hUELLA ONLINE TRAVEL

CASE ANALYSIS

SUBMITTED BY:-PANKAJ RUPLANI2013189SECTION-D

1. Give a brief description of travel industry and the business model adopted by the industry

DESCRIPTION OF TRAVEL INDUSTRY

The travel industry was one of the earliest to go online. Since travel had few geographical boundaries, and, thanks to the widespread adoption ofe-tickets, which airlines aggressively pushed, the airlines faced none of the logistical issues of online product retailers such as shipping and variable tax-collection schemes, the travel industry was uniquely suited for the Web .The advent of online travel had revolutionised the travel industry by offering a cheaper alternative to CRS/GDS technology for travel service providers. It had created new business models, changing the relationships among the key players which had become less interdependent but more competitive. Airlines increasingly reduced their dependence on travel agents and CRSs/GDSs by selling directly to consumers via the internet For example, Cathay Pacific Airways offered deeply discounted airfares that were available only on its website for a limited period each time. Of the total seat sales, average online sales had grown from 24.4% in 2002 to 32.4% in 2006. In the same year, sales via airlines’ own websites alone accounted for 24.4% of the total ticket sales, compared to only 5.1% in 2002.

BUSINESS MODELPromoting itself as a “full-service travel guru”, Huella featured a user-friendly design for both its main and regional sites, making them easy to navigate, as well as a strong selection of attractive deals. The company offered not just flights from major airlines worldwide but also hotel rooms and car rental services. Using its highly-acclaimed search function, which was considered to be one of the strongest in the industry, consumers could search for any combinations of the above offers as well as pre-packaged tours from a wide variety of suppliers—eg, airlines’ package tours like Cathay Holidays. Huella’s sites also allowed users to modify their search parameters to include their intended dates of travel and displayed results that were up to three days around the preferred dates. Moreover, users were also able to look for best fares within a self-chosen date range. Huella only accepted online bookings and charged a fee of US$4–11. Although the majority chose to use e-tickets for their travel, customers could also opt for paper tickets and would be required to pay for postage. Besides credit cards, the sites also offered various payment options, such as bank transfer or bank draft, to cater to different needs.

2. How do you see the performance of Huella Online Travel Ltd (HOT) and what are its current concerns?

HUELLA ONLINE TRAVEL

Founded in 1999 in Kuala Lumpur, Malaysia, Huella Online Travel was an Internet travel portal targeting Greater China and the rest of Asia. Huella was a subsidiary of Blue Rock, aUS-based private equity firm which owned a majority stake in the company, and Your Journey Partner, an online travel agent headquartered in Australia. Blue Rock also owned stakes in some of the major passenger carriers in Asia Pacific, such as Cathay Pacific, Japan Airlines, Singapore Airlines, Air China, China Airlines, EVA Airways and Korean Airlines. In less than a decade, Huella had expanded into ten markets across Asia, including Hong Kong, China, Taiwan, Singapore, Japan and South Korea, among others, and each had its

own localised websites. By 2006, its total revenue across all markets had reached US$100 million.

CURRENT CONCERNS

In April 2007, Huella Online Travel Ltd,1 a Malaysian-based online travel portal targeting Asia, including Greater China, announced its results for the financial year 2006. Since the launch of the company’s Hong Kong site in 2000, its market share for the city had been hovering just under 5%. Indeed, Huella’s performance in Hong Kong had been lower than in its other markets. Previous market research commissioned by the company had found that low consumer awareness of the Huella brand and the general risk-averseness among Hong Kong people towards online travel purchases appeared to be the key factors behind this situation.

3. Define the marketing management problem faced by HOT

MARKET MANAGEMENT PROBLEMS

Jenny Leung, marketing and market research manager for its Hong Kong office, had been with Huella since it first opened its office in Kuala Lumpur, Malaysia. In 2000, she was transferred to help set up the company’s Hong Kong operations. Jenny Leung, marketing and market research manager of Huella Hong Kong, was surprised that the online travel industry had not picked up in Hong Kong despite the city’s high internet usage penetration rate and thetechno-savvy nature of its population, especially among young people. She was also interested in knowing how Hong Kong consumers were taking the Huella brand. Therefore, in 2002, she hired MGO, a Hong Kong-based market research company with offices across the Greater China region that included Taiwan and several major cities in China (eg, Guangzhou, Beijing and Shanghai), to conduct a study for its Hong Kong market.

Major issues:

Brand Awareness: A majority of the respondents had never heard of Huella, whether it was before prompting (unaided awareness) or after prompting (aided awareness). The few who had heard of the brand tended to have a vague impression of it.

Brand Image: All respondents perceived Huella as risky and unreliable, mainly due to their concerns about the security and stability of Huella’s website. Moreover, a majority of the respondents, particularly business travellers, also shared the view that the losses incurred from a travel-related purchase that went wrong would be difficult to compensate. The perceived risks would outweigh any potential benefits, thus discouraging them from buying their flights, hotel rooms or other travel-related products and services online.

Brand Positioning: Virtually all respondents categorised Huella with other online travel agents/retailers (Group A). No one perceived Huella as similar to traditional, brick-’n-mortar agents, such as Hong Thai, MorningStar and Wing On (Group B).

Usage Pattern: Due to the low brand awareness, a majority of the respondents had never used Huella’s Hong Kong site before, nor had they used any other regional sites of the company. Among the few who had heard of the brand, they normally only used it to obtain information about available products/services and to compare prices, with their actual purchases being made with traditional, brick-’n-mortar travel agents. With regards

to how they intended to use Huella, all respondents claimed they would only use Huella as an information provider and would purchase from traditional, brick-’n-mortaragents instead.

4. As a business research consultant what could be your research objectives?

RESEARCH OBJECTIVE General purchasing habits and attitudes of Hong Kong consumers towards travel and

vacations, in particular online travel Awareness of the Huella brand among consumers in Hong Kong Attitudes and perceptions towards the Huella brand and its Hong Kong website with

its competitors’ Actual or intended usage pattern of Huella and its competitors.

5. What type of information you would like to collect to answer your research objectives?

The information needed for answering the research objectives would be the internet usage pattern of the local people. How they use the internet. This would require answering of a questionnaire that would have questions like where the people use internet, how much time they spend on it, what websites they visit, which travel portals they visit for information/purchase transaction, etc. Questions relating to traditional travel agents would also be included like what facilities draw consumers to the traditional agents, what are the major area of concerns regarding to the online travel portals, etc.

Information regarding the target market and their composition would also be needed. This would clarify if the target market of HOT is internet literate or not.

6. Formulate a research program to help solve marketing management problems faced by HOT

To begin a research program for solving the marketing management problems faced by HOT, the problem should be defined clearly so that the result of research would be of some actual use. The main issue with the marketing management had been stated above. If the problem definition is glossed over or done poorly, the research results are likely irrelevant and potentially harmful.

Once the problem had been defined, next step would be to formulate research questions. Research questions express the research objectives in terms of questions that can be addressed by research. After designing the research questions, various methods had to be used to collect information about the cause of the problem and factors that are closely related to it. Both qualitative and quantitative research methods would be used to collect information.