Maket Research (2019): Technology changes face of Vietnamese tourism (part 2)

Online travel platform is an inevitable trend and continually developing
  • The report on Southeast Asia’s e-economy carried out by Google and Temasek Holdings in 2018 forecasted that the online travel market revenue in Southeast Asia would increase from 30 billion dollars in 2018 to 78 billion dollars by 2025. Vietnam would account for about 10% of this figure, equivalent to nearly 8 billion dollars.
  • Online travel agencies (OTAs) from around the world and from Vietnam are popular in the country, especially in accommodation and travel, such as Booking, Agoda, Traveloka, Expedia, Vntrip, Ivivu and others.
  • According to the Vietnam E-commerce Index 2018 (provided by Vietnam E-commerce Association), the booking rate through OTAs increased by 30% in 2017, online travel revenue in 2017 increased by 50% over the year 2016.
  • In recent years, foreign OTAs have been going further to please Vietnamese tourists when providing a website version in Vietnamese and allowing payment making in Vietnam dong. Some foreign OTAs have opened representative offices in Vietnam such as Agoda, Booking and Traveloka in an effort to lure more customers. Others arrange staff in charge of the Vietnamese market such as Expedia. Foreign OTAs which have big advantages in technology, marketing and operating experience are dominating the Vietnamese online tourism market. They are occupying about 80% of the market.
  • There are about 10 domestic online platforms on tourism such as Vntrip, Ivivu, Gotadi, Mytour, Chudu24, Tripi, etc, however, these platforms only account for 20% of the travel demand, the remaining of the market is occupied by the foreign platform. Not only international visitors to Vietnam, but also local tourists use the services of foreign providers.
  • Foreign OTAs also have disadvantages which can be exploited by Vietnamese OTAs. Foreign OTAs only accept online payments with international payment cards. Some others accept later payments, but ask customers to enter card information for booking. The customer services favored by Vietnamese, such as giving consultancy via phones and accepting different modes of payment (internet banking transferring, cash collecting point, onsite payment) have been developed by domestic OTAs. Domestic OTAs also provide specific services, for example, free bus to meet and see off clients at the airports.

  • The rapid development of online travel platforms presents many benefits. These platforms are likely to attract and serve more tourists by increasing the number of rooms and providing different experiences. The platforms also have more promotion programs due to larger numbers of products being introduced to the market. E-commerce exchanges also provide more choices to tourists, increasing competition in accommodation and services at a destination.
  • Most of hotels in Vietnam are cooperating with the OTAs in order to maintain regular and constant visitor flows. OTA is an effective marketing channel, by appearing in such popular websites, the customer hotel identification will be improved. In addition, when partnering with OTAs, hotels could save an amount of online marketing costs.

* More information about two popular domestic OTAs targeting Vietnamese tourists:

  • Vntrip and iVIVU are considered as a good example of emerging domestic OTAs. Though established after the giant foreign companies, these two local OTAs are expected to grow to a level where it is able to compete with Booking and Agoda.
  • Vntrip, which was founded in 2014, owns and operates one of the largest website booking system for hotels in Vietnam. It has a network of more than 11,000 hotels in Vietnam and over 1 million hotels in 200 other countries. On September 2018, Vntrip.vn has announced that it has completed the merger of Atadi.vn, one of the leading providers of cheap airfare hunting website in Vietnam that allows users to search, compare and book tickets from multiple airlines on the same interface. The company already raised its third round of funding from Switzerland’s IHAG Holding which saw its valuation go up to $45 million in August. Before that, Vntrip had previously secured two rounds of funding, including US$3 million in a Series A round from FengHe Group and Hancock Revocable Trust in 2016, and US$10 million in a Series B round led by Hong Kong investment firm Hendale Capital in 2017.
  • Launched in 2009, iVIVU.com is a member of Thien Minh Group which currently owns well-known brands in the market such as Buffalo Tours, Hai Au Aviation, Victoria Hotels and Resorts. Offering a wide range of hotels and types of rooms worldwide, with around 2,500 hotels in Vietnam & more than 30,000 international hotels, iVIVU provide useful advice about the tour or the hotel that guests need. iVIVU not only sells hotel rooms, but also tours and air tickets. This OTA often launches Free & Easy service packages (combined service of air ticket & hotel room) with good prices. Mr. Tran Trong Kien, chairman of Thien Minh Group described that the application understands automatically what a customer needs, and accumulates knowledge relevant to a range of guests. The more customers use the services, the greater understanding the application gains. The application can suggest suitably priced schedules that meet the customer’s requirements and the best time to travel, among other things.
Free & Easy packages are flourishing
  • Free & Easy tour service which arranges air travel tickets and hotel bookings without tour itineraries and tour guides is gaining popularity in Vietnam. Package tours are a good choice for the elderly, but Free & Easy tours are very popular with the young who need not depend on tour schedules and can afford a reasonable rate. The age group of 17-37 yrs is the most popular customer of this package.
  • According to Ms. Nguyen Vi Van, regional director of iVIVU, the package tour is becoming less popular because of the tight schedule. If self-organizing the trip, travelers have to spend a lot of time to hunt for cheap airfare, hotel booking, car reservation, etc. With Free & Easy, customers pay only once for full package and have a better price, hence they are very interested in it.
  • Van also said: “The result of the first trial package to Phu Quoc island made us very surprised. In the past time, we sold about 50 nights a month for this resort, but when launching Free & Easy package, the number increased to 300 nights.
  • Free & Easy tours are mostly provided by local agencies. This type of tourism package include not only domestic but also foreign destinations.
  • Not just tourism agencies but also airlines seem to exploit this service for domestic and foreign destinations. Vietnam Airlines and Jetstar are participating in this sector (Jetstar is in partnership with Agoda on providing the accommodation).
International travel service booking platform received great attention
  • The travelers now would like to arrange for even small things before the trip so that their trip can be well-prepared and convenient. Tickets to visit attractions, amusement parks, full day city bus tickets, SIM services, wifi router, whole day or half day tours, food vouchers, luggage storing service at the airport, etc. are the concerns of a lot of travelers. Many travelers choose to buy the tickets or services in advance to save time during their trip.
  • There are some platforms which offer such of this service with better prices in comparison with on-site prices, which makes customers feel fond of. The most popular ones are Klook and KKday, both of them have Vietnamese version and nice appearance websites.

