Lokaverkefni til BS-prófs

í viðskiptafræði

An analysis of the Vietnamese online travel agency

industry: Opportunity for entry

Gústav Arnar Magnússson

Leiðbeinendur:

Gylfi Dalmann Aðalsteinsson, dósent

Magnús Haukur Ásgeirsson, aðjúnkt

Október 2020

An analysis of the Vietnamese online travel agency industry:

Opportunity for entry

Gústav Arnar Magnússon

Lokaverkefni til BS-gráðu í viðskiptafræði

Leiðbeinendur:

Gylfi Dalmann Aðalsteinsson, dósent

Magnús Haukur Ásgeirsson, aðjunkt

Viðskiptafræðideild

Félagsvísindasvið Háskóla Íslands

Október 2020

3

An analysis of the Vietnamese online travel agency industry:

Opportunity for entry

Ritgerð þessi er 12 eininga lokaverkefni til BS prófs við

Viðskiptafræðideild, Félagsvísindasviði Háskóla Íslands.

© 2020 Gústav Arnar Magnússon

Ritgerðina má ekki afrita nema með leyfi höfundar.

Prentun: PDF

Reykjavík, 2020

4

Foreword

The inspiration for this research topic comes from my founding of an online travel agency

in Vietnam in 2019 called Conbeo. The results of this research are therefore hugely

beneficial to me and my founding partners.

The origins of this journey of founding an online travel platform in Vietnam began

when I worked for the Icelandic online travel platform Guide to Iceland from 2016 to

2018. Guide to Iceland, one of the fastest-growing companies in Icelandic history, is a

website where sellers of tourism services in Iceland can list their products and have them

sold for a commission fee. They were experts in generating online traffic through clever

blogs, images, videos and social media campaigns. The combination of a sudden spike in

interest in Iceland and the remarkable execution by the team at Guide to Iceland created

one of the most successful companies in recent Icelandic history. Being a part of this team

and seeing this success first hand were eye-openers for me and gave me the confidence

to start a similar venture myself. After spotting the same growth trajectory in Vietnam’s

tourism market, two partners and I decided to launch Conbeo.

The purpose of this research was to more clearly understand the competitive

landscape of the Vietnamese tourism market. The research certainly had some

challenges, such as defining which metrics matter most when it comes to measuring each

competitor. Nevertheless, I feel that the goal of understanding the potential for Conbeo

in Vietnam was achieved. Given that a competition analysis of this nature has most likely

never been carried out, the most important lesson that I learned from this experience

was how to measure and define the market.

I would like to personally thank my advisor, Magnus Haukur, for helping me to navigate

this process.

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Abstract

Vietnam ranks among the fastest-growing tourist destinations in the world, with revenue

in 2018 reaching $26.75 billion, up $4.75 billion from 2017. Between 2010 and 2018, the

number of international tourists grew threefold from 5 million to more than 15 million.

An estimated 19 million tourists will visit Vietnam in 2020, including 3.5 million from

North America, Australia and Europe. This massive spike in tourists has created a lucrative

business environment, especially in the online travel sphere. The goal of this paper is to

determine whether current market conditions in the Vietnamese tourism industry are

ripe for a new online travel agency to enter the market, specifically in the tour and activity

sphere. Most flight tickets and accommodations are booked online through the major

online travel agencies, such as Expedia and Booking. However, the focus of this paper is

the tour and activity industry, which differs from other industries in the sense that global

online travel agencies have not been able to capture its market potential as successfully

as has been the case with air travel and hotels.

A competition analysis was conducted of the online travel agencies for tours and

activities to define where in the product life cycle the industry is currently located. The

question of whether it is feasible to enter the market in Vietnam with an online platform

that offers tours and activities for tourists is addressed.

The key metrics for analysing the online market for tours and activities in Vietnam

were defined. Based on these metrics, the key players in the market were identified and

analysed. Studying the main competitors in the market and comparing them to the

current size of the tourism market in Vietnam revealed that the online market for tours

and activities is still very early in the product life cycle. The results provide an impetus to

continue developing an online entity focused on the tours and activities market in

Vietnam. However, several factors need to be further investigated, such as market

conditions in Vietnam, general online interest and the convenience of booking through a

hotel desk instead of online booking.

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Table of Contents

INTRODUCTION 8

1 THE ONLINE TRAVEL AGENCY 9

1.1 History and development 9

1.2 The global landscape of OTAs 9

1.3 OTA tours and activities market 11

1.4 OTA business models 12

1.5 Search engine marketing and tourism 13

1.6 Service blueprint for tour and activity OTAs 14

1.6.1 The customer begins planning a vacation to Vietnam using ‘keywords’ 15

1.6.2 Conversion from a unique visitor to a client 15

1.6.3 Problems that can be solved with digital platforms 16

2 OTA TECHNOLOGY 17

2.1 Written content and blogs 17

2.2 Links and backlinks 21

2.3 Visual content 22

2.4 Technological infrastructure: the Conbeo case study 23

3 THE VIETNAMESE TRAVEL AND TOURISM MARKET 25

3.1 Development of OTAs in Vietnam 29

4 COMPETITION ANALYSIS OF OTAS IN VIETNAM 31

4.1 Local competition 31

4.2 Foreign OTAs 34

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5 THE PRODUCT LIFE CYCLE AND CUSTOMER SEGMENTATION 38

5.1 OTAs for tour and activity services in Vietnam 39

5.2 Segmentation 40

5.3 The English-speaking tourist segment in Vietnam 41

6 CONCLUSION AND DISCUSSION 43

REFERENCES 46

Figures

FIGURE 1: EXAMPLE OF A SERVICE BLUEPRINT. SOURCE: JENSEN, 2015. 14

FIGURE 2: AN EXAMPLE OF CONTENT. SOURCE: CONBEO.COM. 18

FIGURE 3: THE INTERSECTION OF THE THREE KEY ONLINE MEDIA TYPES. SOURCE: CHAFFEY AND ELLIS-

CHADWIDK, 2019. 20

FIGURE 4: INTERNATIONAL VISITORS TO VIETNAM. SOURCE: VIETNAM BRIEFING, E.D. 27

FIGURE 5: NUMBER OF TOUR OPERATORS. SOURCE: VIETNAM TOURISM, 2016. 27

FIGURE 6: ACCOMMODATION. SOURCE: VIETNAM TOURISM, 2016. 28

FIGURE 7: THE FOUR LIFE-CYCLE STAGES AND THEIR MARKETING IMPLICATIONS. SOURCE: KOTLER AND

KELLER, 2006. 38

Tables

TABLE 1: PROFITABILITY OF THE LEADING OTA BRANDS. SOURCE: PRIETO, 2019. 11

TABLE 2: FOREIGN OTAS OPERATING IN VIETNAM. SOURCE: TSETKVOV, 2018. 34

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Introduction

As the Vietnamese tourism industry continues to grow at a rapid pace, the potential for

new business opportunities is evident. The lack of a strong online presence of agencies

offering travel services in Vietnam indicates the potential for a new entity to enter the

market, a possibility this paper explores. Today, most flight tickets and accommodations

are booked online through the major OTAs, such as Expedia and Booking. The focus of

this paper is the tours and activities industry, which differs from the other industries in

the sense that global OTAs have not been able to capture its market as successfully.

Currently, a significant number of travellers still book their tours and activities through

hotel lobby desks and physical travel agencies on arrival, opening the door for localised

OTAs to emerge in tourism markets around the world and to capture a share.

Focused on the Vietnamese tourism industry, this paper conducts a competition

analysis of OTAs for tours and activities to define where in the product life cycle the

industry is currently located. The research question of this paper is the following:

Is it feasible to enter the online travel market in Vietnam with a

localised OTA that offers tours and activities for tourists?

The first section of the paper discusses the global landscape of the OTA industry and

how it has become the preferred solution for buying airline tickets and hotel

accommodations around the world. The major business models of OTAs are defined, and

a service blueprint for customers using services from internet-based companies are

mapped out. The second chapter goes into detail about the technical specifications

necessary to develop a successful travel platform, followed by an analysis of the

Vietnamese travel market. Chapter 5 presents a competition analysis of the Vietnamese

OTA industry. The OTA business concept is explained, the technology needed to capture

traffic to a website is described, and the investments necessary to establish an OTA

agency and the changing Vietnamese tourist market are defined.

