An Interview with Maria
Taylor, Regional Vice President of Southeast Asia at TravelClick
Maria Taylor,
Regional Vice President of Southeast Asia at TravelClick
Right now, we are all still talking about the rapid growth of
China and to a lesser extend India, Russia and Brazil under the collective
banner of BRIC. Their evolution into capitalistic territories has presented
countless lucrative prospects for hospitality organizations both big and small.
But there should be a fifth name in this acronym which is often overshadowed
despite what's happening on the ground and despite it being the fourth most
populous country in the world.
From what I've read of
recent, the archipelago nation of Indonesia has as many opportunities for the
hotel industry as there are islands (and then some). Then factor in the
astounding growth throughout the rest of Southeast Asia and it's the equivalent
of a total paradigm shift in global travel.
To help shed some light on
the situation so that you can stay abreast of this trend and so you comprehend
any potential impacts on your business, I was eager to sit down with Maria
Taylor, who was recruited as Regional Vice President of Southeast Asia for
TravelClick back in January as part of the company's long-term strategy to ramp
up its Asian presence.
Ten years ago, this
appointment wouldn't lift a single eyebrow, but now this region is perhaps the
most dynamic 'theatre of war' in the world for hospitality. Indonesia, and
other nearby territories like Thailand, Vietnam and the Philippines, are
shifting from third world to second and then to first so quickly that you
simply must have a cursory understanding what's going on.
Our interview started with
Maria laying the groundwork for some of the idiosyncrasies of the country and
how travel has already been affected. The first thing you should know is that
Indonesia is bolstered by a diverse minerals and natural resources industry,
helping transform the already thriving middle class into a full-fledged
bourgeoisie with considerable travel influence. And as an island nation, that
means lots of airlift (and far less rail, bus or car), both domestic to quiet
vacation areas aside from the already well-known ones like Bali and
internationally with second-tier cities like Surabaya and Bandung now handling
similar traffic levels as Soekarno–Hatta International Airport in Jakarta.
With Indonesia leading the
pack, growth in Southeast Asian travel easily trumps that of North America and
Europe combined! And even more surprising to my ears was when Maria told me was
that most of this travel is internal to the continent. For example, 80% of
visitors to Singapore are from Asia, and that percent is rising year-over-year,
with most neighbors following a similar pattern.
In many ways, the
proliferation of the travel industry in Indonesia echoes that of China nearly
two decades ago, with recently opened airlift to secondary markets paving the
way for vast tourism expansions both in terms of number of incoming travelers
and hotel development. However, a key difference is that while the archipelago
has some 2,500 independent properties to serve domestic customers, it also
already has its own major chains to almost exclusively cater to the same
audience.
One of the main reasons
why the multinational brands weren't able to establish a foothold prior to
these local chains firmly entrenching themselves is that there was, and still
is, a profound technological barrier. Credit cards only have upwards of a 5%
penetration of the total population, making for a monetary system that is
incompatible with the standard global practices of these hotel conglomerates
and most online travel agencies. Traveloka is the country's dominant OTA with
specific functionality to meet this local criteria of debit card-based
transactions. Moreover, alternate lodging companies like Airbnb haven't been
able to build a following partially for this reason.
The other key barriers of
entry for the multinational chains, OTAs and Airbnb pertain to the unique
cultural differences in Indonesia. Firstly, most families, regardless of
income, live in modest, multi-generational dwellings. So, unless grandma and
grandpa agree to share their cozy bedroom with a random stranger, couch-surfing
websites aren't going to get many takers. Next, and circling back to the
'modest' adjective thrown in above, Indonesia is hardly a 'five star' market,
with most of the domestic travelers preferring midscale accommodations and the
luxury tier only slowly coming into its own.
Thirdly, as a nation late
to the worldwide tech boom, it has in essence skipped the landline and desktop
phases of this evolution, proceeding straight to mobile. Blackberries were the
first devices to make an impact and now even the poorest person has a
smartphone. In fact, an Indonesian is now more likely to get a second cell
phone than to purchase a laptop computer. And this quality is having weird
behavioral side effects, such as internet speeds trickling to a halt during
popular soccer matches because all 250 million people are live-streaming the
game and consumers not caring an iota about a website if it isn't wholly mobile
friendly.
Lastly, if you are to
fully grasp what's happening in Indonesia, you must be respectful of its Muslim
traditions. At the very least, there are dietary concerns (Halal) and religious
holidays to earmark. For instance, the nadir of the tourism season is during
Ramadan, but then there is a huge spike in travel for the two weeks immediately
thereafter.
To finish off our
conversation, Maria touched on a few other destinations and some of their own
particular travel trends. While there are still a few hurdles to jump, Cambodia
has been receptive to the multinational chains with lots of new resort
construction and hotel groundbreakings. Myanmar and Vietnam are following suit
but trade and visa restrictions are dampening capitalism's full onslaught in
these territories. For the latter, online room sales still only account for 20%
of total revenues, but this too is on the upswing. Finally, while tourism in
Malaysia was badly hurt by the Malaysian Airlines tragedies a couple years ago
because this was the country's primary flight provider, recovery is well
underway. Like Indonesia, Malaysia has lots of mineral wealth to act as a
foundation for the economy, and it borders many other countries to make it a
natural hub for travel.
After my delightful chat
with Maria Taylor, I had to lean back in my chair to full digest some of the
profound ideas she expressed. To me, I can't help but liken the current
Southeast Asian travel economy to the Wild West – there's lots of development
with no standard set in stone or clear direction as to what that standard will
be. Oftentimes, the most fruitful innovation occurs on these frontiers and
where the growth is. As Indonesia – and all of that part of the world – is in a
full-on hospitality boom, so too must we all look in that direction to know
where our industry lands.
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