Emerging economy opportunities numerous, says Transperfect boss
Travolution Business Breakfast: There’s more to international growth than Brics and Figs
Travel firms must take a more strategic approach to internationalisation if they are to maximise the opportunity, a Travolution Business Breakfast was told last week.
The event, hosted by Google, heard from Joel Brandon-Bravo, vice president of travel at sponsor Transperfect, who headed up Travelzoo at UK managing director for 10 years from 2008.
He said firms often focus on the high profile Bric (Brazil, Russia, India, China) markets as potential high growth opportunities.
Or they opt for the US or Australia because of the shared langue, or target based on proximity focusing on the ‘Figs’ countries – France, Italy, Germany and Spain.
But he said opportunities to take advantage of emerging economies are numerous.
“Of the estimated $30 trillion in middle class consumption growth between 2015 and 2030 only $1 trillion is expected to come from western economies. Most of the rest is going to come from Asia.
“Twenty years ago, people spoke about the Bric countries as the future powerhouse economies but if you look at the total travel market in Brazil and Russia it has pretty much flatlined in that period.
“India has more than doubled, but for China it more than quadrupled and it is now twice the size of the other three countries combined. In terms of percentage growth, as well as China, you’ve got the Middle East, Thailand and Mexico.
“Yes, these percentage growths are from a low base, but even if you look at the absolute figures from Visa, by 2025 the emerging markets will be larger in absolute terms than the developed markets of the world.
“So, who are they? The ten biggest are Argentina, Brazil, China, India, Indonesia, Mexico, Poland, South Africa, South Korea and Turkey. Not a single one of those countries has English. Even in South Africa it’s actually only 9% there that speak English as their first language.”
Brandon-Bravo said not only has there been massive change and growth in terms of where travellers come from there’s also been huge growth in the amount of content that’s being created by both individual and travel brands trying attract, engage and convert customers.
“In addition to the amount of content being created, there’s been a proliferation in the number of channels that companies are having to maintain in terms of where people get their inspiration, how people want to book and then communicate that brand and have their customer service to be fulfilled.
“So, we have changes in the demographic of who is travelling, change in the amount of content, proliferation in channels and what you actually want to do is mange all that content in all languages in all channels at the touch of a button.
“Quite often companies think we will go into America or Australia because they speak English there and it’ll be easier. Well, just because it’s easy doesn’t mean it’s the smart thing to do. Actually, language may be the least of your problems.”
Transperfect has researched what influences overseas opportunities, finding the key factors are GDP per capita, mobile adoption rates, importance of inbound tourism to that country and how politically stable is that country.
Brandon-Bravo said: “You’ve got to think about the product to market fit. You don’t just need to look at what the opportunity is, but you need to also look at what the competitive landscape is like.
“What I have seen a lot of OTAs do in the UK do is test the market by using things like TripAdvisor and Trivago Express to test their hotels in all the markets without having to build websites.
“They can see what’s the cost of traffic, what’s the cost of conversion and then use that to be smart about which products and which markets they want to go in. I think that’s a very sensible strategy.”
Brandon-Bravo explained why he thought it was important for firms to grow and why internationalisation is important.
“One thing I did learn at Travelzoo was that the companies that managed to do the most volumes got the best rates and the companies that got the best rates were then able to drive the volume.
“So those companies that had that scale created this reinforcing virtuous circle. In order to drive scale there are limitations with the UK audience so the best way is by going international.
“My tip would be to take a strategic approach to the market, to the product market fit, to the language approach, to how you approach the technology and finally how you go to market.”