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1 The online travel agency

An online travel agency (OTA) is a travel website that provides information about and

sells travel products such as flights, accommodations, cars, travel packages and tours

(Peltier & Sheivachman, 2018). Within the OTA industry, accommodation reservation and

flight-booking services have unquestionably had the most success. Practically all flights

and accommodations are booked via OTAs such as hotels.com, booking.com or

expedia.com. However, the segment referred to as the tours and activities market has

not had the same success in moving the booking process online. It is estimated that

roughly 80% of tour and activity market transactions still occur offline in hotel lobbies and

among street vendors (Peltier & Sheivachman, 2018).

1.1 History and development

The first OTA specialised in re-selling tours and activities online was Viator, which was

established in 1995 and began selling online in 1997. Rob Cuthbert, its founder and

former CEO, stated that between 2000 and 2010 there were no serious competitors to

Viator, which caused investors to worry (Peltier & Sheivachman, 2018): ‘If you don’t have

competitors, that raises questions in the minds of investors and potential acquirers’.

Cuthbert continued,

Some investors were questioning us whether there really was a marketplace. There

was a lot of resistance because there was not really a strong competitor to Viator.

I‘ve never fully understood why since the marketplace was going to expand rapidly

and why more people didn’t get into it much earlier (Peltier & Sheivachman, 2018).

Cuthbert’s statement indicates that the online tour and activity market has been

overlooked given the massive growth in the sector. In the past decade, there have been

numerous major tour and activity OTAs created, such as GetYourGuide (founded in 2009)

and Klook (founded in 2014). As a result, interest in this industry has spiked in recent

years. Despite the formation of numerous OTAs, this market sector remains heavily

offline (Peltier & Sheivachman, 2018).

1.2 The global landscape of OTAs

A handful of large international entities dominate the online travel market most notably,

Priceline Group and Expedia Group, which account for over 60% of the market. However,

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within the travel industry, a large amount of business is still handled offline. Of the top-

10 largest travel industry companies in the world only two, Expedia and Priceline, fall into

the OTA category (Power List, e.d.).

1. Expedia Group ($60 billion), including expedia.com, hotels.com and other brands

2. Priceline Group ($55 billion), including Booking, Priceline and Kayak

3. Carlson Wagonlit Travel ($24.2 billion)

4. BCD Travel ($23.8 billion)

5. HRG North America

6. FC USA ($13.4 billion)

7. American Express Global Business Travel ($6.93)

8. American Express Travel ($5.1 billion)

9. Travel Leaders Group ($4.32 billion)

10. Fareportal/Travelong ($4.1 billion)

However, the trend is toward continued growth in online or digital businesses at the

expense of more traditional companies such as American Express and Carlson Travel. The

two leaders are Expedia Group, which owns several large brands, including hotels.com,

Orbitz and hotwire.com, and Priceline Group, which owns Booking.

In the online journal Mauprieto, journalist Mauricio Prieto compared the results of 10

publicly listed OTA companies: Booking (part of Priceline), Expedia, Ctrip, eDreams

Odigeo, Despegar, On The Beach, Lastminute, MakeMyTrip, TripAdvisor and Trivago

(Prieto, 2019). The operating results for four leading brands are summarised in Table 1.

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Table 1: Profitability of the leading OTA brands. Source: Prieto, 2019.

In 2018, Expedia and Booking accounted for 73% of the combined revenue of these

publicly traded online travel companies. The third largest was Ctrip, which is the largest

Chinese OTA. TripAdvisor is the fourth largest OTA, with $1.6 billion in revenue, which is

only 11% of the revenue of Booking (Prieto, 2019).

The three largest companies (Booking, Expedia and Ctrip) comprise 93% of total

revenue for the leading eight OTAs. Clearly, there are significant differences in the EBITDA

figures of each of the world’s top four OTAs. Booking leads by a large margin, with a 2018

EBITDA of $5,750 million, followed by Expedia with $1,970 million, Ctrip with $521 million

and TripAdvisor with $400 million. Based on these figures, the bargaining power that

Booking has over players is significant. The phrase ‘booking’ has even become

synonymous with booking hotels online, an indication of the brand’s dominance over the

market (Prieto, 2019).

1.3 OTA tours and activities market

There are individual markets in which online penetration of the tour and activity market

is significantly greater than in others. Guide to Iceland is a market platform for tour and

activity providers in Iceland that was founded in 2014 and grew into a business valued at

$100 million in 2018 (Northstack, 2018). The online booking of tours and activities in

Iceland has surged since the company’s introduction to the market. The key difference

between Guide to Iceland and OTAs such as Viator and GetYourGuide is that this platform

is localised to the Icelandic market. The company focuses on promoting and selling

excursions and day tours to both customers who are planning trips to Iceland and

customers who have already arrived in Iceland. Given Guide to Iceland’s success, one

must consider if the localisation factor is significant for success in the industry. A

Booking (Priceline) Expedia Ctrip Trip Advisor

Year Revenue EBITDA Revenue EBITDA Revenue EBITDA Revenue EBITDA

2013 6.8 2.7 4.8 0.9 1 0.4

2014 8.5 3.5 5.8 1.1 1.1 0.05 1.3 0.5

2015 9.2 3.7 6.7 1.2 1.7 0.1 1.5 0.4

2016 10.7 4.1 8.8 1.6 2.8 -0.1 1.5 0.4

2017 12.7 4.9 10.1 1.7 4.1 0.6 1.6 0.3

2018 14.5 5.8 11.2 2 4.5 0.5 1.6 0.4

All numbers are in US $ billions

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traveller’s first instinct is to seek information about the destination they are visiting. A

local service provider, with its local insight that international companies lack, should be

in an advantageous position in being able to provide higher-quality content. Furthermore,

people are increasingly seeking to personalise the tours they book, which provides OTAs

that are localised in a market with a competitive edge (Northstack, 2018).

Local OTAs certainly have advantages in individual markets, but there are still technical

aspects that need to be executed to achieve high rankings on search engines. Search

engine optimisation (SEO) is the process of maximising the number of visitors to a

particular website by ensuring that the site appears high on the list of results returned by

a search engine (Kaur, 2017). Executing an SEO strategy that puts one’s company above

competitors for keywords related to the tourism market is how one attracts potential

customers to their website. Traffic from keywords can be generated via two methods:

paid search or organic search. Paid search is the process of buying ownership of certain

keywords so that one’s website appears first when a keyword is typed into a search

engine. Conversely, organic search is when content that has been produced on a site

appears on a search engine because the search engine algorithm has deemed it to be

more valuable and relevant to the search phrase than other search phrases (Odden,

2012). In this regard, there is unquestionably a race to increase online bookings for tours

and activities in tourism markets around the world using these methods (Yalçın & Köse,

2009).

1.4 OTA business models

Three recognised business models are used in the OTA sector: the agency model, the

merchant model and the advertising model (Uenlue, 2017). Companies such as Booking

use the agency model. The advertising method is a common business model employed

on the internet. Google, Facebook and TripAdvisor are examples of companies with

successful advertising business models on the internet. The merchant model is likely to

be employed more frequently in the future as large companies use their scale to buy in

bulk from service providers. The definitions of the three models are as follows:

The agency business model operates as an intermediary between the operator and client, generating revenue through commissions. Agency business model contracts are made with operators and determine what the commission percentage of each sale will be. An OTA may incentivise operators to give away

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a larger percentage of the commission in exchange for a higher ranking on the platform (Uenlue, 2017).

The merchant model operates by buying large chunks of inventory, such as accommodation nights, and reselling them at a marginal rate. For example, Expedia does this by buying up large numbers of accommodations well in advance at a discounted rate (Uenlue, 2017).

The advertising method generates revenue through click-based advertising and is generally used by OTAs that are primarily focused on offering information to clients, such as TripAdvisor. In this model, revenue is made per click as the OTA presents the user with ads from partners. The cost per click is generated via an auction system, so the price fluctuates greatly between a two-star hotel in a remote area and a five-star hotel in Manhattan, for example (Uenlue, 2017).

