The world of B2B travel distribution has seen multiple developments in recent years, with market consolidation and enterprise transformation as major indicators.
After acquiring rivals GTA and Tourico back in 2017, TravelTech giant Hotelbeds recently launched its new group brand, HBX Group, comprising four major brands - Hotelbeds, Bedsonline, Roiback and TravelStack.
CEO Nicolas Huss said the group continues to evolve as a world-leading TravelTech company, and has completely rebuilt its tech stack to support this shift.
The travel industry is still recovering from some lingering impacts post-pandemic. With consumer behaviors and booking channels evolving, how will the traditional B2B distribution sector develop in the next few years? Is the sector still a promising one, with online travel further penetrating into consumer preferences?
Carlos Muñoz Capllonch, Chief Commercial Officer of HBX Group (parent of Hotelbeds), recently talked to ChinaTravelNews and shared his thoughts and views on the B2B sector, as well as how the company is going to grow in the China market.
Carlos said that the value proposition of B2B wholesalers remains unchanged as consumers continue to book travel through different channels, and offering the right products with the right conditions is still essential to them.
He also mentioned that the company plans to triple its business size in the China market in the next three years. For the longer term, Carlos believes that the industry still looks promising despite some common challenges that the sector is facing.
Following are excerpts of the talk, edited for brevity:
How did Covid-19 change travel distribution?
Carlos: As for the B2B sector specifically, I think Covid has driven people and companies to further digitalization. They are now looking for ways to become much more digital, automated and efficient. And this is driving one important change: our partners on both sides - hotels and clients - are looking for fewer partnerships. In the past, a B2B customer used to have like 10-20 partners who supply different products, but today, many of them are reducing significantly the number of their partners. And this drives efficiency and stronger partnerships.
How do you view the China market?
Carlos: As a destination, China is in our top 20 hotel countries (in particular, the top 17 representing 1% of the share). Top destinations are Shanghai (20%), Beijing (13%), Guangzhou (10%), Hangzhou (5%) and Nanjing (4%). Currently, ADR is still below pre-Covid level (around -20%), but that's still recovering.
With flight capacity being made available, we see significant growth in terms of travelers to China and from China to the world. This is where our company is focused on, bringing international travelers to and from China.
In this regard, we are at similar levels to 19 than pre-Covid. We know that the market is not at this level yet, because the flight capacity is at -40% compared to the 2019 level. But I think we are currently running ahead of the market.
What are your plan and expectations for China?
Carlos: The growth is happening across China. I would like to mention the big cities - Shanghai, Beijing, Guangzhou and Shenzhen - all these are the first-tier drivers for international travelers, which are our focus. Also, Hong Kong obviously is where we see triple-digit growth at this moment. So growing very fast.
As for our plans for the future, we just finished our strategic plan for China which we presented to our board. In the coming three years, we want to triple our size in China, both as a destination and a source market.
Just a few months ago [China's air capacity] was 10%-20% of pre-Covid level, but now it's at 60%. It's growing rapidly. So we expect that will continue evolving steadily and our expectation is that, by the first quarter of 2024, we will be at 100% of the airline capacity. And by the second half of 2024 the market will be fully recovered. That's our expectations for the outbound sector.
What's your strategic positioning as a B2B wholesaler?
Carlos: Everything is driven by the end consumers.
Some people want to go to an online travel agency and book their holidays there. But some people prefer to go to a travel agent because they are looking for someone to take all the burden for them, so they can have peace of mind. Some people simply prefer booking through their credit cards or loyalty points. Some others prefer to go through airlines.
And there are also some end consumers that belong to closed user groups. This can be, for instance, I'm in a closed user group from a retail shop, from a bank, or from an insurance company. And I buy my travel through this closed user group.
So consumers like to buy in many shapes and forms. This means that distribution is going to continue being very fragmented. Providing all these different ways to consume travel with the right offerings, competitive products, and curated content with the right conditions, picture descriptions, etcetera, is what makes the roles of B2B travel companies like us relevant. And this is going to continue to be the case.
I cannot see a world in which there will be only one global player.
What's the secret of your global growth?
Carlos: We got all the teams on the ground in every source market or destination. They speak to our partners, hotels or clients, and they understand their business model, strategy and needs.
Based on these needs and objectives, we joinly define what is the best solution for them, for our partners to achieve these goals and objectives.
I think the global teams are comfortable and very happy to be in a company like us. Our employees' net promoter score (NPS) is very high, with very low attrition. And that's because they feel that our company provides the right value to the market, as well as the right value to the employees.
How do you grow in online technology and innovation?
Carlos: We were born as a tech company, as an online player more than 20 years ago. There are many solutions that we've been putting in place. I think we've been leading in the space, with the rollout of API solutions for clients and also connectivity with hotels and with other partners.
And we are now doubling the effort on innovation, teaming up with key partners, for example, New York University. We got an exclusive partnership in terms of travel and tourism with them. They have an innovation hub, also in Shanghai and many other places.
And together with all the partners, we look for ways to continue innovating, including startups. Together we create an ecosystem that drives innovation and new functionalities for the market. It can be elements like applying fintech to travel or online check-ins. So there are many applications that we are working on.
How do you see the travel market in long term?
Carlos: The travel industry still looks very promising. Expectations for growth in the coming years are really ahead of the global GDP, significantly ahead. At the same time, travel has become more and more of a basic for the consumers. So they may give up on certain expenditures, but not on travel. People want to experience the emotion of traveling. So that's very positive for our industry.
The challenge that we all have in our space is to make sure that these experiences are truly memorable. Eliminating all the friction that happens in travel. We are committed to making this happen.
