New Guest is Here to Stay

Travel industry needs to cater not just to Chinese customers, but to their mobile devices

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Landing in a new city, in a foreign country, a Chinese traveler jumps into a cab and pulls up a location-sensitive travel app on a mobile device. Within moments, the traveler has thumbed through reviews, found the best deal and booked a room for the night. Planning a trip can be shorter than a cab ride.

This newfound simplicity for travelers leads to an increasingly complicated industry for hoteliers. Hotel and travel companies now need to perfect their e-commerce, social media and mobile engagement strategies.

"I don't think any non-tech company can claim they are staying ahead of mobile trends," said Henry Zhao, Director of Marketing at Beijing Marriott Hotel Northeast, an AmCham China member company. "The more reliable path, and our mobile strategy, is to really understand what problem the customer is trying to solve at each key moment in their journey."

Marriott may not be a tech company per se, but it's still going to great lengths to insert itself into these key moments with mobile offerings. Marriott's app (available in five languages, including Chinese) lets users book rooms, make special requests and check in, explained Joanna Lin, Director of Marketing and Communications at Sanya Marriott Yalong Bay. Its WeChat goes a step further. Within the Marriott WeChat account (marriottgroup), users can access and write reviews on DaoDao, the Chinese version of TripAdvisor. Innovations in mobile travel, like online travel agents and review sites, often drive travelers further from a hotel's own content; Marriott’s mobile products bring them back. In 2014, mobile channels accounted for $1.8 billion in revenue for Marriott and will grow by double digits this year.

"Brands will always be able to create a deeper, longer and more profitable relationship with their customers when it occurs on channels that the brands own," Zhao said.

Players in every part of the travel industry are expanding their scope to keep China's mobile travelers within their brand. Qunar, an AmCham China member company, made a name for itself through metasearch (which compares prices across the Internet), but in recent years the company, publicly traded on the New York Stock Exchange since 2013, has also introduced online bookings and the all-important customer review feature. Qunar bolstered the number of reviews it received by soliciting them over text message, further encouraging mobile users to do what they do best – share.

While the shift to mobile is a worldwide trend, Chinese travelers are exceptional for two phenomena: leapfrogging from offline to mobile bookings and expanding their purchasing power at a rate not seen elsewhere. Consider that while only 3 percent of Chinese citizens have a passport, Chinese travelers still completed more than 100 million trips outside of China in 2014, and that number is expected to double by 2018. This strong and swelling contingent of jet-set Chinese has become the world's second-highest spending group. Also consider that China has more than 550 million mobile Internet users, and that the use of travel reservation apps has increased by 195 percent – the fastest-growing segment of mobile business apps. Domestic travel leader Ctrip saw mobile bookings increase by a staggering 400 percent in 2014. Welcoming Chinese travelers is no longer about putting green tea or slippers in a hotel room – it's about the free Wi-Fi, the Chinese-language mobile content, the ease of finding and contributing reviews. It seems the most important guest to cater to is the one in Chinese travelers’ hands.

"Gone are the days when a hotel could focus only on building a happy customer one guest at a time," said Sam Goodman, Cofounder of Attract China, which supports Chinese travel to the US. "If your information is not in Chinese, you're virtually invisible. If the the information is not mobile friendly, basically you don't exist."

Mastering e-distribution

When Goodman first established Attract China in 2012, he had to explain over and over to potential clients why the Chinese traveler was important. Then, after statistics came out about China's travelers being top spenders in the world, US companies started calling him. Attract China serves as a bridge between Chinese travelers and American brands that offer new, unique experiences. He sees mobile-targeted efforts as one of the key ways a US company can attract a Chinese consumer.

"Everybody on a phone in China can book any hotel in the world," Goodman said. "They can find the cheapest price, what other people think, and they can do this in 30 seconds. This level of accessibility is just getting started."

Goodman shared one example of how far mobile integration can go: the Linq hotel in Las Vegas lets guests control everything in the room – lights, temperature – from their WeChat accounts. While that’s more of an extreme example by today's standards, making the most of WeChat’s 600 million users isn’t a bad strategy. Attract China utilizes WeChat to conduct concierge services for travelers who don't speak English. An increasing number of online travel agencies, including Ctrip, can execute complete bookings over WeChat.

The ease of online payments is also fundamental, and for many years that meant accepting UnionPay. This month, though, Chinese-owned UnionPay’s monopoly on bank-card clearing ends, thanks to a World Trade Organization ruling. Starting this month, companies such as MasterCard and Visa will be able to enter the market for yuan-denominated bank-card payments. This could potentially benefit American credit card companies as well as American hoteliers hoping to attract Chinese e-commerce. But the details of the post-monopoly environment are not yet clear.

It could also help smaller, boutique hotels who haven’t had the bandwidth to equip themselves with UnionPay terminals. Smaller hotels are often left behind in this rapid push toward mobile, said Henrik Bork at Chinese-focused luxury online travel agency Lychee. Mobile customers tend to make more last-minute bookings than PC or offline customers. While tech-focused companies like Lychee and large hotels such as Marriott can handle these rush bookings, boutique hotels struggle to process the booking with little lead time. This presents an issue for online travel agents, too, as the check-in may not be as smooth a process as promised.

“This is not the strength of hoteliers,” Bork said. “They’re good in giving you a warm welcome and frying an egg, not mastering e-distribution.”

