07/04/2016, by Yeoh Siew Hoon, in Distribution, Events, Featured, Mobile, Regions, Sectors, Start Ups
When asked to describe the state of the Korean online travel market in an image, Min Yoon, CEO of TideSquare, shared an image of a gladiator scene from ancient Rome much to the amusement of the audience gathered for the first WIT Seoul on March 25.
He called it “super competitive” and that things will get bloody and “it’s important not to get under the wheels of the chariots”.
Sharing air ticket sales from BSP for the first two months of 2016, Min said that TideSquare, which started as a private members’ site, while ranked #11 was showing strong growth of 50%.
According to the chart, Hana Tour, Interpark and Mode are the top three agencies in air ticket sales, each growing by 18%, 3% and 27% respectively in the first two months of the year.
Min said hotel sales growth was exceeding air ticket sales however and most encouraging of all is the fact that direct contracted hotel sales has been leading the growth in the agency’s hotel sales, which grew 115% in 2014 and 39% in 2015.
Chris Lee, managing director, hotel business of Interpark, the country’s leading e-commerce marketplace, agreed with Min’s observation that the market was getting hyper-competitive and he said the market “would not be able to quench the thirst” of the many players entering the market.
Using the drinking analogy, he said, “there are many big straws coming in and Korea’s potential travel market can’t quench your thirst”.
One big trend he sees is the rise of same day booking apps. Interpark’s Check In Now is competing aggressively against Daily Hotel. Started in 2013, it was the first company in Korea to apply time-commerce methods for hotel reservation services. Vacancies are provided at more than 70% off the usual price on the day and the company is said to be extending their service from hotels to restaurants.
Late last year, it received an investment from Silicon Valley’s Sequoia Capital, marking the third investment for Daily Hotel following Bon Angels (a venture capital primer) backing of the company earlier this year. It was Sequoia’s second investment into a Korean company with the first being Coupang.
In this report, Shin In Shik from Daily Hotel said, “Using the investment O2O as a base, we plan on pursuing a new mobile commerce market. The Korean launch will provide an accelerated assessment of the business model and upon verification will be launched globally.”
Lee said Interpark would also be launching its travel business globally.
Mobile is a strong theme in South Korea. According to data presented by Sina Ko, managing director, South Korea of Criteo, 10% of South Koreans have five and more devices while 14% have four and more devices. “In Korea, the preference for mobile devices is growing with mobile share of voice growing each month,” she said.
This is why Min reiterated his priority this year would be to pursue mobile. “It’s just beginning and this is going to change the market.”
Charlie Park, general manager, Hotel Team of Hana Tour, said that the good news was the overall online travel market was growing. Sharing his company’s FIT report, he said online growth was running at 50%, mobile share of business was 30% and it was seeing 20% air and hotel cross-selling share.
While Korea’s inbound tourism had been hit by the slowdown in the Chinese market in the last few months – China accounts for a third of all visitor arrivals – it was ranked 20th in the world in terms of ranking and the potential was strong. This is why Hana Tour, a dominant outbound player, is expanding into inbound and was building its own hotels.
Having said that, he echoed the sentiment of increased competition and he said, “The rich will get richer and the poor will get poorer”.
Min meanwhile is putting his bets into three new segments – meta search, private accommodation and tours & activities. He’s an investor in Allstay, the first Korean hotel meta search product, BnbHero, the Seoul-based startup for rooms and apartments, and BeMyGuest, the Singapore-based tours & activities provider.
Min said that meta-search was beginning to take off in South Korea. Naver, the country’s dominant search engine, is getting into travel and has partnerships with Hotelscombined and Booking.comtrivag and Skyscanner is also getting traction. “They do no advertising but have been able to do well with social media and user experience,” he told the audience at WIT Seoul.
Experts believe the advent of meta-search will increasingly move travel consumers online – currently, the majority of Koreans search online but prefer to book offline with traditional travel agencies. Search solves a consumer problem and hopefully will lead them down the funnel to purchase as more meta-searches now offer facilitated booking.
Indeed, TripAdvisor switched on its instant booking feature the week of WIT Seoul and Edward Jeong, senior manager, said the review site was expanding healthily in South Korea. Its brand awareness had been low but in the last three years, through a strategic partnership with Samsung, as well as link-ups with local brands such as Naver and Asiana Airlines, brand awareness was rising.