A combination of these three models is often implemented, but depending on the

purpose of the OTA, one will usually be the primary source of revenue. In the case of

TripAdvisor, 46% of its revenue is acquired through the advertising model because its

core function is to serve as an information hub for travellers. In the case of Booking, 80%

of its revenue is generated through the agency business model, while a site like Expedia

generates 63% of its revenue via the merchant model (Uenlue, 2017).

1.5 Search engine marketing and tourism

Travel search engines have become an integral part of the travel industry (Kaur, 2017).

Search engine marketing has thus become one of the most important strategic tools for

marketing tourism destinations. In addition to representing a significant opportunity for

online travel businesses, search engine marketing poses a significant challenge in that it

involves travel businesses competing against each other and other sources of information

for consumers who have a virtually infinite amount of information available to them.

Furthermore, travellers are performing searches to find the most relevant information

based on their background knowledge on travel, the destination and the search engine.

This makes the relationship between the travel company, the searcher and the search

engine a dynamic one, while making search engine marketing (SEM) a moving target

(Pan, Xiang, Law and Fesenmaier, 2011).

Search engines were created to render the enormous amount of information on

the internet accessible by crawling, indexing, retrieving and representing relevant

information for users based on unique algorithms (Henzinger, 2007). Search engine

marketing is defined as a form of marketing on the internet whereby businesses and

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organizsations seek to gain visibility on search engine results page (SERP) through paid or

non-paid means. While travellers may use search engines at varying stages of their trip,

most find them particularly useful during the planning stage. Studies have demonstrated

that the use of search engines requires two fundamental cognitive steps. The first step,

query formulation, is when the user enters a keyword into the search box. Three factors

determine query formulation: the user’s understanding of how the search engine works,

their knowledge of the domain and the search topic itself. With the second step, user

evaluation, after reading the snippets generated from the search engine, the user’s

understanding of the search results increases. Search queries are reflections of a user’s

goals, which can be navigational in trying to obtain a piece of information.

1.6 Service blueprint for tour and activity OTAs

For an OTA to achieve its desired goal of delivering a product to a client, the client and

the OTA need to successfully walk through a service blueprint. Figure 1 displays this

process.

Figure 1: Example of a service blueprint. Source: Jensen, 2015.

The above blueprint is a process that customers experience when booking a hotel room

or other accommodation through an OTA. The technology is the same in all sectors, but

to be successful in attracting customers to travel websites, one must implement a

sophisticated business strategy. Additionally, consumer behaviour must be understood

to create the strategy. A customer of an OTA in Vietnam that sells tour and activity

products and services is likely to go through the steps outlined below.

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1.6.1 The customer begins planning a vacation to Vietnam using ‘keywords’

The first stage of the service blueprint involves the customer entering a search query in a

search engine to plan a trip to Vietnam (Kim, Kim and Han, 2007). The customer generally

begins by inputting a keyword related to travel in Vietnam. An internal process within the

OTA to predict what keyword this will be is called keyword planning (Netto, 2019).

Keyword planning involves combining a vast list of keywords that the target audience is

likely to enter into a search engine. Creating a ranking for these keywords can be done

either through paid advertisement or organic ranking through published content.

Achieving a margin via paid advertising is difficult, so it is generally not advised (Netto,

2019).

1.6.2 Conversion from a unique visitor to a client

Following arrival to the website, the next phase of the service blueprint involves

transforming the visitor into a client. This process is referred to as conversion, and the

success of any website intent on selling is measured through its conversion rate, or the

percentage of total visitors to a website who ultimately purchase a product. The website’s

usability and conversion rate go hand in hand. Web analytics can be defined as the act of

increasing a website’s ability to persuade and relevancy to achieve a higher conversion

rate (Netto, 2019).

A website’s usability measures the quality of the user experience. If the usability of the

website is poor, the client is highly likely to leave the website, and thus conversion fails.

Factors that can explain poor usability include information that is difficult to comprehend

or that does not answer relevant questions. Furthermore, if the user finds it difficult to

use the website or gets lost trying to navigate it, they will usually leave it immediately.

Several key metrics are used to predict a successful conversion rate: average page views,

time spent on site and internal searches (Beri & Singh, 2013).

The term page views simply refers to the number of times a given page is visited. If

web users visit a website without viewing many pages, the website may have problems

with usability, design or structure. If a page view count for a website is low, it is most

likely due to a disconnect between the marketing effort that brought the client to the

website and the actual content presented to them (Beri & Singh, 2013). This metric simply

measures the average time the user spends on the site. This is the key metric to measure

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how successful the site is in attracting relevant visitors (Kim, Kim and Han, 2007). The

assumption is that the longer the user spends on the website, the more interested they

are in what the website has to offer. Furthermore, a large amount of time spent on a

website indicates that the user is not running into any difficulties with its usability.

Measuring time spent on a website in relation to page views is also critical to ensuring

that the user is not simply struggling to obtain components or content that should

otherwise be more easily accessible (Beri & Singh, 2013).

A website’s search box or bar provides the user with a navigational tool. To find what

they are looking for, the user can use the search box instead of the website’s standard

navigation. This provides the owner of the website with invaluable information because

an overview of the keywords used can be obtained through web analytics to obtain a

direct reflection of what the site users are searching for on the website (Beri & Singh,

2013). Return visitors are the most important assets of a website; they are the ones who

have visited the website and have decided that it is worth returning to. They are also far

more likely to make a purchase than a unique visitor. The higher the percentage of return

visitors to a website, the better the conversion rate is likely to be (Beri and Singh, 2013).

1.6.3 Problems that can be solved with digital platforms

OTAs solve problems for consumers. Travellers receive access to a unified platform where

they can search for and book tours across many operators based on the region of travel.

They also have an overview of which tours they have booked and their tickets, which can

be both printed or accessed in a mobile format. Users can likewise read reviews from

other travellers and have access to a wealth of information on all things related to the

travel destination (Kamallakharan, 2019).

Operators gain access to a portal where they can create and manage their tour

offerings. A comprehensive overview of their sales, bookings and passenger lists is

typically provided in an easy-to-navigate operator’s dashboard. Additionally, a check-in

system for travellers is provided. In the modern age of big data as king, it is important for

tour operators to be equipped with as much information as possible so they can make

the proper decisions. OTAs can help all stakeholders to manage data more efficiently

(Kamallakharan, 2019).

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2 OTA technology

In this chapter, the focus is on the required technical factors for an OTA to rank highly in

search engines. Those factors are content, links and the website structure.

The key factor for the success of OTAs is the ability to drive potential customers to the

website. Driving traffic to a website is done through SEO, the process of enabling a

website to appear on the top result page for certain keyword searches (Shafiee,

Rahimzadeh and Haghighizade, 2016). Because in most cases users will only look at the

top five results after typing a keyword in a search engine, the value of having one’s

website listed there is an instrumental success factor for OTAs (Yalçın & Köse, 2009).

Search engines are a type of software that collect data about a website. The collected

data includes the website URL, some keywords or keyword groups that define the content

of the website, the code structure that forms the web page and links provided on the

website (Yalçın & Köse, 2009). The actions are taken by programs on the search engines

called bots or spiders, which navigate through websites periodically and capture changes

that have been made to them. The more often the content on the website is updated,

the more often search engines will crawl the website, which increases the likelihood that

the website will improve in the rankings (Boag, 2009).

SEO is a never-ending process; new techniques that are useful for improving a site’s

performance on search engines are constantly continually being created. This chapter

delves into the current key factors for success in implementing an effective SEO campaign

and other factors required for a successful online presence (Boag, 2009).

2.1 Written content and blogs

Content generated on a website is the most critical component of predicting an OTA’s

success. Plessis (2017) has argued that content marketing has become a leading

marketing strategy in digital marketing communication. With this approach, marketers

adopt the perspective of consumers to build relationships by creating and sharing

engaging content on social media that enhances their daily lives. The purpose of Plessis’s

research was to investigate content marketing’s role in social media content communities

to engage with the target audience in an innate manner. The findings showed three

important categories of content marketing use: building content communities, platform-

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specific content and understanding channels. Plessis has claimed that these three

categories provide sufficient evidence of how brands use social media content

communities to connect with the target audience in an unobtrusive manner. Ahmad,

Musa and Harun (2016) investigated the role of social media content marketing (SMCM)

in increasing ones brand health score. They have stated that business practitioners tend

to use social media marketing to create awareness and promote their brands to

customers. They have also pointed out that SMCM plays an important role in conveying

effective information to consumers to attract them and keep them engaged with the

brand. It is also essential to evaluate brand health and point out few indicators such as

time on site, repeat visitors, social likes, subscriptions and bounce rates.

