It’s been one of the nagging challenges facing the global tours and activities industry: the low adoption of technology among tour and activity operators across Asia.
Speak to any global online travel agency (OTA) or booking system executive, and you’re likely to hear a similar refrain: operators across Asia have been slow to adopt modern reservations systems to manage their business, offer online booking, and connect to distributors.
According to Arival’s 2020 Sales & Distribution Report, 26% of Asia-based operators do not use a reservation system, vs. just 9% in Australia and the U.S. However, these numbers are likely to be understated, as offline operators are far less likely to respond to online surveys.
However, this lower technology adoption across Asia may change if two of the region’s biggest OTAs, KKDay, and Klook, have anything to say about it.
Enter Klook and KKDay
Taiwan-based KKDay, following a $75 million series C fundraising last September, has launched its own booking system, Rezio, to serve tour and activity operators. Already active in the market for several months, the company claims to have nearly 500 customers and approximately 12,000 activities. Rezio is focused on operators in Northeast and Southeast Asia, according to Melvin Ng, the company’s regional director for Southeast Asia. The company offers a free version and a “Rise” tier from $85 a month for operators that need online booking and payment, among other features.
Hong Kong-based Klook, which just announced an additional $200 million in funding, has been a bit more cryptic with its announcements. The press release highlighting the new investment states that “with this new capital, the company will accelerate the development and roll-out of its merchant SaaS solutions.” Klook is avoiding the more commonly used label of reservations and ticketing system. Still, the company confirmed that its “merchant solution” offers inventory and booking management, online storefront and payments, ticketing, and other common reservation system features.
The company would not disclose how many operators are currently using this solution, nor did it share pricing information.
Pandemic Drives a New Tech Wave
Reservations technology is not new to Asia. Singapore-based BeMyGuest and GlobalTix have been offering booking systems to operators since 2018 and 2019, respectively, while VariTrip has been focused on China. Several reservation system companies based in Australia, Europe, and the U.S. have at least tip-toed into the region. But the practical difficulties of operating in Asia have been a major obstacle to tech companies trying to enter the tours and activities sector there.
“There are cheap labor and vast differences between countries in terms of technological adoption,” said Chris Atkin, CEO of Australia-based reservations system and channel manager Rezdy. “If you add in the localization required for product and support, payment gateway complexity, the role of mobile apps, and the viability of commercial models, it makes Asia a different prospect to crack.”Chris Atkin, CEO of Rezdy
What circumstances have changed for Asia’s top OTAs to reconsider technology strategies for engaging with operators? In a word, it’s Covid-19.
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Tour and attraction operators who have been able to re-open have had to do so under strict requirements, such as facilitating contact tracing and social distancing. Attractions that once sold open-ended paper tickets with general admission had to implement contactless mobile ticketing with timed entry with capacity management. K.F. Lee, deputy CEO at Singapore’s iconic Gardens by the Bay, speaking at Arival’s Asia Pacific Virtual Summit last August, explained how the attraction had to implement all of these procedures and new technology in a matter of weeks.
“We think the market is fast-changing and tour operators and attractions are finally serious in adopting technology,” said C.K. Chan, COO and co-founder of GlobalTix, which provides technology and connectivity to the tours and attractions sector in Asia. “We have found tour operators and attractions are a lot more receptive to technology change. Covid-19 has forced a mindset change.”C.K. Chan, COO and co-founder of GlobalTix
OTAs & Res Tech: Partnerships or Battlestations?
The next big question is what will this mean for distribution. Reservation system companies and OTAs have formed alliances, whether through acquisition or partnerships. TripAdvisor’s purchase of Bokun and Booking Holdings’ acquisition of FareHarbor, both in early 2018, caused some fear among operators the reservation systems might switch off API connections to OTAs, or that the OTAs would give preferential treatment to the operators using their booking systems.
The industry’s worst fears, however, do not appear to have been realized. Most OTAs and reservation systems have realized that more connectivity, not less, ultimately increases their platforms’ value for operators.
Rezdy’s Atkin doesn’t anticipate any disruption resulting from Klook and KKDay stepping into the reservations technology sector. “The benefits to all of moving trade online will create enough value for us to continue working very closely with our global OTA partners and retaining connectivity.”
However, whether Klook and KKDay will offer connectivity between their reservations systems to their own OTA channels is another story. Rezio currently offers distribution only through KKDay, although it’s working to develop connections to other partners, according to Ng.
When asked whether Klook would consider connecting to the reservation system of its top competitor in Northeast Asia, Wilfred Fan, Klook’s chief commercial officer, sidestepped a direct answer, but his implication seemed clear enough:
“Klook evaluates API connectivity based on individual market needs and the technology capabilities of these providers,” Fan said. “The company works frequently and closely with numerous providers globally. As an example, Klook’s coverage of directly contracted merchants in Taiwan is pervasive, and the majority of them are already integrated to the company’s extranet system.”Wilfred Fan, CCO of Klook
Will Operators use OTA Tech?
One key question is whether operators will want to rely on core business technology that is provided by an OTA? While thousands of tour and activity operators use FareHarbor and Bokun, those companies were acquired by OTAs after they had large, established customer bases. This is not the case with Klook and KKDay, which have developed and introduced new technology platforms.
The distribution independence of third-party booking systems, say some, will be an advantage.
“Technology has never been more critical to our sector, but the source of that technology is even more crucial as your entire business operations will flow around it,” said Blanca Menchaca, CEO of BeMyGuest, which started as a B2B distribution platform and launched its Xplore reservations system in 2018. “Operators must decide whether to adopt a system from independent providers that offer multiple sales channels, including offline and online, or if it’s best to use a system powered by an online booking platform who might also be competing with your own direct website for customer bookings.”Blanca Menchaca, CEO of BeMyGuest
Just the Beginning
It’s still very early days for tours and activities technology adoption in Asia. If one thing is clear, it is that the market remains wide open and very competitive.
“As much as Covid has been accelerating the digital transformation in the past year, the market penetration for res systems in Asia is still remarkably low,” said Baidi Li, head of growth initiatives for Magpie Travel, and an industry veteran who led TripAdvisor Experiences in the region for years. “Almost all systems we know have advertised themselves as the one-stop-shop offering reservations, channel management, back-office functionality, and more. We are not seeing consolidation or a clear front runner in this space. If anything, this market is getting even more fragmented and volatile.”Baidi Li, head of growth initiatives for Magpie Travel
Baidi adds that, due to Covid, most tour and attraction businesses have had to shift their business to local markets and distribution channels, lessening the role of the global OTAs, whose business had been all about bringing in international visitors. This, she says, is creating more fragmentation, as each market will have distinct local apps and channels.
“Operators are requiring the res platforms to build connections quickly with more relevant players such as super apps, lifestyle brands, loyalty platforms, and lots of offline outlets as distributors,” she said. “The companies gaining more market share are the ones which have been hyper-focused on a single market.”