New players like Klook, Lazada swooping into vacuum created by pandemic – sales went from zero to “couple of million dollars”
HARRY Sommer, president and CEO of Norwegian Cruise Line, told a good story during last week’s CruiseWorld Asia. He spoke of how he started a travel agency right after September 11, when everyone thought he was crazy.
Turned out it was the best time, he said. “I could get outstanding talent. Frontline agents who would normally not work for a startup, I was able to attract them. Management talent from cruise lines that had been laid off, I got them. And cruise lines were willing to talk to me,” said Sommer, who ran his mid-sized travel agency for seven years.
As has been much discussed during this pandemic, it is always after great disruption that big shifts happen. Expedia took off after September 11, Airbnb came out of the 2008/2009 global financial crisis and now we are all waiting to see what will come out of Covid in travel.
The cruising sector, in particular, is going through a Titanic (had to use it, sorry) shift. This month, Singapore will mark the first anniversary of “cruises to nowhere”. Who’d ever believe Singapore would have a domestic cruise market? Between Royal Caribbean and Genting Cruise Lines, approximately more than 300,000 locals have taken to the seas – something most, especially the young, have never done before.
In Hong Kong and Taiwan, domestic cruises have also attracted new, younger customers. And from December 22, Genting Cruise Lines will also start domestic cruises out of Penang to Langkawi. It is expected similar customer patterns will follow.
With a new demographic segment comes different ways of buying and layer on top of that, the massive digitisation of consumer behaviour across South-east Asia during the pandemic, regardless of age groups. And all this happening at a time when the bulk of cruise lines’ traditional travel distributors have either been dormant or laid off staff.
So guess what happens when there is a vacuum? New players swoop in. At WiT Singapore, Angie Stephen, managing director of Royal Caribbean, had spoken of how it started working with Klook and how, once API integration took place, the tours and activities platform went from zero to top five distributor.
Right after that, Genting Cruise Lines announced a global API integration with Klook – this means Klook’s customers get the best rates with instant booking confirmation. “From a business point of view this partnership will enable our systems and platforms to connect and share data simultaneously, which in turn increase productivity, connectivity, collaboration, as well as grow sales opportunities,” said Michael Goh, president of Dream Cruise.
Klook’s not the only online player moving into the cruising market. Ecommerce giants, Lazada, Shoppee, Zalora and Shopback, are also smelling the opportunity in travel, not only cruising.
At CruiseWorld Asia, Goh spoke of how he was working with ecommerce marketplaces such as Lazada and that sales had gone from zero to “couple of million US dollars”.
“It caught them by surprise too, that a travel product could sell so well,” said Goh.
And what he’s been impressed by is the “shop-per-tainment” aspect of these marketplaces, that they are able to offer shoppers entertaining ways to sell and experience a product.
Kenneth Yeo, head of regional sales, Royal Caribbean, who has worked with Zalora, as an example, said, “What these companies have is immense outreach. Everyone has them in their phone and they can be intrusive, but it’s fantastic for a brand. And it’s not about price but value. On any platform, if you show you offer value, price does not matter.”
Chan Chee Chong, CEO & Co-founder of GlobalTix, has been helping brands such as Resorts World Sentosa and Waterbomb Park in Bali set up shops on these ecommerce platforms and is taking lessons from working with these giants. “They do a lot of promotions, give away a lot of vouchers but what’s interesting consumer behaviour is, people collect the vouchers but maybe only 10% redeem.”
So the big question for traditional travel agents is, amid this dynamically changing distribution landscape, do they API or not? The biggest roadblock to going this route seems to be the high costs, especially at a time when they can ill afford it. But what if the alternative is, if they don’t, they drown in the sea of competition?
Goh said before the question, to API or not, can be answered, travel agencies must ask themselves a more fundamental question – “what kind of business do I want to run?”
You have to decide on your business strategy, and then you make that decision, he said. Because API integration is not just “plug and play” but it needs resources, financial as well talent, to execute.
Having said that, he said that if he were running a travel agency today, he would go the API route.
Chan’s advice is to take baby steps. “Use tech to overcome the obstacle right in front of you first, then solve the next one.”
Yeo said if an API was out of financial reach, then agents could consider other smart ways of selling digitally such as through social. “The only danger is if they stay still.”
But the reasons for API integration outlined by these three panellists are clear – instant confirmation which leads to sales boost, automation of operations, ability to upsell and when cross-border cruises return, ability to multi-connect and sell different parts of the journey, drive, fly, cruise.
Goh said that with regional cruising set to resume in the first quarter of 2022, agents have to be ready to offer packages and Genting Cruise Lines would work on its own back end system to make it more efficient to book.
Plus, there’s the opportunity to go after the luxury segment which Goh and Yeo said they were seeing as the coming wave of customers. Onboard, cruisers are spending more and they are paying more for privacy and space.
Some may argue that once everyone can travel freely again, the Millennials may jump ship (as it were) and go for other forms of travel but the three panellists believe this trend of new, younger cruisers will continue. “It’s so instagrammable,” said Chan, while Goh and Yeo said that the fact “cruises to nowhere” were selling so well means that “the ship is the destination”.
“They don’t have to go anywhere,” Goh quipped.
It is clear though that for traditional distributors of cruise lines, they have to go somewhere with their tech – whether that be in digital marketing, back end automation or API integration – or they will end up nowhere in this raging sea of change.
And as Sommer proved with his agent-to-cruiseline-CEO story, going against the tide can often pay off big time.
Featured image: Klook offering cruises on its platform