‘Content is king’ has been the mantra repeated in the online world for some years

now. Content for a website is generated around keywords or key phrases related to the

industry. Search engine algorithms locate what they deem the most suitable content for

each keyword (Odden, 2012). An example of content can be seen in Figure 2.

Figure 2: An example of content. Source: Conbeo.com.

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Search engines are constantly updating to better detect relevant content for users’

search queries. For example, some years ago keyword stuffing in produced content was

a common practice to trick search engines into listing content on their front pages

(Shafiee, Rahimzadeh and Haghighizade, 2016). This strategy entailed simply using

keywords frequently in blog posts so the search algorithm would deem the posts highly

relevant simply because a keyword was listed more often. Algorithms are constantly

cracking down on these types of hacks used to manipulate the program. The ultimate

goal of a search engine is to maintain integrity online, so the key factor for success in

content production is to create well-produced content that is relevant and useful for the

user (Jefferson, 2015).

Valuable content is helpful, entertaining, authentic, relevant and timely (Jefferson,

2015). It should be helpful in the sense that it answers people’s questions; entertains by

evoking an emotional response; is authentic, meaning it feels genuine and sincere; is

relevant, meaning it is focused and meaningful to its intended audience; and is timely

(Odden, 2012).

Furthermore, there are technical factors to which one much pay attention when

producing a blog. For example, search engines view the first 100 to 200 words as the most

important. It is critical that keywords and key phrases are evident in the introduction

section of a blog post. Proper use of headings is also vital to breaking up the text so that

the content is more easily read and comprehended by the reader (Odden, 2012).

Building a strong and defined content strategy is an essential building block for an OTA

(Shafiee, Rahimzadeh and Haghighizade, 2016). Content published on the platform is the

first aspect with which the visitor will interact, and thus it is paramount that the content

answers the questions that the visitor is seeking answers to. If the content is difficult and

confusing to read, the reader will immediately seek other options to have their query

answered.

Creating a voice and a narrative via the content that is published is the equivalent of

building a brand for an OTA. The primary method to connect with customers is through

the content that is written online. Website content is defined as any form of content that

exists on a website, whether in the form of blogs, gifs, videos or tour descriptions. All

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content that is published on a website is important and must be treated as the most

important marketing tool that the OTA it has at its disposal.

Digital marketing has transformed how businesses and other organisations

communicate with their audiences. In the early days (1992) of the global internet, daily

traffic on the internet was less than 100 GB, which in 2019 was the average storage

capacity of a smartphone (Chaffey and Ellis-Chadwidk, 2019). In 2016, the traffic in a day

was 26,600 GB per second, and it is estimated that in 2021 global internet traffic will

amount to more than 100,000 GB per second. To develop a sound digital strategy,

marketers need to understand a more complex and competitive buying environment

than ever before (Chaffey and Ellis-Chadwidk, 2019). There are three main types of media

channels that marketers need to consider: paid media, owned media and earned media.

This can be seen in Figure 3.

Figure 3: The intersection of the three key online media types. Source: Chaffey and Ellis-Chadwidk, 2019.

Paid media are bought media; the company makes an investment to pay for visitors,

reach or conversions through search, display ad networks or affiliate marketing. Owned

media are owned by the brand and include a company’s own website, blogs, email list,

mobile apps and social presence on Facebook, LinkedIn and Twitter. Traditionally, the

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term earned media has referred to publicity generated through PR invested in targeting

influencers to increase awareness of a brand. At present, the earned media category also

includes word of mouth, which can be stimulated through viral and social media

marketing on social networks and blogs and within other communities (Chaffey and Ellis-

Chadwidk, 2019).

Blogs play an important role in digital and content marketing. In 2011, an estimated

two-million blog posts were published every day (Odden, 2012). Today, the number of

blog posts per day is much higher, leaving less and less room for poorly written content

online. The Google algorithm is efficient at detecting content that is poorly written.

Additionally, readers will not want to engage with a website whose content they feel has

not been thoughtfully produced. If the content published is of poor quality, the likelihood

that the visitor will trust that website enough to purchase anything becomes minimal. A

website trying to sell products or services that has poorly written content is similar to a

car salesperson trying to sell a new car with scratches or dents. The attention span of the

online user is becoming increasingly minimal, and the second the user detects something

untruthful regarding a website, they leave it instantaneously.

2.2 Links and backlinks

All search engines, such as Google, Yahoo and Bing, crawl through web pages according

to the page content, quality and number of links from other websites (known as

backlinks). As the backlinks increase in quantity and quality, the ranking in search engines

increases (Shafiee, Rahimzadeh and Haghighizade, 2016).

Put simply, search engines use backlinks as a tool to deem whether websites are

trustworthy in their field of competition. This is measured in both the quantity of

backlinks that a website has acquired and the quality of the backlinks. The more high-

quality backlinks a website has, the more trust a search engine will place in it.

Search engines have become incredibly sophisticated in spotting whether backlinks

are of low quality, as it was once a common practice to buy links through third parties to

manipulate search engines. These ‘black hat’ techniques are becoming obsolete, and the

only true method of building backlinks is by producing valuable and informative content

that can be useful to another website’s audience.

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In addition to ensuring that one’s website is producing valuable content that will

generate backlinks, there are various strategies to speed this process, referred to as

backlink-building campaigns. Such campaigns usually begin with identifying which

backlinks would be considered most valuable to one’s website. For example, for a website

focused on travel, getting links from other highly authoritative travel-related websites

would be a priority. After a list is created, the websites are further studied to see if there

is an opportunity to add a link to the website, usually through a blog post. Guest posting

on other websites is another common method for creating backlinks and offering to link

to that website in exchange for a link (Shafiee, Rahimzadeh and Haghighizade, 2016). The

value of backlinks is thus paramount in determining any website’s success online and a

critical factor when evaluating a website's competitiveness.

2.3 Visual content

Visual content marketing is the creation of educational or entertainment material that

attracts a clearly defined target audience and appeals primarily to the sense of sight, with

the ultimate intent of converting them to customers. Content helps the target audience

to solve issues that are related to the product or service (Gamble, 2016). In visual content

marketing, images, videos, infographics, memes or other types of visual content are used

for marketing campaigns. Visuals feature an appealing, engaging format to entice people

to visit a website, know a brand better, or to buy a product or service (Manic, 2015).

Having high-quality visual content has become increasingly important in recent years

(Kourtesopoulou, Teodorou, Kriemadis and Papaioannou, 2019). The attention span of

the online client is continually decreasing, so the importance of visual content to draw in

the user has risen. Due to new technology and innovations in computing power, there

has been a significant increase in the image search section on search engines (Smith,

2018).

Technical details that should be implemented to obtain SEO success for images include

using SEO-friendly file names for images to increase the likelihood of crawlers ranking the

images higher (Odden, 2012). When using visual content, it is also key to ensure that it is

not slowing the site speed of the landing page. For example, using many images in a blog

post can seriously slow the site loading speed. Most users will leave the webpage if the

site does not load in three seconds (Smith, 2018).

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2.4 Technological infrastructure: the Conbeo case study

OTAs are websites connected to backend software that can host the content and

inventory available on the platform. There are several ways of constructing such a system

and website. Below is an example of a system that has been developed by the author and

his partners, who have launched a market platform for tourism services in Vietnam, which

can be viewed at www.conbeo.com (Netto, 2019).

The Conbeo backend is written entirely in Java using the Spring Framework. A REST

API serves as the entry point for the main web application (search, booking and portal),

as well as both the Android and iOS apps. The apps have a fairly uniform and simple

design, with passenger lists and passenger check-in services comprising the two main

features. Future development will allow for more complex functionality, such as notifying

customers of potential changes in itineraries or managing booked tours (Netto, 2019).

The backend is hosted on Amazon Web Services (AWS) with three production servers

load balanced over Nginx. As Conbeo grows and receives more traffic, it will be possible

to quickly scale the application as the servers are templated using Ansible to allow for

quick server spin-up and configuration. In addition to the production servers, Conbeo has

two dedicated test servers on which developers can deploy the latest versions of the

application to test newly implemented features before they are deployed to production

(Netto, 2019).

