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Catching a ride as web travel sector takes off
By Ding Yining

CHINESE consumers planning vacations are turning to the Internet in ever-growing numbers to research destinations, read reviews and then book transport and hotel rooms.

And in the coming years, China is set to be one of the fastest growing markets in online travel sales, according to a recent report by US research firm eMarketer.

It is estimated that Chinese web users will spend as much as US$48 billion on online travel by 2016, more than the other BRIC nations combined, eMarketer said.

China's online travel sales will see an annual compound growth rate of around 14.1 percent in the next five years, according to eMarketer.

The research firm also noted that the number of people in China booking vacations online remains small in comparison with the country's overall e-commerce activities.

Domestic research house iResearch suggested that the proportion of online travel bookings out of overall travel-related spending will nearly double to 11.7 percent by 2015, from 6 percent in 2011, leaving enough potential for future growth.

National Tourism Administration figures showed that China's travel market generated an income of 2.2 trillion yuan (US$352 billion) last year, and is expected to hit 3.1 trillion yuan in 2015.

As the travel industry sees a migration to online bookings, China's Internet companies are having to come up with innovations to attract and keep business. While some ideas originated from overseas companies, domestic startup firms have found unique ways to appeal to tech-savvy urban dwellers keen to find out the latest deals and looking for discount coupons.

Shanghai-based HUBS1 Interactive Corporation Ltd came up with smartphone application HotelVP in late 2011. This allows travellers to book hotel rooms at big discount after 6pm every day. HotelVP's "last-minute" model, drawing on the US-based HotelTonight, also helps hotels clear unsold inventory. Earlier this year, it expanded its service to cover daytime bookings, after receiving more than US$4 million in venture capital funding. HotelVP said it now has around 2 million registered users and is partnered with almost 10,000 domestic hotels.

Smart devices and mobile payment may be the buzz, but the majority of travellers make reservations and itineraries in advance.

In a recent report, iResearch said that flight tickets made up over 62 percent of China's online travel market. The remainder comprised of hotel and travel package bookings.

Ctrip, the country's leading online travel agency, started out as online agency for flight tickets and hotel bookings for business travellers more than 10 years ago. It spotted Chinese travellers had increased spending on holidays and so offered more travel packages.

At the beginning of this year, it launched a new service similar to the "name your own price" system offered by US discount travel website Priceline Negotiator. Given only limited information about a hotel's location and facilities, plus customer ratings, web users can put in bids for rooms. The precise name and address of the hotel remain a secret until a bid is accepted.

Vice president of Ctrip James Tang says the new model offers new sales channels for tens of thousands of hotels and help them manage inventory. The format also protects their brands as discount rates are not revealed in advance, he adds.

Tang says travellers are seeking personalized booking models and an increasing number of consumers are willing to try out this new approach.

And in the long run, service - whether online or off - is the core to any business selling travel products.

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