Travel Distribution Strategies for India and China

India and China are expected to dominate the Asian travel market place, and probably even the world if current trends are any indication.

The world’s focus is on both nations, and most refer to them as if in an equal phase of the growth cycle, bounding along from strength to strength. But scratch beneath the surface of opinion a little harder and in reality the experts are divided as to the supposed equal pegging of these massive emerging industries.

As a travel supplier this presents a rather interesting conundrum, that of which country to concentrate growth strategies on. Certainly this is true for suppliers with limited resources and budgets, or those that are not as established globally. Industry representatives from both nations will argue that theirs is the nation with the greatest potential, but how do you know for sure?

In light of this “dilemma”, perhaps the only way to get a clear picture of the situation is to factor like-for-like comparisons into the equation, beginning with country populations. China’s population (1.32 billion) is a paltry 200 million people bigger than neighboring India (1.12 billion), so immediately it’s not difficult to see what all the hype is about.

Both countries have seen burgeoning middle classes in recent years, and their access to disposable income continues to increase where China are leading with 12% in 2006.

Comparing the 2005 GDP of the two nations, China grew by a staggering 10% while India experienced 8.5% growth, meaning both nations feature in the top four highest grossing countries of the world.

India originally adopted online technology far sooner then China, but in recent years the Chinese market has caught up and it is now widely regarded to be at the same level. Similarly both countries have seen significant growth in the number of people with access to the internet, China especially with its 123 million users compared to India’s 60 million. Interestingly however, the number of hosted websites in India is far greater with 1.5 million, approximately 1.3 million more than in China.

The current Indian labor force stands at around 798 million, while China is around the 509 million mark. This suggests that the fewer workers in China earn a higher average salary, and subsequently a higher level of disposable income.

From a marketing, distribution and travel booking perspective, it’s obvious to see why Asian travel companies are so keen to embrace the mobile revolution, when you consider that there are some 437 million mobile phone users in China and 140 million in India.

With regard to access, there are 486 airports in China and 341 in India. The current growth rate in outbound traveler numbers in India is up 12% year upon year, and China (although more unsteady) seems to have stabilized around the 13% mark of late.

Perhaps the major overriding reason for all of this change and unprecedented growth however, is the freeing up of once restrictive government regulations of both nations. In 2006 the top destination for venture capitalists was China, which received around US$900 million in investment. While in third place was India with US$746 million.

With so little separating these two huge countries, perhaps comparisons are not necessarily the best way to answer to the question of where to invest budget. Maybe the future lies in trying to understand which destination will be favored by next generations buying public, and where the outbound travelers of each are bound for.

To hear more about the emerging markets of India and China, join the Travel Distribution Summit Asia, Emerging Markets session in Singapore, March 13 and 14, 2007.

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