Tnooz: Consolidation and M&A activity in Asia

Post live a Tnooz titled "Keep an eye on Asia for next wave of major online travel consolidation". In it I discuss how the three powerhouses of Asia - Rakuten, Wotif and Ctrip - have spent the last three years acquiring companies in Asia, Europe and America as they try to develop growth outside their respective home markets of Japan, Australia and China. I end with a prediction that

"there is more [M&A activity] to come; that we should expect to see more deals by these companies in the next three years. I would also not be surprised to see one of these companies make a major play through a big ticket acquisition in either Europe or America."

Full post here

Rakuten looking to Taiwan and Korea for expansion

Looks like it is Japan week here are the blog. Not sure if it is because the market is entering a new phase or because I am planning a trip there for next week and am spotting more stories. Earlier in the week it was some general market statistics from iMedia Asia. Yesterday Japan's number one online travel company Rakuten caught TechCrunch's attention. Today we have another story about Rakuten - this time on their international expansion plans. Here is a link to a Google translated Japanese language story on Rakuten called "Rakuten Travel, the second half will focus on international expansion - increase in overseas bases, and strengthen customer inbound transportation"

Couple of highlights:

• This year's expansion push will be Beijing, Hong Kong, Korea and Taiwan;
• In Taiwan will be selling inventory through Taiwanese player Eztravel. [BOOT note - EzTravel is part owned by Ctrip - who in turn used to be, but are no longer, part owned by Rakuten. But back in 2007 Rakuten sold out of Ctrip and in 2008 announced further plans for pushing into China ; and
  
• To enter the US market through setting up an office in Hawaii "next month". [BOOT note - we presume this is for inbound only].

The Google translation of the article makes for challenging reading but Rakuten is making their intentions clear and are making expansion a priority.

TechCrunch on Rakuten

Just last week we were talking here on the BOOT about the Japanese online travel market. Then over the weekend TechCrunch published a very detailed and interesting profile of Rakuten called "Japan’s Rakuten: Can The Biggest E-Commerce Site You Never Heard Of Become a Threat for Amazon Globally?". The post discusses Rakuten's full ecommerce spectrum and (as per the title) their challenge to Amazon. We here in BOOT land have spoken often about how Rakuten Travel is probably biggest online travel player in Asia and one of the biggest in the world. Online travel sales for Rakuten are in the $2billion range, beating out Ctrip, Wotif, AsiaRooms or any of the Asian interations of the big four Expedia (including eLong), Travelocity (including Zuji), Priceline (including Agoda) and Orbitz (including HotelClub).

TechCrunch article is good reading, as is their CrunchBase profile page for Rakuten.

Good Japan market stats from iMedia Asia hide unfortunate market challenges

Andy Radovic of Outrider has a nice high level piece over at iMedia Asia on the Japanese search market. Called "Searching for travel, the Japan way", it is the BOOT Recommended Read of the week. Paints a very positive picture of online travel in Japan - which is fair and true. When discussing Japan it is important to know that the success of online travel in Japan is despite the fact that the online travel market has not one but two hands tied behind its back.

Firstly the two main airlines - ANA and JAL - still make it virtually impossible to conduct a search query that includes results for both carriers on domestic routes. This has crippled any efforts by intermediaries to sell air in Japan and led to the focus by the major online intermediaries (Jalan/Recruit and Rakuten) on accommodation.

Secondly I have been reliably informed that there are very strict laws on the requirements for disclosure to consumers about the cancellation policies on package sales. When I last investigated this the cancellation policy for a package tour had to be explained to a customer. That is that it had to happen over the phone or face to face rather than a consent online. If this law is still in effect, then it eliminates the "hands free" sale of group tours online. That is the sale of group tours/travel without the intervention of a sales person.

[above assumes my knowledge of JP market is still up to date - please let me know if I am out of the loop]

thanks to Hyougushi over a flickr for the photo

Ctrip may rule China - but that's not stopping Rakuten from trying

I posted last week on the Chinese market, particularly the dominance of Ctrip in "online" travel sales. A complementary story appeared this week in Hotelmarketing.com (add to your RSS feed immediately if not already there) on Rakuten Travel's plans for China.

Rakuten Travel is the number one online travel company in Japan. This makes them a big player globally. With gross bookings in excess of $1 billion in hotels, Rakuten is easily a top ten online hotel company, maybe even sneaks in as number 5 behind the "big four" of Expedia, Orbitz, Travelocity and Priceline (in terms of hotel sales online).

China is big play for Rakuten as it is the natural largest next market for them. It is also a market they have a lot of knowledge about. Up until August last year Rakuten was one of Ctrip's largest shareholders, owning some 20% of the company. At the time Rakuten disposed of their Ctrip stake I said that there was probably two reasons for the sale: the profit on the sale; and to free up Rakuten to take on the Chinese market all by themselves.