– Klook, Hong Kong-based travel destination startup founded in 2014, specializes in helping travelers book trip activities and logistics when they are overseas. Marcus Yong, Marketing Director of Klook’s Southeast Asia region, said: “Vietnam is one of the three fastest growing markets in the region, with the number of phone orders increasing rapidly because of young Vietnamese travelers who like to travel and often use smart phones, especially after we launched the mobile application and website in the local language. The top 3 destinations were booked by Vietnamese are Singapore, Thailand and Korea”

 

-KKday is a Taiwan-based e-commerce platform founded in 2014, allowing travelers to connect with the local tour providers from all over the world.

  • They are one-stop service websites for arranging any kind of activity while a traveler is on a trip. The apps offers users many promotions and travel tips. Under each product, they have content showing the travelers how to use the service, how the destination is and even detailed instructions on which bus or metro route to take to a destination.
  • Beyond helping make things easier for customers, these two also enables tour operators and attraction owners to tap into travelers with pre-bookings and marketing opportunities.
Homestay concept is on the increase
  • We do see a trend in the “homestay” concept, in which owners rent their rooms or second houses on specialized online booking channels. The majority of these properties are single units with multiple bedrooms, run by the owners themselves at a lower price point than hotels.
  • The home-sharing models holds many advantages over traditional hotels, including lower rates and spacious room. Tourists may prefer a homestay over a hotel in order to seek a local experience where they feel more engaged with the Vietnamese culture and community.
  • The most favored booking channel is Airbnb which has been available in Vietnam since 2015, connecting people seeking accommodation with those looking to rent via a technology platform, taking a fee after transactions. The number of rooms for rent increased from the initial 1,000 to 10,000 by the end of last year, primarily in Hanoi and Ho Chi Minh City, according to the research from Grant Thornton Vietnam.
  • Hanoi has been ranked sixth among the 10 destinations with the highest increase in bookings in 2017, with the increase of 261%, according to Airbnb.
  • The driving force shifting consumer attention to Airbnb in Vietnam is a willingness to experience something new and affordable when it comes to rented accommodation, said Grant Thornton.
  • However, a hotel will always be preferred by business travelers and leisure groups, which all require a full service offering. The numbers of homestay is not a serious threat to the hotel market in the majority of city locations, as only a fraction of the total inventory is homestay accommodation. Inevitably, in location like Hoi An, where a homestay is more popular and the number of hotels is more limited, homestay’s could become competitors to some boutique hotels.

Conclusion

  • Enterprises in the tourism sector have been encouraged to use technological platforms as the use of smartphones and laptops increases. Tourism startup projects are therefore appearing in Vietnam in larger numbers with innovative solutions that diversify tourism products.
  • Tourism enterprises should transform to keep pace with technological changes and figure out how to adopt technologies to engage with customers and gain more market share. Hence, they should catch up newly developed and effective information technology solutions to run travel operations smoothly and efficiently. In the meantime, the key focus should be on providing excellent customer service.
  • The traditional travel agency will doubtlessly see more advancement because technology continues to advance, but as long as demand for package tour travel remains, there will still be rooms for both online and off travel agencies.

Author: Gayeulles

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