The database is one of the most important aspects of Conbeo’s infrastructure because

it is where data such as tours operators’ information on tours, user bookings, customer

preferences and tickets is stored. As such, a secure database system is crucial. Conbeo

utilises AWS RDS, a managed cloud MYSQL server, to ensure extremely secure backups

and reduce development team overhead in maintaining complex database failover

systems. By using a cloud-managed database, the tech team can focus on developing the

actual product (Netto, 2019).

A dedicated Jenkins server manages the entire Conbeo deployment process, from

building and testing the latest versions to deploying to each test and production server.

Integration tests run regularly to assess the entire website flow end to end. When any of

these tests fail, the development team is notified. Conbeo has a robust monitoring system

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that uses Zabbix and Grafana to monitor the application performance. Kibana is used to

visualise logs, load times and latency (Netto, 2019).

A modern alert system complete with monitoring tools is in place to send notifications

to the tech team and other stakeholders when error states are detected. With an

advanced alert and monitoring system, the tech team can quickly react to and fix any

issues that occur in the infrastructure, ensuring high server uptime. After any major

incident, a report is compiled analysing the root cause of the incident, how it could have

been prevented and actionable items assigned are determined so that the issue does not

occur again (Netto, 2019).

The above www.conbeo.com case study is one example of how to construct an OTA.

However, a variety of software and techniques can be used for this purpose. The most

important factor is to ensure that the backend is capable of hosting inventory from a

third-party supplier and can support any requirement that the vendor may have in terms

of availability, price changes or anything else. In the tour and activity industry, having a

flexible system that is capable of continual improvement and change is critical, in that the

products that are listed are far from being standardised as they are in, for example, the

flight and accommodation industry. Day tours can be constructed in countless ways. A

day tour may have added features such as lunches, equipment or child pricing. The

capability to create a website and system is a barrier for competition in the Vietnamese

market, but that barrier can be overcome with sufficient investment in software and

systems (Netto, 2019).

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3 The Vietnamese travel and tourism market

Following Vietnam’s normalisation of relations with the outside world in 1995, foreign

visitors were granted travel access to the country, creating the tourism industry as it

exists today. With 15 million visitors in 2018, Vietnam’s tourism industry has seen a

meteoric rise in recent years.

When visiting Vietnam, one should prepare for sensory overload because the country

is characterised by invigorating sights, sounds and smells. There is seemingly endless

demand for destinations like Vietnam that offer a unique blend of culture, nature and

history: It is no wonder that more and more tourists are visiting (Ray, 2006).

Vietnam continues to rank among the fastest-growing tourist destinations in the

world, with revenue in 2018 reaching $26.75 billion, up $4.75 billion from 2017. Since

2010, the number of international tourists has grown threefold from 5 million to more

than 15 million in 2018 (Das, 2018b). According to the World Bank, since 1988, Vietnam

has seen yearly gross domestic product growth of over 5%, outpacing other countries in

the region, including Thailand. Tourism has been a substantial factor in this growth, with

the number of international visitors to Vietnam skyrocketing over the last 10 years, and

2018 on pace to be a record-breaking year in growth and shear number of visitors. The

Vietnam National Administration of Tourism (VNAT) has projected that tourism will

generate over $35 billion in revenue for the country by 2020 (The World Bank, 2019).

Vietnam received more than 15 million international arrivals in 2018, an increase of

29% from the previous year. Revenue within the tourism industry is expected to grow to

$35 billion, accounting for 10% of total gross domestic product (Das, 2018b). Vietnam

was also listed among the top-10 fastest growing tourism destinations in the world, the

only country in Southeast Asia with this distinction. This significant increase in visitors has

led to a surge in tour and activity offerings being sold via OTAs. However, the market

remains significantly offline, with many tourists opting to book via hotels or physical

travel agencies on arrival. Ho Chi Minh City leads in number of tourists among all cities in

Vietnam, followed by Hanoi, the capital, which attracted 28 million tourists, including 5.5

million international tourists. Both cities recently featured among the top-10 most

dynamic growing cities in the world in number of tourists (Das, 2018b).

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The Vietnamese government views the tourism industry as an important part of its

economic strategy. In early 2011, it released its ‘Strategy on Vietnam’s tourism

development until 2020, vision to 2030’ on developing the tourism industry as a major

driver of economic growth. The plan emphasises training for professionals, market

development, branding strategies, infrastructure development and the development of

tourism products and services with local cultural characteristics (Vietnam Briefing, e.d.).

The success of the current strategy will only increase interest in continuing to invest in

new and necessary infrastructure in Vietnam, ranging from airports to hotels and roads.

These investments will support continued growth and interest from international tourists

(Vietnam Invest Review, 2018).

The increased demand for travel to Vietnam comes mainly from the neighbouring

countries of China and Korea: ‘In 2018, the number of visitors from Asia increased by 23.7

percent compared to 2017 to 12.1 million. China accounted for the majority at 4.96

million, up 23.9 percent, while the number of South Korean visitors increased the highest

at 44.3 percent compared to 2017 to 3.48 million’ (Vietnam Briefing, e.d.).

However, the English-speaking segment, comprising the US, UK, Australian and

European markets, is also growing annually: ‘Visitors from Europe and America increased

by 8.1 percent and 10.6 percent, to 2.1 million and 903,800 respectively. Tourists from

Australia increased by only four percent in 2018 to 437,800, while inbound tourists from

Africa witnessed a growth of 19.2 percent to 42,800’. There were approximately 3.5

million tourists (US, Europe and Australia) who would have preferred a localised market

platform written in English. This segment of the Vietnamese market is currently larger

than the entire Icelandic tourist market (Das, 2018a).

This growth has sparked an uptick in the number of small- to medium-sized enterprises

offering tours, accommodations and bus fares. Many of these operators sell their

offerings through third-party travel agencies in tourist hotspots or through hotels and

other accommodations. This chaotic atmosphere can lead to confusion for travellers as

they try to search for the best tours while having limited access to information online.

Haggling over prices with travel agents, who often take steep commissions of over 70%,

can be an additional stress for tourists, who may not be fully aware of what the ‘correct’

market prices are (Vietnam Briefing, e.d.). This can be seen in Figure 4.

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Figure 4: International visitors to Vietnam. Source: Vietnam Briefing, e.d.

The growth in the number of tourists visiting Vietnam has led to a surge in the tourism

industry, with more and more entrepreneurs creating businesses that target the tourist

market, which hosted an estimated 18 million arrivals in 2019. The growth in recent years

has been quite steep, as displayed in Figure 4 (Vietnam Tourism, 2016).

Figure 5: Number of tour operators. Source: Vietnam Tourism, 2016.

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As expected, the number of tour operators and accommodation providers has grown

relative to the increase in visitors (Vietnam Tourism, 2016). State-owned tour operators

have decreased over this period as Vietnam has adopted more liberal economic and

business policies that favour private enterprises, leading to significant economic

expansion in this sector, as depicted in Figure 5.

The Vietnamese tour and activity sector consists of tour operators in Vietnam that

operate day tours and multi-day tours within the country. The last-known figure for the

number of licensed tour operators in Vietnam was 1,519 (Vietnam Tourism, 2016). Of

these tour operators, most register their products on various OTAs to boost their sales

performance online. The OTA market in Vietnam for tours and activities is currently

dominated by foreign OTAs such as Viator, GetYourGuide and Hotels, although a handful

of local OTAs have had success, such as Christians, Vietnamonline and Bestpricevn

(Vietnam Tourism, 2016).

Figure 6: Accommodation. Source: Vietnam Tourism, 2016.

The latest forecasts from the VNAT predict that tourism in Vietnam will generate $35

billion in revenue by 2020 (Vietnam Investment Review, 2018). The government has also

put effort into supporting the fast-growing industry by rolling out more liberal policies,

such as easing entry visa procedures and allowing tourists to apply for their visas online.

Marketing campaigns have helped advertise Vietnam as an attractive travel destination,

while investment in the tourism sector has been actively encouraged, resulting in new

hotels and other infrastructure, as displayed in Figure 6.

