Major challenges for foreign meta-search companies in China

Beijing – Established meta-search brands including KAYAK and Skyscanner are set to foray into China. explores what to expect as these entities enter with contrasting market entry strategies

Travel meta-search continues to spread its tentacles as established players look beyond the US and Europe for expansion. This trend is paving way for intriguing battles in several markets.

With KAYAK targeting China with a local site, and Skyscanner opting to acquire Chinese meta-search specialist Youbibi, the stage is set for intense competition, most crucially with nine-year old meta-search brand

“Content and understanding the nuances at the local level are of utmost importance,” said KAYAK’s VP Asia Pacific, Debby Soo, who is scheduled to speak at the upcoming 2014 TravelDaily Conference to be held in Shanghai from September 3-4.

Soo added, “As we have done elsewhere, product quality is pre-eminent, followed by monetisation. Once a certain threshold is reached, then the next step is worked out. Till then there are no big marketing plans, and possibly no strategic alliances.”

Major challenges

The most critical aspect of any meta-search business is the depth of its content, and this is precisely where complexity is deeply rooted in China where even the definition of a hotel isn’t clear.

“The hybrid model of Qunar is different from what a traditional meta-search or traffic generation site would focus on,” said a source based in Beijing. Other than charging for CPC and cost per sale basis, and display ads, Qunar also offers hotel reservation promotional programmes – last minute sale (featuring over 12000 hotels) and opaque booking platform.

The source further added, “While meta-searchers are generally OTA friendly, Qunar is competing with OTAs on the commission front. Qunar possesses a technology solution for around 60,000 hotels or so (signed directly by Qunar), where they market and sell their inventory and garner commission in return.”

Catching up with local players

The concept of “facilitated bookings” where a user doesn’t leave the meta-search site and still completes the booking with supplier/ OTA has been prevalent for both flights and hotels here in China. For any international meta-search brand that hasn’t focused on this aspect, it would call for major adjustment – in terms of both technology as well as regulatory licensing requirements, explained a source.

KAYAK does offer facilitated booking in flights, hotels and cars so users can book their travel without leaving the site or app. KAYAK might not face any major teething problems, but in all likelihood Skyscanner must have weighed this in while going for a strategic alliance with Youbibi.

Another key element would be gaining brand recognition. Last year Qunar garnered over 60% of its traffic without incurring any payment for it. This denotes that visitors reached its site through natural search results. In all, Qunar processed around three billion web and mobile search queries for air tickets and hotels, respectively, last year. Mobile search queries have risen from 30m in 2011 to over 780m at the end of 2013.

Also, a key aspect is to go beyond just price comparison and aid decision-making with an apt blend of content and tools.

YuanYuan Zhang, former marketing head of TripAdvisor China, says a company focused only on meta-search would not be able to satisfy the need of the Chinese users, especially in the hotel sector. She says one has to aptly feature users’ review and enhance the overall meta-search experience.

In case of, the number of hotel reviews grew to 2.3 million by the end of the first quarter this year.

Zhang also says just having a localisation team in place isn’t enough, the pace of setting up operations and constant improvisation counts, too.

This is where KAYAK is expected to make rapid strides, counting on its technology prowess. The entity streams live customer data in its technology centre in Boston. “There is a constant sense of urgency and focus on what’s happening right now with customers and how to fix it fast,” said Soo.

Even for existing meta-search players there are certain challenges that are tough to handle.

“One of the biggest challenges we faced was the recent GFW (Great Firewall), which completely blocked all Google services in China recently, and slowed down the Internet access speed into and out of China,” said an executive, associated with a meta-search engine outside China.  Source: WIT