There is a lot more background in the Hotelmarketing article which I suggest you read. If you are sitting in Europe dismissing this as another Asia story by Tim I urge you to reconsider and keep a little eye on Rakuten and the number two Japanese palyer Jalan/Recruit. Why? Because both are billion dollar plus players that are looking outside of Japan for places to expand and grow.

401 not out

Time for my "not out series" - a regular summary of the last 100 posts that I first started with 101 not out and continued with 201 and 301.

Without a doubt this recent period of posts on the BOOT have been dominated by consolidation and deals:

• Lonely Planet admitted that it could not meet the challenges of the Internet on its own and sold out a majority stake to the enterprise division of the BBC;
• Opodo shed Karavel with the story being broken by an blogger from the inside;
• TUI made a bad decision in buying asiarooms and once again search traffic predicted a deal;
• the battle for Travel.com.au (who now own the lastminute.com brand outright in AU/NZ) is not yet over with Webjet and Wotif at each others throats and AOT sitting not so quietly on the sidelines;
  
• Rakuten made some healthy profits and set itself for further expansion by selling out of Ctrip;
• the Flight Centre privatisation fell in a heap in an embarrassing way for the Flighties board;
  
• rumours flew that Priceline want Travelzoo and the comments section filled up with a debate on the merits of this idea; and
  
• we have the as yet to be confirmed rumour that TravelCLICK are about to be bought.
  

In other general news

• every media outlet there is ran a story about how bad the US air industry is prompting me to run my own series of the Airline Industry brought to you by BusinessWeek, the Legal Fraternity, Wharton, NPR, the Economist and Pizza Hut. Conclusions were that the US air traveller is stuffed and no-one is taking responsibility. In fact Marion Blakely quit as head of the Federal Aviation Authority to join the peak airline lobby group the Aerospace Industries Association;
• the T-List is soon to be a book. The BOOT submitted three stories:
• UGC vs Editorial. What's better? What's the balance? What's more 2.0?;
• Helping Airlines Stay on top; and
• the fourth phase of online travel - "too much information"; and
• it looks like Dead Herring for Red Herring.
  

and in quirky news

• one muppet shouted at two others;
  
• a lion, a crocodile and a buffalo tried to sort out their differences the old fashioned way; and
• the BOOT saved the world by defusing a jar of olives.

I hope you're enjoying reading because I am enjoying writing.

Rakuten and Ctrip part company and commence battle

Japanese online powerhouse Rakuten Travel has announced that it is selling its 20.3% stake in Chinese powerhouse Ctrip for $575mm - pocketing more than $470mm in profits in three years (Reuters). Good deal. Rakuten was the largest single shareholder. Profit is not the only motive. Rakuten has been pushing its own brand in China for a at least three years. The natural expansion plans for Rakuten given its inventory and regional location has been into Korea and China. It was only a matter of time before that Chinese expansion saw Rakuten (the brand) battling head to head with Ctrip. The challenge of course in China is the one I discuss often - the fact that "online travel" really means "call centre travel" meaning that it is not a clean and easy expansion of the current Rakuten model. Not a simple matter of more hotels in China and more translated pages. But with $470mm in profits in the bank you can buy a lot of seats in a Chinese call centre.

If you love a list of hotel sites, you'll like (and hate) TOP 100 HOTEL SITES

Found this site while surfing around. Claims to be a list of the "Top 100 Hotel Sites". List is generated using

The URL of every Hotel site was found in multiple internet searches and the amount of mentions of site's addresses is used to generate the rating. Hotel directory and travel guide. Includes information on tours attractions, restaurants, hotels reservations, travel jobs and more.

Whatever. There are some really bizarre rankings here. TripAdvisor is number one, Orbitz three, Booking.com four, Hotels.com five and Expedia six - all of which sounds find. However stuck at number two is myswitzerland.com, which undermines the whole list. Missing from the list are Wotif, HotelClub, RatesToGo, Rakuten and probably many more. Can't say either way if this is run by legitimate enthusiasts or just a link farm...and don't care. If you ignore the rankings and order, it provides a decent list a lot of the main (but also the minor) online hotel players.

The Internet in a tube map

Japanese based design agency iA have put out what they call a "Web Trend Map". Using the eye catching mechanism of a tube/subway map they try to visually track the "200 most successful websites on the web, ordered by category, proximity, success, popularity and perspective". Can't see how this improves your thinking or planning but sure is interesting to look at and worth a few minutes of your time. As it comes out of Japan it has a much more global feel than any other trend documents that I have seen. Travel companies Expedia and Rakuten get a mention. Unclear why Rakuten gets a mention but the equally large Booking.com and Hotels.com do not but who cares as it is fun to look at anyway.