New Cendant TDS Survey reveals Impact of Low Cost Carriers on Travel Patterns across Asian Markets

New research released today by Cendant Travel Distribution Services (TDS) reveals that, with the option of low cost airlines, travellers in Singapore and Malaysia both intend to travel more often (68% and 53% respectively), while only 25% of Hong Kong travellers will do so. The research aimed to discover how consumers in major Asian markets are reacting to the emergence of low cost carriers and the impact on their travel buying patterns. The survey was carried out in December 2004 and January 2005 for Cendant TDS by independent research firm Marketshare and covered 2,000 leisure travellers in Hong Kong, Singapore and Malaysia.

Mark Rizzuto, Managing Director, Asia, Cendant TDS, said, “Our research shows that there is a new low-cost travel segment emerging that travel agents need to understand so they can adapt their offerings. While direct online bookings are increasing, we believe that there is still a strong opportunity for travel agents to offer low-cost travel options combined with the expertise and service that only travel agencies can provide.”

The research predicts that the tourism market will grow where low cost airlines fly, providing that consumers are interested in the destinations offered. Preferred destination choices vary across markets, and some preferred destinations (like those for Hong Kongers) are not yet serviced by low-cost carriers. The top three for Singaporeans are Bangkok, Hong Kong and Kuala Lumpur. Malaysians want to go to Singapore, Bangkok and Sydney, while Hong Kongers prefer Tokyo, Beijing and Shanghai. Low cost carriers’ current market penetration in Asia is still relatively underdeveloped, compared to the United States and Europe. As of January 2005, there are 27 low cost carriers operating in Asia Pacific and these numbers are expected to grow significantly.

Cendant TDS’s research also found that online booking is taking off in Singapore and Malaysia, but Hong Kongers still prefer to book through their travel agent. Malaysians have the highest online buying pattern, with 87% intending to book air travel online in the next 12 months, and 84% planning to make online accommodation bookings. Singaporeans are next, with 69% planning to book air travel online and 50% to book accommodation. In contrast, only 32% of Hong Kong travellers intend to book air travel online in the next 12 months, and even fewer (26%) will book their accommodation online. 

The survey also examined how travellers will spend the money they save on low cost air travel. Singaporeans are generally not upgrading their accommodation with the airfare saved, preferring to spend on shopping during their trip (62%). 65% of Hong Kongers also intend to spend the same amount on accommodation when they travel by budget airline, and also will spend the savings on shopping (61%) and eating (52%). Approximately half of travellers from Malaysia will spend the savings on shopping, but 39% said they will choose better accommodation when travelling with a low cost airline.

Anthony Venus, Executive Director of Marketshare, said, “Low cost carriers are creating new demands for travel, appealing to new customers who would otherwise not travel at all, or use other means of transport such as car, bus, train or ferry. This clearly represents a new breed of traveller for agents to reach, provided that they learn more about this segment’s preferences and create the right products.”

This survey is the first of a series commissioned by Cendant TDS to examine trends in Asia’s travel industry and the implications for how these trends impact business.

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