2023-04-13
Zhuang Zhuoran
Vice President of Alibaba Group , CEO of Fliggy
Full text:
Your Excellencies, distinguished guests, ladies and gentlemen:
Good morning !
This year’s Chinese New Year holiday saw strong signs of recovery for China’s tourism industry. Take Fliggy as an example. Our domestic hotel booking and air ticket sales during the holiday were both higher than in the same period of 2019, and outbound tourism bookings for over 30 countries doubled. In addition to the aggregate statistics, we also observed significance disparities in terms of consumers’ attention to different products, recovery of different categories of service and merchants, the fulfillment of contracts concerning different types of services, and the rebound in indicators. This is largely attributed to practical factors such as demand fluctuations and labor shortage. More importantly, it indicates that the industry still faces daunting challenges in its pursuit of high-quality and sustainable development. This is also the reason why I call for a rethinking of tourism recovery today.
It is important to get a head start when demand bounces back. However, in a fast-changing and highly uncertain environment, the ability to understand and constantly meet customer demand holds the key to reaping the benefits of recovery and boosting consumer confidence over a longer time frame so as to truly achieve the anticipated tourism prosperity. Next, I would like to share some views on what platforms can do in this process.
First, platforms should empower merchants to leverage new growth drivers to address the urgent task of repairing the supply chain. In the tourism sector, supply is highly fragmented, and merchants can be in vastly different development stages. During my visits to various merchants last year, someone told me that it was difficult to recruit even two staff members familiar with tourism and online operations, and even if they were hired, it would remain unclear how long they would stay. Today, the power of digital means in matching supply and demand, creating impressive experiences and improving the efficiency has been widely recognized in the industry. However, the real crux is how to make the most of digital tools and how to acquire digital capabilities.
In December 2022, Fliggy launched a special program called “Hello, Future” aimed at boosting the recovery of the tourism sector. One of the most important measures is to introduce a tiered business cooperation model, which makes it easier for merchants, especially small and medium-sized organizations and new merchants, to share the opportunities brought by digitization.
Some of our partners are for now unable to open and run a store independently. For example, traditional travel agencies may have decades of operational experience, excellent resources and great service capabilities for some tourism destinations plus ties with overseas merchants unfamiliar with the Chinese market. In response, we have made our procurement and marketing capabilities available to them so they can divert precious manpower from these affairs and focus on the quality of supply and services. If some merchants have the ability to engage in retail on their own and want to directly serve consumers through self-operated stores, they are always welcome to open stores on our platform to build their digital assets and capabilities.
On this basis, Fliggy has scaled up subsidies and steered more resources such as e-commerce live streamers in an effort to help merchants get better prepared for the new cycle. We are glad to see that since outbound group tours and “air ticket plus hotel” packages were put back on offer on a pilot basis, close to 100 outbound tour operators have registered and started operations smoothly on Fliggy.
Second, platforms should be able to identify and tap into new demand so as to better match fine-grained supply with suitable consumers. Today, tourism consumption behaviors driven by themes and interests are increasingly common. What counts more is to give tourists a reason to come rather than simply wait for them to come. It is difficult to register solid business performance by merely moving what one offers from a brick-and-mortar travel agency to an online platform or relying merely on online traffic.
Platforms can provide insights into the travel needs of different consumer groups and consumption scenarios and constantly stimulate the interests of consumers, thus increasing the certainty and the conversion rate for merchants. These capabilities have the potential to generate new high-quality supply.
Take Jiangsu, Zhejiang and Shanghai as an example. Catering to the growing demand for self-drive tours to surrounding cities on weekends, Fliggy joined hands with merchants to launch a car rental product that allows consumers to purchase a rental entitlement at a fixed price and then make reservations and use it multiple times as needed within the validity period. This product not only brings more revenue to merchants, but also facilitates their business operations as it can be used multiple times.
Third, on the basis of identifying new requirements, platforms need to develop new services. The key lies in constantly looking for ways to come up with new products so as to enrich supply and bring stable, reliable and riveting experiences for consumers while helping merchants lower operational costs. For example, the consumption model of purchasing travel packages first and then making a reservation when needed has gained popularity over the past three years. In the post-COVID era, this consumption model is still warmly welcomed, as it offers greater flexibility.
For a long time, consumers had to contact a merchant by phone to validate the travel packages they had purchased. In 2021, Fliggy launched an online reservation feature, which enables consumers to check the inventory in real time and conveniently make their reservation with a few clicks via a mobile phone app. In the future, we will continue to increase input in such endeavors.
Over the past three years, I’ve been repeatedly asked by peers and partners, “With so many things changed, will a platform’s position change too?” As I see it, these changes would not affect the openness that defines platforms, but will make platforms more inclusive and diverse and enable them to better serve the consumers. On the path to recovery, to keep people confident in the tourism industry as a whole is the key to a bright future for the industry.
Over the past three years, the tourism industry has suffered an unprecedented blow and also experienced a drastic overhaul in its concepts, knowledge and approaches. While respecting the industry’s characteristics and rules of development, tourism professionals must break away from old thinking, keep an open mind and deal with potential problems from the perspective of a paradigm. The same is true for platforms. We serve as a bridge connecting not only consumers and merchants, but also physical operations and digital operations. Adapting ourselves to changes and better empowering our partners will be the overarching principle in the process of tourism recovery.
Thank you!