Interview with Thomas Reiter, managing director, Pacifictours.com

Pacifictours.com is planning to invest more in software technology for packaging.

“We are getting a lot of hits on our packages advertisements and respective landing pages. What we don’t like is the communication resulting out of many requests, which is often excessive in spite of detailed product descriptions on our site. However, it is quite clearly the trend of the future, but it is a challenge in terms of technology and product inventory,” says Reiter.

In an interview with EyeforTravel.com’s Ritesh Gupta, Reiter, one of the speakers during the Travel Distribution Summit Asia 2006 held in Singapore, shares progress made by his company and how is it dealing with consumers from various markets in Asia. Excerpts:

Kindly share info on what kind of progress has Pacifictours.com Ltd made in the last six months?

We managed to reduce our search engine ad spending by running extensive logfile analysis. Following this, we have drastically reduced out our keyword inventory and concentrated on a much narrower range of keywords. We found that we simply didn't get any bookings on a number of search terms in spite of good click-through-rates. We are focusing our budget on a narrow range of "buy words".

What according to you have major developments in the online travel business in Asia or the markets, which you serve in the last six months or so? How have these impacted or shaped up business opportunities for your organisation?

There were problems with a number of hotels and hotel chains that didn’t want to deal with “Internet pure plays” (travel websites). We used to receive a good number of emails asking us to remove their property from the site, but this has calmed down a bit, although it still does happen. Overall the supply chain gives us more headache than generating traffic for our site. As for search engine advertising, the cost of clicks did not really go up that much, but the search engines are enforcing minimum click-through-rates and so the pressure on marketing expenses will persist.

Of all the markets you cater to, which market is most promising in terms of online travel business and why?

In general still the US market (plus Canada), as they are used to buying from websites. US customers are more familiar with the peculiarities of internet sales (i.e. if there is a problem with the payment gateway). They simply are the easiest to deal with, which shows as well when you approach smaller portals with revenue sharing suggestions. They know the ropes and come back very quickly with specifics.

How do you think Chinese consumers are taking to online travel?

We have a fully interactive Chinese interface (shortened characters) and had to realise that even with competitive rates and product inventory you don't really get around having a foothold on the ground in China. We hoped to capitalize on flights of some low-cost carriers in and out of China, but so far this did not happen. It seems it's still a case of 'look online, book offline'. Online settlement is a major issue and it will take a while until online credit card payment online will reach a level of acceptance like, say, in Singapore.

Could you share some insight into how are people currently researching and buying travel online in Asia?

Unfortunately they do it on very short notice, at least that’s what we are faced with day-in, day-out. It appears they are researching quite well in advance and then try to book on very short notice, a day or two before arrival. That makes it difficult to calculate ROI (return on investment) on ad spending, as we often don't know from where a certain booking originated.

Is it possible to segregate diversified market in Asia on the basis of their online behaviour?

Yes, we've seen quite distinctive consumer behaviour in various markets. For us Australia and New Zealand are the easiest to deal with. Singaporean and Korean markets are OK, followed by Malaysia. To compete with Hong Kong offline travel agents is very difficult, and Thailand and Indonesia don't work for us yet, contrary to Philippines, which has seensurprisingly good results.

What is the future for small and medium sized firms on the web? How do you know where to invest your money online and what return can you expect?

It very much depends on your product range: if you have a narrowly defined product (say a three-star hotel in a certain destination), you will find it difficult to maintain your ads on major search engines, you cannot generate enough revenue for the portal and they will disable your ads. You will be better advised to try some revenue sharing deals or try content advertising on very low bids.

If you have a wide product portfolio (many products, many destinations), the key issue is to allocate your budget carefully, as marketing cost can easily spin out of control.