The online travel market in South Korea is taking off and big opportunities now exist for meta search and OTAs, according to Min Yoon, CEO of TideSquare, which operates a premium travel service for premium card members, Privia Travel, and an online travel mall.
Yoon, who started his career as an e-commerce strategy consultant at the inhouse consulting arm of Samsung, and then managed online marketing at Korean Airlines and later premium marketing at credit card company, Hyundai, said low cost airlines had changed the market.
This month, he said, more than 50% of domestic air market share was dominated by low cost airlines. “Mega carriers are losing their market share in short haul market very fast so they are focusing on direct sales more and more to compete with LCC.”
On top of that, with Korea the fastest and biggest smartphone market in the world, mobile was going to change the game. “Considering these trends, meta search engine can be the next thing.”
Yoon said he started up TideSquare for the simple reason that he loves to travel. “I travelled as a backpacker since I was a student so I could find many ways of how we can travel efficiently. Sometimes people fly with LCC and stay in Four Seasons, or fly in first class and stay in business hotel. Customers’ needs are becoming very complicated.
“The Korean travel market is sky rocketing especially the FIT market. People are looking for simplicity and usability to book their holidays and that’s what we focus on so that customers feel more comfortable when they access our services.”
TideSquare started life three years ago as a marketing company, handling market projects for luxury hotels and luxury private clubs. “Then, one of the largest credit card companies in Korea decided to outsource its travel service and TideSquare joined the project. We now have two business domains, (offline) premium travel service for premium card members and an online travel mall.”
Building an online travel site from scratch wasn’t easy, said Yoon. “In the beginning, TideSquare borrowed all the booking systems from our partners. It does have limitations on how we express our philosophy of usability, marketing activities and so on.
“During the recent one-and-half years, it was a kind of battlefield here in my company to build up an all-new homepage, new air booking engines, new hotel booking engines and all the infrastructure systems.”
From a one-man show, TideSquare now has 160 people on its team. “Building up right culture was the biggest challenge and it still goes on.”
TideSquare now generates 15,000 to 20,000 bookings per month and US$120 million in transaction revenues (US$10 million revenue in terms of Korean accounting law) in year 2012, and 300,000 visitors per month.
Yet Korea remains a very traditional market dominated by brick and mortar giants, which seems to be at odds with its image as the most connected country in the world.
“Yes, the market is different here, Korean travel agencies compete aggressively with different and various types of discounted air fares in the market. OTAs need to build quite complicated booking systems so their entry has been somewhat delayed in Korea as opposed to other markets in Asia.
“And actually traditional brick and mortar giants are also strong in online as well, probably because IT is everywhere in Korea.”
Another new trend is the emergence of IM services like Kakao, which is now one of the major communication methods in Korea.
“Many people spend a lot of time in the app. Kakao has enormous points of contact with customers with various apps such as SNS, social games, mobile shopping etc. There seems a lot of opportunities in this space. People use maps, search for information, communicate, take pictures and it’d be interesting for a travel company to work with Kakao. But it doesn’t have an integrated travel application although I believe it’s only matter of time.”
Yoon said that although the Korean online travel market started a bit late compared to its neighbours, “it seems like it is on track now. We should keep an eye on the growth of some OTAs such as Interpark. I believe after a few years, those OTAs can become big giants in the Korean market.”
• Min Yoon will be speaking at the WIT Bootcamp, Oct ober21, sharing the latest trends in the Korean online travel market.