ArticleHUBS1 is providing more distribution channels for hotel industry during the 2010 Expo (3)
Q: Is there that same transparency that going from your company to the travel agency?
R: Yes. We do not interfere any transactions. All systems are touch-less processes, so whatever supply displays, it shows on the demand side such as travel agencies’sides, corporations, whoever uses our travel products.
Q: You guys got a lot of experience in the Special Olympics, what did you learn there that is now carrying over to bookings for the Expo?
R: The Special Olympics is very special, particularly athletes are different, and their family members. I think what we learned was it was the first time in the Special Olympics history that we provided web-based reservation systems, allowing athletes and their family members to know before they came here where they were going to stay and how they were going to access to the stadium, and what’s the transportation and all these information. I think part of the sensitivity is because you got the 163 countries, even though the scale is much less than the Olympics or the Expo, but the diversity is quite there. In terms of cultural sensitivity, how do you arrange the accommodation, religion? You don’t want to put some different religions together, as they might have conflicts if they live next to each other. So those kinds of things are quite different, and that can be applied to the Expo as well. Before we provided the web platform, it was initially started with the call center, even though we are multilingual, it is still difficult for people to describe their accommodation information on the phone. So that’s why the Internet really changes many industries, including ours. Then once we launched the web platform, instantly you see the phone call drops. And a lot of communication is so easy, and they can book the rooms for their family and friends who come to China in a real-time fashion, that’s quite different in the Special Olympics history before in terms of the hotel booking.
Q: Which hotels have you guys signed up in Shanghai? Give me a percentage, 90%, or 50%.
R: I think we have signed up almost all the star-rated hotels in Shanghai about 700 hotels, and the next step is how we get on those social hotels, 3000 hotels. They provide about 125,000 beds. How can we help them to get on the platform like us? In a regular business environment they can’t afford to join in those travel websites, because those travel websites charge high commission and for those social hotels, their rates are really very low. So since we’re less labor intensive and the incremental cost is very low. So we can have them on our platform and promote their products. And this is critical, because we are talking about 500,000 beds; almost half of them are from those social hotels. So that’s the key, how do we get those social hotels onto the platform? Otherwise, people in Wuhan, in Shenyang, or even in New York, how do they know if I am willing to want to stay in bed-and-breakfast hotel but I can’t find it. That’s the key to solve this demand of visitors and suppliers. Hopefully, we can get the government support to help the tourism committee, to help those social hotels get on the platform. That’s very important to the successful 70 million people who are going to visit here.
While the Expo will likely change the face of tourism in Shanghai, where does it go from here? The details are coming up next…
Although Beijing’s five-star hotels reaped profits in August during the 2008 Olympics, the financial windfall sputtered out the rest of the year. In fearing the same situation, Shanghai hoteliers are looking for more distribution channels and keeping an eye on the bigger market brought in by the Expo.
Q: Let’s talk a little bit about what happens post-Expo. Where do you see the tourism industry going? What do you see happening to all those hotels?
R: Overall, I’m very optimistic about the Chinese travel industry. This Expo is just a catalyst, I mean, this industry, as I just described earlier, lacks of distribution infrastructure, like the one the US had, the US had built this infrastructure 50 years ago. We did not have this infrastructure, so we want to take this Expo as a catalyst, opportunity, build the distribution infrastructure, allow the thousands of hotels, even those social hotels, can benefit from the booming travel demands. And if you look at the emerging domestic middle-class incomes, that’s a large population that potentially can be 200-300 million people which is almost the entire US population. How do we help them to find right travel products and avoid this supply-demand information asymmetry situation? That’s why this infrastructure comes in. and I think the post-Expo, once for the Expo we build this infrastructure, post-Expo can benefit a lot of players along the value chains of this travel industry, the travel agencies, and pop-and-mom shops. A lot of travel agencies, because the Internet comes up, are traditionally losing their business, and this platform right now sort of puts them back on the road, continuing to be able to compete with other online travel agencies.
Q: Yes. They were really in the past not able to keep up with the advancement of information?
R: Exactly. They lack resources, such as financial and technological resources. And for the market, for a healthy market, you don’t want to see only one or two travel agencies online or offline dominating the market. Imaged if the US only has the Expedia or travelocity.com two companies what consumers’choices are you going to have? So the government can break up those companies, like we did in the AT&T business. But the same thing in China right now and you know you don’t have many choices when you travel to book hotels. I’m talking about booking channels. So that’s not good for consumers not good for the supply hotels. This platform built is really helpful for the post-Expo. All the hotels can have one-stop marketplace where they distribute their products, inventory, and services to thousands of channels. And consumers can also benefit from all these varieties of choices and channels, versus if you only have two choices.
Q: Do you see too, because of this and because of the way China is advancing, do you see China’s tourism and hotel industry continually growing over the next ten years?
R: Yes, I think right now even though we are affected by the financial crisis and to certain degree the swine flu that really deter some inbound travel to china, but in the long run I think particularly this Expo as a catalyst with the post-Olympic effect which is you know getting china exposure worldwide. The mini-economy will rebound I am telling if china is going to be the top travel destination, get a lot of attentions, and probably is we are ready to accommodate these people domestically and internationally. Particularly if you look at China’s national holidays, hundreds of millions of people moving around. Some need hotel accommodation and some do not, but the infrastructure in the hotel industry was not there and hopefully through this Expo it is going to be there and it is going to benefit all the companies along the value chain.