that features a full range of travel products and services.

Meanwhile, the Asia Travel Leaders Summit will see the Asian travel and tourism industry’s leading minds come together to collaborate on and address pertinent industry-wide issues, such as consumer insights and innovation. These efforts will culminate at the TravelRave Leaders Gala which celebrates the distinguished leadership and business minds in the Asia travel and tourism industry.

These are some of the events in an exciting line up of eight quality events under the TravelRave umbrella. TravelRave will take place from 21 to 25 October 2013 providing a dynamic platform for business leaders and industry professionals to share knowledge and insights, explore business opportunities, and celebrate Asian tourism at its best.

Find out more

Get connected with the best travel minds ahead of TravelRave 2013, the most influential travel trade festival in Asia. Follow us @TravelRaveSG or visit www.travelrave.sg for the latest industry updates.

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