Scaling Tech-Led Brands: Harnessing Disruptive Innovation

Photo by Element5 Digital on Unsplash

Behind every mountain climbed, there will always be a higher one to climb. Despite the alleviation of travel restrictions in Asia, the travel industry continues to face struggles against the significant job-filling gap, creating a scarce talent pool for certain job roles and hefty, rising costs due to global inflation. However, the recent reopening of China may very well be the game-changing element for the travel industry within the Asia Pacific region.

China constitutes a large portion of the tourists visiting different countries within the Asia Pacific region; outbound travel from China has already rebounded faster than inbound travel, providing economic growth, expanded flight routes and service offerings, and extensive partnerships between local and foreign operators associated with travel. With continued reopening and tourism recovery, the Asia Pacific region is expected to experience accelerated growth, which is likely to reach 3.3 percent this year before moderating to 2.8 percent in 2024 . In turn, this creates the notion of the following impacted factors:

• Supply and demand management
• Approaches to avoid price wars amidst rising demand and costs

However, outbound travel remains extremely limited at this time due to China’s policy announcements that continue to delay and hamper the progress of returning to normal outbound travel levels. Contrastingly, a McKinsey report indicates that Chinese consumers are still considering health and safety concerns in outbound countries, with close to zero covid-19 cases, as a driving factor to travel more comfortably . Resultantly, this puts inbound travel in the spotlight as China takes its first step toward recovery within the travel industry. In response, Chinese travel brands are shifting their focus to encourage domestic travel using the tools and lessons obtained following the shutdown of travel a few years ago to dominate and fortify their competitive advantages within home soil before scaling globally as outbound travel incrementally returns.

Ctrip, one of China’s largest online travel agencies, launched curated campaigns to encourage domestic travel. An example of these campaigns includes its "Travel in China" campaign, which includes discounts on hotel bookings, transportation, and activities across the country to incentivize customers for inbound travel. Another is its "Travel in Style" campaign, which targets younger, more affluent travelers with luxury travel experiences, such as private jet and yacht rentals or high-end hotel packages . This revitalized the need for travel brands to be able to mold into the ever-changing industry landscape easily and stay ahead of competitors.

In this article, we delve deeper into how to respond to the impact of China's potential reopening on the travel industry in Asia, focusing on how to tailor approaches to balance growth, technology integrations, and foster culture. We walk you through an established case study of how Klook Travel, a renowned travel operator, leveraged this opportunity and gradually optimized its competencies, while circumnavigating industry challenges to better position themselves while outbound travel began to soared back up.

Clinch Customers like Klook

Klook, a leading travel and leisure e-commerce platform, has been at the forefront of digital transformation, and an exemplar of how to weather the storm despite travel restrictions.

As the world accelerated its shift towards digitalization, Klook’s founders were a step ahead as they re-shifted their focus on the activity booking market with a clinically tailored approach to engage customers through their portfolio of activities and experiences guided by their customer-first principle. Here is a breakdown of the key success factors that led them to their top spot:

1. Building a niche

In 2019, Klook’s founders took a pivot in their strategic approach by honing their travel activity booking capabilities as they built off their currently extensive portfolio of activities and experiences to tailor them to each customer’s needs and preferences.

These activities are sourced from deep explorative research into local cities and suburbs that led to a whopping 390% growth in the number of activities Klook has from 100,000 to 490,000 activities from then to today. Klook has designed a seamless categorization that customers can easily navigate through, from theme park passes, to cultural experiences, water activities, outdoor adventures, etc.

In doing so, Klook developed the competitive advantage they needed against traditional travel operators by taking the one pivotal step before the market’s current growth spurts they restructured to be more hyperlocal. Klook also leveraged the first-mover advantage by optimizing its offerings, services, and network to create the synergy they need to propel itself against the industry storms.

“Airbnb launched more detailed categories earlier in the year, e.g., campervans, skiing, amazing pools, historical homes, etc. It is the starting point to offer something special. Customization and personalization - going to be a force within the industry. “ - Stephen Liew, Director of Public Policy, Airbnb

2. Leveraging technology

The travel company has always been digital, to begin with. It has a mobile-first principle that centers on how they tailor and improve services as customers have been gradually shifting to mobile interactions in recent years.

Klook has identified that 80% of customer transactions occur on mobile devices, and over 60% are 35 years old or younger, two key findings that are complementary to one another when properly leveraged. With that, Klook has utilized artificial intelligence and machine learning to recommend to their customers a tailored range of activities to choose from based on personalized preferences and browsing history.

Their recommendation model is based on real-time data analytics to ensure customers receive the best price deals and inventory management of their service offerings to altogether blend into the satisfactory customer experience the company strives for.

To communicate this, Klook established their various social media platforms that their customers interact with by using optimized content, messaging, and marketing delivery to complement their strategic efforts.

In addition, Klook has recently launched Flickett, a trade platform that enables tours and activity operators to digitize their services in small, incremental steps. Flickett enables operators to gain access to content management tools, online booking capabilities, and third-party distribution channels. This allows Klok to strengthen and foster relations through this network of partners, hence fortifying its capability as the market segment leader in the travel industry.

3. Partnering with local providers

To create an optimized customer experience, Klook developed a network of local providers as partners that expanded their knowledge utilization capabilities to make more personalized recommendations and offerings to the individual customer.

These partnerships are an asset to Klook as they complement each other in delivering value to the customer. An example of this would be Klook’s portfolio expansion of car rentals , enabling easy access to quality transportation for their traveling customers, saving them time and money from having to search, book, and...