Bork has positioned his company to support the luxury end of the market, which he says has been slower to adopt mobile commerce. He said cheaper hotels are more easily sold online, while high-ticket items require more trust and depend on established habits and relationships with agents. He straddles the divide between present and future by offering a powerful, mobile-supported site while still allowing more traditional clients to reserve hotels over the phone or even in person. As his clients get younger, he’s starting to see the old ways drop out of fashion. Mobile bookings currently account for 20 percent of his business, and are steadily increasing.

The customer review is always right

Besides easy mobile bookings, another important way the travel industry can reach out to Chinese customers is through customer review sites, such as DaoDao or on online travel agencies such as Qunar and Elong, another AmCham China member company.

According to travel industry research company Phocuswright's 2014 report Traveler Reviews and Social Media in China, four out of five Chinese planning a trip read user-submitted reviews. Travelers typically look at review sites first, then, based on what they find, visit a proprietary website and continue with a booking.

“Increasingly mobile-connected Chinese travelers are bringing their affinity for social media to the online travel world in the form of traveler reviews,” analyst Maggie Rauch said in Phocuswright's report. “Online agencies, metasearch sites and review sites are all encouraging users to share their impressions with other travelers.”

Qunar introduced user-generated reviews a few years ago, and has seen the feature's popularity skyrocket. The number of contributions jumped up 420 percent from 2012 to 2013, thanks in part to the use of text messages to solicit and submit reviews, according to Phocuswright. Reviews on other travel sites were also increasing at that time, but at a comparatively modest growth rate of 95 percent.

As well as offering travel sites huge opportunities for traffic, user-generated reviews can open up new marketing channels for hotels both big and small. Charles Lankester,  Senior Vice President of Reputation Management at Ruder Finn, an AmCham China member company, said all hotels should invest time in engaging past customers through online reviews.

"Not taking review sites seriously is a very high risk to business and reputation strategy," Lankester said. "The conversation is taking place whether hotels like it or not. Therefore, the business imperative is to make sure you're engaging in that conversation."

A good strategy, Lankester said, is to consistently respond to reviews, both good and bad. Responses should be personal and engaging, and stock answers that don't address the reviewer personally could do more harm than good.

"It's a huge opportunity for the hotel to demonstrate it's listening and that it cares for customers," Lankester said. "People understand that everyone has an off day. What they judge is how the problem is dealt with and that the organization is flexible and listening."

But the opportunities for customer engagement aren't limited to saving face after a bad review. In a case study from travel-focused marketing cloud services company Brand Karma, one hotel took note of the large number of reviews on Dianping that praised its spa. The hotel responded by creating and promoting a spa package, which increased revenue for the hotel. Review sites, like much of the Internet, open up more ways for companies to listen in on consumers opinions. How hotels and travel sites respond will define their success in the mobile era.

To app or not

Being mobile-friendly doesn't necessarily mean every hotel and travel company needs to each develop a mobile app. For Marriott, its app makes full use of its global network. However, for smaller players in the field, getting people to notice and use their apps could be problematic and pricey.

Bork of Lychee said that a year ago, he was keen on developing an app. He ultimately changed his mind when he saw the $50,000-some price tag for building one, and the even bigger investment of money involved in maintaining and promoting it. Instead, he implemented a mobile-optimized website. This required several staff replacements to his team of 10 in order to find programmers versed in HTML5, but had a much clearer payoff than an app. Bork is also firming up partnerships with larger luxury travel brands by offering the same ease of booking associated with other online travel agencies, but solely devoted to high-end properties.

Beijing-developed app Tripper has also found its niche by supporting China's biggest online travel agencies with instant human interpretation and live local travel help. Travelers can access Tripper's services directly inside the Qunar app when visiting Thailand. On-the-go assistance accommodates the mobile traveler's lifestyle, seeking instantaneous information rather than researching ahead of time. Companies that deliver the most instantly gratifying products could seize the mobile-savvy Chinese travel market.

“I predict that the winners will be the ones that sacrifice margins to make the necessary investment in technology and marketing for their mobile businesses to flourish,” said Tripper Business Development Manager Sam Silverman.

Wi-Fi and beyond

One key investment for hotels wanting to capture the mobile-wielding Chinese traveler is in Wi-Fi. It may sound like an obvious decision, but a 2015 ranking by Hotelwifitest puts American hotel chains toward the bottom of a ranking of international hotels for free, high-quality Wi-Fi. Travel news site Skift reports that only 60 percent of US hotels have free Wi-Fi.

Goodman of Attract China said this is a major issue, as nearly all Chinese travelers visiting these hotels will have a mobile device in hand (or on wrist), wanting to look up restaurants in the area or book an extra night at a hotel. Messing up the crucial element of Wi-Fi could lead to unhappy guests and poor reviews – once they can connect again to post it.

Goodman theorizes that Chinese hotels have more quickly adapted to the Wi-Fi-dependent travelers because the industry in China is younger, whereas the well-established hospitality industry in the US tends to be more sluggish and prone to inertia on the Wi-Fi issue.

Besides planning on the fly, Chinese mobile travelers are also increasingly sharing their trips with friends, family and colleagues during the vacation, not after. WeChat's social media function, Moments, floods with vacation photos during every Chinese holiday. If considering user-generated reviews is usually the first step in a traveler's planning, admiring a friend's WeChat moments can be considered the prelude. Enabling guests to share vacation photos to their hearts' content won't just keep them happy – it could inspire a hotel's next customer.   

Bridget Riley is the Editor of Business Now.