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3.1 Development of OTAs in Vietnam

In an interview with Vietnam Investment Review, Nguyen Van Tuan, head of the VNAT,

stated that in 2018, global OTAs comprised up to 80% of Vietnam’s online travel market

share. Tuan provided the information at the Online Tourism Forum 2018 held by the

Vietnam E-Commerce Association (Vietnam Investment Review, 2018).

According to Tuan, internet-based technology is rapidly developing and affecting many

sectors, including tourism. Over the past two years, personal and group experience travel

booked using smartphones to search for information has been on the rise, replacing

travel agents. Visitors often book flight tickets or rooms through OTAs. At the meeting,

Tuan cited the Vietnam E-commerce Association’s information as saying that OTAs such

as Agoda.com, Booking.com, Traveloka.com and Expedia.com account for up to 80% of

Vietnam’s online travel market share. Most foreign visitors to Vietnam and domestic

holidaymakers also use foreign OTAs. On the other hand, Vietnamese firms supplying

online travel services, including vivu.com, chudu24.com, mytour.vn, tripi.vn, gotadi.com

and vntrip.vn, that are focused on the local market and see low numbers of transactions

(Vietnam Investment Review, 2018).

Vu The Binh, the vice chair of the Vietnam Tourism Association, has stated that tourism

companies in Vietnam face technological and financial difficulties that limit their capacity

to develop reliable and local solutions that are competitive. The association, which has

4,000 members nationwide, encompasses a few companies specialising in tourism

technology development, while most use the old tourist trade model, which relies on the

physical distribution of information and sales. The traditional tourist trade, which relies

on offline methods, still holds 80% of the market for excursions and day tours. Global

OTAs have captured the market for accommodations and flights, but localised OTAs

specialised in excursions or tour and activity products that consumers prefer have a

limited market presence (Vietnam Investment Review, 2018).

According to the Vietnam E-commerce Association’s Vietnam E-business Index 2018,

the booking rate through OTAs increased by 30% in 2017. Domestic firms account for 20%

of the market, while foreign companies such as Trivago, Booking, Expedia and Agoda

control 80% of the market. The major growth drivers for foreign firms include access to

capital, partnerships with hotels and promotional programmes such as discounts and

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offers. With the increased use of the internet and smartphones, tourists will continue to

prefer OTAs over traditional travel agencies due to convenience, the range of properties,

promotional offers and easier payment methods. In 2018, 71% of foreign tourists heading

to Vietnam searched for information online, while 64% booked their Vietnam tours

online. The online tourism market is predicted to grow from $2.2 billion in 2015 to around

$9 billion in 2025. Competing with foreign OTAs in areas such as capital, promotional

offers and marketing will be challenging for domestic firms. However, they can focus on

localised service in which they can develop a competitive advantage in improving

customer service (Vietnam Briefing, e.d.).

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4 Competition analysis of OTAs in Vietnam

Direct competition is classified as any party that is engaged in reselling tours and activities

online within Vietnam. Currently, most tours and activities sold online in Vietnam are

likely sold via foreign OTAs such as TripAdvisor and GetYourGuide. A handful of

Vietnamese OTAs that have a share of the market will be analysed, as this is the target

market The purpose of this competition analysis is to evaluate the significant competitors

in the market based on the previously discussed key criteria related to creating and

operating successful OTAs. All data used was drawn from the website or the software

solution SEM RUSH, which allows the user to measure traffic on websites (Semrush,

2019).

Indirect competition is classified as any party that does not specifically sell tours and

activities in Vietnam but that potentially competes for the same customers online. This

category can include OTAs in different markets in South East Asia or other content sites

related to Vietnam that are competing for the same sources of traffic, such as Expedia.

Each website is analysed with the software SEM RUSH, which helps measure the

performance of websites. This software is the most widely used of its kind globally for

competition analyses of websites.

4.1 Local competition

Vietnam-guide.com is the largest travel site related to Vietnam for the English-speaking

market. With roughly 562,000 monthly visitors, it is a content-heavy site with a large

offering of rooms and activities within Vietnam. Vietnam-guide has had the most success

in targeting critical keywords related to travel in Vietnam that are likely to result in

bookings. Despite being the market leader, the site has significant room for improvement.

External and internal linking remains limited. Because linking is regarded as one of the

most critical factors for optimising a site online and the market leader is currently not

properly implementing this technique, competition for space in this market is currently

extremely low. Furthermore, the design and user experience on the platform are below

average How do you know it is below average, is that an objective or subjective

statement?]. The font is dull, small and difficult to read, and little thought was seemingly

put into the design and user experience.

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Competitor: Vietnam-guide.com (owned by Hotels.com)

Monthly traffic: 562,000 visitors (https://www.semrush.com/9)

Cost of traffic: $99,000

Sources of traffic: Vietnam 38%, US 12%, UK 7%, Australia 5%

Content analysis:

Content volume is significant, with blogs on all regions of Vietnam focused on what to see and do.

The site ranked highest for most valuable keywords in the market (Vietnam map, Hanoi, Halong Bay, Sapa).

It contains maps of each major city in Vietnam.

Internal and external linking is limited.

The font is dull and difficult to read.

There is no ‘voice’ present in the writing, which mostly consists of lists of information.

Christina’s is one of the leading local OTAs in the market today. The blog produced by

Christina’s was created according to the highest SEO standards. It also leads the way in

terms of original visual content. Nevertheless, the value of the traffic it creates is low

compared to market leader Vietnam-guide.com. Although Christina’s garners 50% of the

traffic that Vietnam-guide does, the value of that content is only one-tenth of that of

Vietnam-guide. This is because the keywords that bring it traffic are not valuable and are

unlikely to result in a purchase. According to SEM Rush, some of these keywords are ‘one

trip’, ‘com tam’, ‘Vietnamese words’, and ‘Vietnamese wedding’ – far from relevant to

any service that Christina’s is selling.

Competitor: Christinas.vn

Monthly traffic: 240,000 visitors (https://www.semrush.com/)

Cost of traffic: $3,000

Sources of traffic: Vietnam 61%, US 11%, Australia 2%

Content analysis:

Everything is created according to high standards regarding modern SEO practices.

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The site is the best platform for local knowledge.

If features excellent images.

Few curated tours are listed.

Vietnam Online is the leading locally owned platform that resells tourism services in

Vietnam. It receives 300,000 monthly visitors on average and traffic currently valued at

$8,000. Despite its impressive traffic numbers, the site is still significantly below average

in terms of the content produced on the website and the overall design and user

experience.

Competitor: Vietnamonline.com (https://www.semrush.com/, 2019)

Monthly traffic: 300,000 visitors (https://www.semrush.com/)

Traffic cost: $8,000

Sources of traffic: Vietnam 44%, US 19%, Canada 3.7%, UK 3%

Content analysis:

The site has poor readability, has small font and is hard to read.

It lacks internal and external links.

Images are poor.

Best Price vn.com is a locally owned website that has generated a significant amount of

traffic, with 120,000 visitors per month. The quality of the content and technology is

below international standards.

Competitor: Bestpricevn.com

Monthly traffic: 120,000 visitors (https://www.semrush.com/)

Sources of traffic: Vietnam 44%, US 9.2%, Australia 5.84%, Malaysia 4.79%

Content analysis:

The site features poorly written content with grammatical errors.

The articles contain no links.

Images are poor.

The site lacks in design and layout.

Other comments:

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The selection of inventory is extensive.

Tour landing pages are well done.

There are four localised websites in Vietnam that are generating significant traffic:

vietnam-guide.com, christinas.vn, vietnamonline.com and bestpricevn.com. The blog

posts on these sites are not content heavy and all lack significant use of internal and

external links to boost SEO. Christina's is the only platform that has a decent selection of

images. None of the platforms deploy video content. Though they follow easily replicable

models, the platforms do not meet industry standards in more sophisticated markets.

The key takeaway from this study is that competition in Vietnam is present but

vulnerable.

4.2 Foreign OTAs

This section provides a competition analysis of the major international players in the tour

and activity space in Vietnam: GetYourGuide, TripAdvisor/Viator and Klook. Currently,

foreign-based OTAs make up a considerable part of the market. Nevertheless, the

Vietnamese market represents a very small percentage of their overall business. The

major markets for large foreign OTAs such as TripAdvisor and GetYourGuide are in North

America and Europe (Tsetkvov, 2018). Table 2 lists the major OTAs that operate in

Vietnam.

