Wednesday, 10 April 2013

How is the sudden increase of mergers and acquisitions going to shape travel, in 2013 and beyond?

Priceline buying Kayak, AirAsia merging with Expedia, Delta investing in Virgin Atlantic, TripAdvisor buying Jetsetter….to name but a few.
This sudden flurry of company acquisitions and buy-outs in the travel space, coupled with the always-connected online and mobile consumer demonstrates how travel is moving at a faster pace than ever before.
Take these two examples. Can we identify key clues which indicate the direction the travel industry is pointing for 2013 and beyond?
Priceline buying Kayak:
Take Priceline’s unexpected move of purchasing Kayak end of last year– this immediately raised the importance of hotels and other travel related companies to have multi-channel digital marketing strategies and to not rely too heavily on Priceline or Google’s strategies.  Multi-channel and digital strategies emphasise the importance of presence on social channels (Facebook, Twitter – or RenRen, Weibo for the increasingly lucrative Chinese consumer) and that brand building through these is essential.
This acquisition also suggested that Priceline may be using Kayak as a way to bypass Google and consequently save up to $1 billion annually that it spends on Google – after all, Priceline is one of Google’s biggest customers, having spent $375.2 million in online advertising just in the third quarter of 2012.

What does this mean for Travel 2013 and beyond: The travel and hotel industry is incredibly fragmented and everyone is vying for space.  This is reflected by the big OTAs merging in the battle for supremacy.  Could this mean that smaller travel companies need to be even more innovative to compete, or should they be placing more effort in to looking at how to partner with such giants? 
Air Asia and Expedia:
What I found interesting about this was that ‘AirAsia Expedia’ appointed Kathleen Tan, who previously served as AirAsia's Group Head of Commercial and Senior Vice President in China since 2004.  Is it just a coincidence that they chose someone with a strong background in the Chinese market, or could this be a sign of things to come, suggesting and reinforcing AirAsia Expedia’s intention of placing an even bigger focus on penetrating the Chinese market.  This would make sense as the Guardian (among many) have recently reported, the “Chinese become world's biggest-spending tourists - Chinese tourists spent $102bn on foreign trips last year, outstripping travellers from Germany and the US” (www.theguardian.co.uk)
What does this mean for you in 2013 and beyond:  There has been a lot of press on the growth of China as a soon to explode huge player in the travel industry – everyone wants to know how to penetrate this market.  Should this be an area to focus your distribution efforts?

Conclusion:
The travel industry is booming.  2013 is set to have more apps, more online personalisation, more mobile friendly websites and more choice.  Smaller companies are going to have to place significant effort in building their brand through multi-channel marketing.  Ultimately, mergers and acquisitions mean more data and more reach, so as the travel giants battle it out, as a consumer, you can expect great things from travel.
The flurry in mergers could also be a reaction to the pressure and expectation the industry has around Google's travel plans.  The launches of Google Flight Search and Google Hotel Finder caused a stir, years before they even got released.  Maybe the key players ‘merging and acquiring’ is in the wake of the prospect of a big entrant like Google making waves in the online TA space.
As a competitor, expect to be integrating slick, targeted and personalised marketing into your distribution strategies. To make sure your strategy is on track for success in 2013 and beyond; make sure you attend the 9th Annual  Travel Distribution Summit,Asia 2013

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