Before he became president of the Hotels.com brand, Johan Svanstrom was based in Hong Kong and played a key role in building up the business in Asia Pacific. With Expedia committing more resources to growth in the region, Svanstorm and his team are riding high on the wave of globalisation. I caught up with Svanstrom on the sidelines of the Expedia Partner Conference in Las Vegas last December to get his thoughts on Expedia Inc’s push into Asia and Hotels.com’s strategy to expand further in the region.
Johan Svanstrom: “It’s of course a long game to play and we’re very dedicated to being on the pitch.”
Q: Given Expedia’s global push and its focus on Asia, and H.com is the most global brand, and your previous experience in Asia, is H.com the go-to and growth brand in the family? What’s the pressure like?
Hotels.com
has its expertise in accommodation and a truly scalable global platform. We have often been the first branded point of entry into a market or region, together with our lodging supply team, thus trailblazing for other brands in the Expedia Group.
I don’t see this role as pressure, I see it as opportunity. What we care about is providing a great local user experience as fast as possible, and that brings learnings that we can leverage in many ways for the wider group.
According to a report by Phocuswright, Asia Pacific is set to be the largest travel and online travel market globally by 2020. I have lived and felt the Asia opportunity myself for almost a decade, so I’m glad to see not just Hotels.com but the entire Expedia Group investing into the region. It’s of course a long game to play and we’re very dedicated to being on the pitch.
Q: Tell us about the trends you’re seeing in Asia, the traction thus far and your outlook for 2018?
Asia is developing rapidly, and I think three core factors are at play:
The first is a sustained above-average economic growth, whereby new consumers and discretionary spend gets created every day, and the travel industry very much benefits from that.
Secondly, there are some super-power population numbers, and a skew towards younger population pyramids, at play. The numbers are dwarfing both the US and large countries in Europe, but we’re only somewhere mid-way in how this plays out in global business and product innovation. For some of these markets, there are also distinct differentiation in industry dynamics and user interfaces to cater to, which is why you see single-market giants getting created.
Thirdly, mobile is a core element of how users get online, shop, get serviced and so forth more than in other regions.
Here are some data points that substantiates the long-term prospects for the Asia travel industry:
A report by Oliver Wyman titled “Chasing the Chinese Dream,” indicated that China’s mass affluent consumers who have built their personal wealth in the new economy will account for more than 75% of the country’s total consumption by 2020. The Hotels.com Chinese International Travel Monitor 2017 further revealed that Chinese travellers will spend an average of 10% more on international travel in the next 12 months than the previous year.
Mastercard’s report on the Future of Outbound Travel in Asia-Pacific noted that emerging markets in Asia-Pacific currently account for roughly 1.5 times more outbound trips than its developed counterparts. Furthermore, they are expected to grow more than twice as fast (7.6% versus 3.3 percent) over the forecast period of 2016 to 2021.
We’ve seen high growth in our Asia Pacific business for several years and see it continuing to do well on the back of these factors, in combination with our commitment to the region, in 2018 and beyond.
Q: Highest growth market in 2017?
We’re seeing solid growth across all our regions in the market for online hotel bookings. We’ve built strong positions and growth especially in Japan, South Korea Hong Kong and Taiwan. More recently we’ve kicked into a higher gear in South-east Asia.
Q: Most sluggish market in 2017
Hotels.com’s new brand mascot launched in Singapore, Hong Kong and Taiwan last November. The launch is part of the “Obvious Rewards” campaign which includes a series of lighthearted commercials, a dedicated mascot microsite and a “Name the Pug” Facebook contest where consumer can win Hotels.com rewards. Since its launch, Hotels.com Rewards has given away US$1b in free nights globally.
Global expansion is high on our priority list, and growth happens in all of our markets. If you look at the $1.6 trillion global travel market and demand overall, it’s basically 30% North America, 30% Europe, Middle East and Africa, 30% Asia Pacific and 10% Latin America. The good news about operating globally is that we can absorb and re-allocate efforts to withstand specific shocks or situations (f/x swings, natural disasters, terrorism, irrational competitor spend behaviour, etc). For Asia specifically, I wish the Hotels.com brand could grow faster domestically in China, but it’s incredibly competitive and we have strategically focused mainly on outbound travel and on powering partners in that market, through our EAN division, and that is going really well.
Q: Clearly mobile is the big driver in Asia and H.com is the mobile leader in the Expedia Inc family – 45% of transactions and 55% of traffic, which is relatively low compared to those of Ctrip, Traveloka or MakeMyTrip? What investments are you making in mobile to grow your share in Asia?
We have a multi-year mobile focus programme to continuously improve our customer experience on mobile apps and mobile web, and allocate more of our marketing dollars for mobile. Speed of interaction has been a big topic for us over the last year and we will certainly continue that focus. The underlying tech for mobile is a very dynamic landscape that you need scale to operate. Examples of specific interest to low bandwidth markets include AMP, PWA, the UC browser, etc. The rapid interest in voice and bots as user interfaces of preference has lots of potential, but those trends are global to a large extent. On the app specifically, we add useful services to help customers for their journey and not just the stay, such as the Hotels.com Concierge (see news here).
Regarding the numbers you mentioned, 45% of transactions and 55% of traffic, please remember they are global numbers for Hotels.com. They vary by market, and in many Asia countries they are certainly higher. What’s also relevant is that we have great hotel supply in places like the US and Europe, and users who book long-haul still tend to use computers a little bit more than mobile.
Q: At the Hotels.com workshop, I saw a slide which saw a drop in mobile traffic from China – S Korea and Japan were first and second. Can you explain that dip?
This is likely due to our strategic business decisions and operating model for meta and SEM channels in China.
Q: Simon Sinek (the keynote speaker at the Expedia Partner Conference) talked about how the true competition is yourself and yet you need a worthy adversary to pace yourself against. At H.com, what internal competing force drives you and who’s the worthy adversary you pace yourself against?
Overall, I’d say that we have a very clear internal competitive force and that is to be better every day. Translate everything into a number, and you can measure it. It might sound simple, but a fast-paced, question-based approach to all that you do is a great way to foster innovation and development. We also ask owners of a project or function, that can easily be biased by their ownership, to put themselves in the other corner of the “boxing ring” and go a match against themselves. It delivers discoveries. And a boss or colleague doesn’t even have to tell you about it – it’s self-discovery! The overarching metric for success in an infinite business game is customer satisfaction. We know there is always more we can do on that, tomorrow morning as well as for the next 10 years!
Q: Do you feel hampered in a way by being part of a family which may restrict you from pursuing other paths of expansion? For eg, alternative accommodation – you’ve got HomeAway to consider. Experiences – which booking.com is getting into – you’ve got Expedia’s tours and activities? Advantage or disadvantage?
No, quite the contrary, we – and most importantly, our customers – get the benefit of Hotels.com being part of the largest multi-product global travel platform company. We are driven by the same purpose to bring the world closer through travel and tech.
Q: Simon Sinek also spoke about having a just cause. What’s H.com’s?
We believe booking a place to stay should be as rewarding as the trip itself and that every single trip is a big deal in its own way. Every stay and experience of a user is a chance to connect and to be there in the moment – with the people and the place that matter very specifically to them. We propel our day-to-day work with the love of inspiring and enabling those moments – they stay with people forever.
We are truly part of Expedia Group’s broader mission of bringing people together and breaking down barriers through travel, which a is great way for people to explore differences and to discover similarities.