Table 2: Foreign OTAs operating in Vietnam. Source: Tsetkvov, 2018.

All these platforms constitute multi-billion-dollar valuation companies that do not

consider Vietnam an essential part of their overall operations. However, as the

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competition analysis shows, they are still significant players in the market. The core

reason is their exceptionally high domain authority compared to other players. Domain

authority is a score that websites receive on a scale of 1 to 100 that indicates their

authority level to the search engines. All these websites have a domain authority of over

80, compared to an average of 30 for the local websites. Given that these are very high-

performing websites globally, they do not need to publish extensive blogs to support their

products, but can count on them ranking alone. What follows is basic information on each

website’s performance in the Vietnamese market.

GetYourGuide is the second-largest player in the global tour and activity market.

Vietnam is, therefore, not yet a significant market for its overall business. However, it still

has a considerable presence in the market, which is proven in the traffic numbers.

GetYourGuide, like the other ‘mega-platforms’, does not have to rely on writing unique

travel content to achieve traffic and sales.

Competitor: GetYourGuide

Monthly traffic: 562,000 visitors (https://www.semrush.com/9)

Cost of traffic: $99,000

Sources of traffic: Vietnam 38%, US 12%, UK 7%, Australia 5%

Key takeaways:

The site has limited blogs.

It ranked highest for most valuable keywords on the market (Vietnam map, Hanoi, Halong Bay, Sapa).

The technical SEO is excellent.

The site has an extensive number of backlinks.

Product descriptions are poorly written.

Due to its high domain authority, tours posted through the company’s platform have

a high chance of outranking those of competitors. Currently, GetYourGuide ranks on the

first page for most high-conversion-related keywords. They are both ranking organically

and paying for positions through Google Ads. There are 800 products published on the

platform related to Vietnam. Many of these products, however, have not been properly

edited. Due to the massive amount of inventory on the site, they most likely struggle to

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maintain standards regarding the published content. At the moment, this does not seem

to affect the site’s rankings in the search results, however. In terms of technical SEO

factors such as backlinks, there are few better performing websites online today. The

strength of the technical aspects of the website is its main competitive advantage.

TripAdvisor/Viator is the largest player in the online tour and activity market. Based

on traffic statistics, it is safe to assume that it is a critical player in the Vietnamese market.

Competitor: TripAdvisor/Viator

Monthly traffic: 562,000 visitors (https://www.semrush.com/9)

Cost of traffic: $99,000

Sources of traffic: Vietnam 38%, US 12%, UK 7%, Australia 5%

Key takeaways:

The site has limited blogs.

It ranked highest for most valuable keywords on the market (Vietnam map, Hanoi, Halong Bay, Sapa).

The site has an excellent user design.

It has an extensive number of backlinks.

Product descriptions are poorly written.

The site features excellent images.

TripAdvisor/Viator ranks on the first page for most high-conversion keywords. Like

GetYourGuide, Viator can rely on the high domain authority it has achieved to ensure that

its Vietnamese products rank highly. The content analysis of the published products

revealed that they had not been edited. From an SEO technical standpoint, Viator is also

among the best performing websites online, which is its significant competitive

advantage.

Unlike the previous competitors, the platform Klook, founded in Hong Kong, is more

heavily focused on Asia. It is ranked number four in the world in the tourism category,

according to SimilarWeb.

Competitor: Klook

Monthly traffic: 562,000 visitors (https://www.semrush.com/9)

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Cost of traffic: $99,000

Sources of traffic: Vietnam 38%, US 12%, UK 7%, Australia 5%

Highlights:

The site has limited blogs.

It ranked highest for most valuable keywords on the market (Vietnam map, Hanoi, Halong Bay, Sapa).

The site has an excellent user design.

Technical SEO is excellent.

The site features high-quality images.

The content is well written and clearly closely monitored.

Based on traffic statistics, Klook is slightly above TripAdvisor/Viator and GetYourGuide.

It ranks for all the high-conversion keywords as well. Following a content analysis, it was

clear that the quality of the published content was of a higher standard than on other

sites. This indicates that Klook pays much more attention to the Vietnamese market than

is the case with the previous two sites. The images are also of high quality and appear to

be owned by Klook, which differs from the other two sites, which rely on images owned

by their operators. This factor can potentially be seen as a competitive advantage.

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5 The product life cycle and customer segmentation

The concept of the global village is commonly accepted today as a market reality. Most

consumers (more than 50%) in the world today use the internet to research and purchase

products and services. The global megatrend is obvious: internet-based online businesses

will continue to capture a larger and larger share of all trade. For both consumer services

and business-to-business relations, the internet is democratising global business

(Czinkota, Ronkainen, Moffett, Marinova and Marinova, 2009). Despite the ongoing

global transformation from analogue to digital, businesses must segment markets and

know who their customers are. According to Kotler and Keller, a market segment consists

of a group of consumers who share a similar set of needs and wants (Kotler and Keller,

2006).

The product life-cycle stages, or the international product life cycle, which was

developed by economist Raymond Vernon in 1966, is still a widely used model in

economics and marketing (Kotler and Keller, 2006).

Figure 7: The four life-cycle stages and their marketing implications. Source: Kotler and Keller, 2006.

The introduction stage consists of an organisation developing a successful product or

launching a service. To encourage demand, investments are made to create consumer

awareness and promote the new product towards generating sales. During this stage,

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profits are low and few competitors exist. Tour and activity OTAs in Vietnam are in this

stage.

In the growth stage, demand typically increases, costs decrease as the unit costs

decrease with increased scale, and high profits are generated. The service becomes

widely known, and competitors enter the market with their own versions of the product.

Usually, competitors offer the product at a much lower sales price. To attract as many

consumers as possible, the company that developed the original product will still increase

its promotional spending. Global OTAs selling airline tickets and hotels are in this stage.

When many potential new customers have bought the product, it will enter the next

stage.

In the maturity stage of the product life cycle, the service is widely known and used by

consumers. Competition is intense and a company will do anything to remain a stable

market leader, including substantially lowering fees and prices.

In the decline stage, the market becomes saturated and demand for the service or

product is substantially lower. This stage of the product life cycle can occur as a natural

result of the life cycle stage, but it can also be stimulated by the introduction of newer

and more sophisticated products or services. During this stage, companies continue to

offer the product as a service to their loyal customers, turning the service or product into

a ‘cash cow’ with limited investment in developments.

5.1 OTAs for tour and activity services in Vietnam

Based on Kotler's model (Kotler and Keller, 2006), the online market for tours and

activities in Vietnam is in the introductory phase. Although this point cannot be verified

with accurate statistics, valid assumptions can be made about why this is the case. This

section lays out these assumptions based on Kohler’s five metrics that define a market in

the introductory phase, three of which are discussed: low sales, high cost per customer

and little or no competition.

The first metric that needs to be met for a product to be classified as in the

introductory phase is low sales. The Vietnamese online travel market is experiencing

comparatively low sales in terms of the global OTA market. To substantiate this claim,

one might compare Vietnam to Iceland. People in Iceland has already created several

multi-million-dollar companies in the online tour and activity sector, despite receiving

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only 2 million tourists per year compared to Vietnam's 20 million. Furthermore, that

major OTAs such as TripAdvisor/Viator and GetYourGuide are clearly not focusing their

energy on the market indicates that the market has not matured past this introductory

stage. The second metric discussed is high cost per customer. A comparatively low

number of people go online to buy tours and activities in Vietnam as compared to the

rest of the world. This makes reaching each customer more costly, confirming that

Vietnam is in the introductory phase. The third metric is few competitors. There are few

competitors in the market today. This is true because of the size of the Vietnamese

tourism market and the global online travel market. Given the exceptional growth of

both, it is remarkable how limited the competition is.

5.2 Segmentation

Two fundamental methods are utilised to segment consumer markets. Some form

segments by examining descriptive characteristics such as geographic, demographic and

psychological factors. Then, they examine whether these customer segments exhibit

different needs or product responses. As an example, would American consumers be

more likely than Chinese consumers to buy a tour in the Gucci tunnels in Ho Chi Min City?

Often, behavioural considerations in the form of potential responses to a benefit are used

to determine this, such as whether older American customers are more likely to ask for

quality rather than a low price (Kotler and Keller, 2006).

The growing interest from travellers in Vietnam has created a tremendous market for

countless ventures and businesses in the tourism sector. With the increase in tour

operators, a single marketplace where tours from all providers are aggregated would be

highly beneficial to tourists looking to plan their trip. With an online presence, tour

operators would have access to a vast international market of travellers who would be

able to book any tour ahead of time. Instead of selling through travel agents on the

ground, tour operators would be able to sell their offerings directly online at prices they

themselves dictate. Additionally, an OTA and data collected through a specialised

software solution offer endless opportunities to segment the market (Kamallakharan,

2019).

An OTA is highly beneficial to operators because it allows them to gather statistics on

how well they are selling certain trips and at what prices. With an OTA, operators would

41

also have the opportunity to introduce yield price structures that would automatically set

the price of certain tours on certain dates as they increase or decrease in demand.

Machine learning algorithms could also be implemented to find optimal prices for nearly

anything an operator sells through the OTA. Advanced search and booking systems do

not already exist in this market, but this model has proven effective in other markets.

Examples include websites such as Guide to Iceland and Ebanos (Kamallakharan, 2019).

The Vietnamese market will be dominated in the future by localised OTAs for tour and

activity products assuming that the same development occurs as has been observed with

Guide to Iceland. The English-speaking segment visiting Vietnam is likely to purchase high-

valued tours and have relatively homogenous needs. This is an interesting segment where

a localised OTA can satisfy needs better than a traditional travel agent or a global OTA.

Subculture and culture are the fundamental determinants of a person’s wants and

behaviours, so the strategy to target this segment not only is based on common use of

the English language but also can become the core of the marketing segmentation

strategy for developing tools that meet the needs of the target group better than

competitors (Kotler and Keller, 2006). Further research and development is needed to

perfect product offerings, prices and promotions for this group.

5.3 The English-speaking tourist segment in Vietnam

The English-speaking demographic that visits Vietnam is a large and growing market. Out

of a total of 18 million tourists, a projected 3.5 million travelled to the country in 2019.

There are strong indications that this growth will continue (Das, 2018). The English-

speaking segment is about 20% of the total tourist market in Vietnam and will primarily

use OTAs to fulfil their needs for tour and activity products in the country. Customers will

buy excursions and day tours both before departure from their home countries and after

they arrive. This provides an opportunity to segment the market because it is technically

possible to identify customers who have not left their home country and those who have

arrived in Vietnam. Most prefer to buy services before they arrive, making it essential to

capture customers months before they land. The English-speaking segment that visits

Vietnam is thus a prime business opportunity. The opportunity is to capture a relatively

small segment of the market, English-speaking visitors to Vietnam, by providing them

42

with high-quality services and growing the business as that segment of the market

continues to grow in the future (Vietnam Tourism, 2016).

Kotler and Keller (Kotler & Keller, 2006) have argued that market segments must have

favourable ratings on five key criteria:

Measurable: The size, purchasing power and characteristics of the segments can be measured.

Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth pursuing with a tailored marketing programme.

Accessible: The segments can be effectively reached and served.

Differentiable: The segments are conceptually distinguishable and respond differently to various marketing-mix elements and programmes.

Actionable: Effective programmes can be formulated for attracting and serving the segments.

To ensure success, it is necessary to identify segments where one’s business offers

competitive advantages. Market segmentation offers key benefits over mass marketing.

It allows companies to design, price and deliver to the consumer the service they are

searching for (Kotler & Keller, 2006). The English-speaking segment of visitors to Vietnam

meets these five criteria and represents a worthwhile demographic for an OTA to

penetrate with tour and activity products. OTAs for tour and activity products in Vietnam

are arguably still in the late introductory or early growth stages of the product life cycle.

43

6 Conclusion and discussion

A megatrend is currently occurring in which consumers are flocking to the internet to

fulfil their needs for flights, accommodations and excursions (Kourtesopoulou, Teodorou,

Kriemadis and Papaioannou, 2019). This trend has created large and capable

organisations called OTAs, such as Priceline Group (Booking), Expedia, Ctrip, TripAdvisor

and Guide to Iceland. These companies charge a 20% or more commission on all business

generated in return for linking consumers with airlines, hotels and other service

providers. OTAs are profitable and continue to invest in further developments as they are

in the growth stage of a significant market segment.

The global market for travel services is large and continues to grow. At the same time,

OTAs are attracting new customers from the old travel trade value chain, which is no

longer competitive in terms of either cost or quality. Today’s consumers prefer the speed

and convenience of the internet. In consequence, the market for arranging flights and

accommodation has almost entirely gone digital. Global OTAs currently dominate these

segments and will continue to do so. The tour and activity market is different from the

more standardised market for airline tickets, hotel nights and other accommodations.

Each geographic market has its own local products that require unique knowledge,

networks and skills. The local OTAs in Vietnam have not yet invested in the proper

systems to offer consumers sophisticated services. As a result, 80% of tour and activity

business still takes place in the traditional travel trade value chain.

As pointed out already, there are strong indications that a market opportunity exists

to penetrate local markets with tour and activity services. In this study, Vietnam has been

used as a case study. A number of other local markets could be considered, but they are

beyond the scope of this paper. The research presented here indicates that it is profitable

to offer incoming tourists a digital market platform in which day tours, excursions and

other services can be bought and sold in a more efficient manner than in the physical

travel trade value chain. As an example, in less than five years, Guide to Iceland captured

a large share of this market in Iceland. At the same time, this newly founded company

became far more profitable than the more established and better financed companies in

the market, such as Iceland Travel (Northstack, 2019).

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To be successful as a local OTA, designing and publishing a high-quality website are

necessary. Then, one must drive potential customers to the website. Driving traffic to a

website is accomplished through SEO, which was described in Chapter 2. SEO is the

process of enabling a website to appear on the top results page for certain keyword

searches in Google and other search engines. Most consumers only look at the top five

results after typing a keyword in a search engine (Kaur, 2017). Therefore, high-quality

content that uses the right words is the key to driving traffic to a website.

As described in Chapter 3, a sophisticated system must be in place to support a website

that receives traffic from the right potential customers. The backend and frontend of the

system must be written in line with international standards. These systems are critical to

collecting data and managing the relationship between consumers and tour operators.

To increase the likelihood of success, the market should be segmented into groups with

homogenous needs. This process was described in Chapter 6.

The growth in tourist arrivals in Vietnam is rapid and sustainable. This development is

being encouraged by the government, as noted in Chapter 4. The tourist sector is a major

contributor to the economic growth of the country. There is a clear indication that this

trend will continue as the government plans to further increase its investments in

infrastructure.

Based on the competitive research conducted in this paper, no player has been able

to implement all the defined key metrics of success for creating a tour and activity OTA

in Vietnam. The websites are outdated and the quality or quantity of content available is

poor (Kourtesopoulou, Teodorou, Kriemadis and Papaioannou, 2019). This results in a

trust deficit for Vietnamese tourism products online and makes it increasingly likely that

travellers to Vietnam will wait to book tours and activities until they arrive at the

destination or will refrain from purchasing any travel services at all. The online sales

channel is the most efficient way to distribute products to the consumer. Given that

online sales channels for Vietnamese tourism products are almost overlooked due to the

size of the market, it is safe to say that there is a massive gap that can be filled by a well-

invested localised OTA dedicated to increasing sales of Vietnamese tourism products.

Additionally, global players have natural disadvantages when it comes to offering local

45

excursions and day tours. The traditional tourist trade value chain is neither cost

competitive nor able to offer the quality service that global consumer’s desire.

The aforementioned arguments support the hypothesis that there is a gap in the

market for tour and activity services in Vietnam. A localised OTA with an optimal strategy

and systems that focus on excursions, day tours and travel service for the 3 to 4 million

English-speaking tourists in Vietnam could therefore become a successful business

venture. What are some examples of possible excursions or day tours specific to Vietnam

that could be offered? This would be particularly interesting to mention and expand upon

(before the conclusion). More details about the Vietnamese tourism industry and local

attractions could be provided. This will be addressed in the clarity and structure check.

46

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