Country: Hong Kong
Organization: Worldhotel-link.com
2) Sector of activity: Financial Services
Tourism
3) Description of your products or services: WHL provides a channel to global markets for local accommodation providers, irrespective of their size. In most developing countries tourism is the major foreign exchange earner. Local accommodation owners have difficulty connecting with independent travellers. Our approach in designing and building the business has been to develop win-win relationships with all key stakeholders. We have started with a staff-owned organization in WHL, and extended the owner/operator approach to the ownership of the individual e- marketplaces. We believe that this model over time is the best way to ensure real customer focus at all points in the WHL community thereby ensuring the best accommodation choices for travellers.
Beyond this we have built in tools to improve both the traveller and accommodation owner experience, allowing them to manage much of their own interaction with the WHL community, via their own log-on access. Value added services are planned such as online training material for small hotels and a performance improvement program leveraging ratings and traveller feedback. Our program encourages socially and environmentally responsible tourism by accommodation providers (caring for the destination) and traveller ratings of all accommodation providers (caring for the customer).
Finally, we have started a “building a family” program within the WHL community. All back-offices are benchmarked against every other on the network, providing continuous feedback to e-marketplace o
4) Description of the operational model: Our marketing channel for local accommodation providers connects them with independent responsible travellers, who make their bookings through a local business, owned by locals and operated under a partnership agreement with WHL similar to a franchise. Booking commissions are retained by the local partner, minimising leakage (loss of tourism income to foreign companies).
Low income families operating small guest houses report that between 10 and 70% of their bookings now come through the Worldhotel-link.com system and they are able to differentiate their offering rather than competing solely on price. The local partner works cooperatively with the local accommodation providers, promoting the destination and good practice. The performance measures and benchmarking built into the system allows each operation to identify areas for improvement and find solutions for individual and local issues. Each accommodation provider has a six page web site and is able to differentiate their service.
The WHL system uses a combination of best practice technology and best people- a global web-marketing platform with a personal interface using local people with local knowledge, the best to inform travellers seeking particular information about the destination.
The WHL system is unique in offering win-win solutions
The main stakeholders are outlined below, along with bullet points on key areas of WHL innovation which differentiates the WHL sites. • Destinations (the town or regions we service) o A pro-poor solution minimising leakage. Leakage in tourism the developing world runs at anything from 30-85% due to the fact that the big travel suppliers (tour companies, e-marketing/e-booking sites, international hotel chains, transport companies etc) reside in the first world and take most of the tourist dollar. This is especially true for the packaged tour market. WHL are doing 3 things here which help o WHL is trying to build the independent traveller segment (good in that they buy travel products directly in the destination leaving more dollars behind); o The network of local partners who own and operate the WHL site retain most of their earnings onshore (other than what they pay WHL) o WHL is able to bring online a wide choice of locally owned and operated accommodation ....suitably rated by other travellers .......encouraging tourists to book with these providers instead of always the foreign owned (known) ones....hence improving outcomes for the local community. o A solution encouraging Sustainable Tourism. This is being rolled out now and it is hoped that this will drive the uptake of sustainable tourism initiatives by accommodation providers. o Destination Marketing. Most small destinations lack any professional online presence and hence sites like the WHL sites (with information on travel to and from the country, visas, health, climate, sights to see, shopping, tours, restaurants, etc) act as a destination marketing site. Even where other destination marketing sites exist, it is good to have as many channels to market as possible. • Travellers. o Local Knowledge. WHL is the only multi-country accommodation e-marketplaces with a local office in the destination, and a person on the line, able to give current advice on and/or arrange things for the traveller in addition to accommodation (e.g. airport pick-ups, guides, etc ........things which are not obvious when travelling to developing countries) o Choice. In most destinations in the developing world (outside maybe some key hubs like Saigon, Bangkok etc) WHL would expect to be able to offer a broader choice of accommodation then other sites .....simply because we have people on the ground able to work with those accommodation providers not on the web. o Ratings. Traveller feedback on service and on sustainability. Surveys indicate a large body of independent travellers interested in responsible travel .....and WHL has developed a unique product to address this demand. • Accommodation Providers. o Local back office (trust and convenience). Opportunity to deal with a local provider ......easy to follow upon complaints, queries etc. o Local back office (infrastructure and support). For SMEs who do not speak English, who do not have web access and/or knowledge of how to use the web, and who do not have web ready content for use on off-shore sites. o Flexibility in Booking Management. WHL offers "booking-on-demand" unlike most offshore sites which can only work with allocation. Hotels are reluctant to allocate rooms to too many sites as it is not good for them in their efforts to optimise returns per room. (i.e. rooms they can sell themselves at rack rates are much more profitable then the ones sold via intermediaries at a discount ......so they like to hold a portion back. They can then choose whether or not to let the WHL partner have the room when an actual booking request is in hand ....effectively leaving them the option for how they want to sell the room up till the last minute). Note: WHL will also have booking from allocation available in early 2006 giving the hotels both options .....which none of the offshore sites will be able to offer. o Flexibility in Payment Options. Offshore sites take the money upfront and pay the hotels later. This is not always an attractive option .....especially when the hotels get their money 60-90 days later less remittance fees etc. WHL offers 3 options including one where the hotel collects everything from the traveller and pays the WHL partner later. o Training Resource Material. When the service ratings kick-in in 2006 we plan to provide MPOs and hotels with training resource material to help them improve business outcomes. Our local MPO could play the role of a consultant / trainer in some cases, building value for the accommodation provider.
5) Description of the financial model: The financial model is based on bringing new business to local accommodation providers. The travellers pay the provider who pays a commission to a local marketplace operator for arranging the booking. The marketplace operator pays a fee based on the number of members to WHL in accordance with the WHL service agreement.
WHL does not require any upfront fee from the accommodation providers. They only pay commission from new business. The local marketplace operator collects and retains the commissions. The WHL business model is not yet profitable. It becomes profitable when it has a sufficient number of marketplace operators. We are currently rolling out in five continents and expect to become profitable in late 2006. Our strategy is based on win-win-win partnerships, working with people and organisations who care about their communities, their destinations and their customers. At this stage the fees amount to less than 10% of our operating budget.
Client fees represent this approximate percentage of operational budget: 5%
6) Key operational partnership: All our business is transacted via operational partnerships, namely the locally-owned businesses responsible for each destination in the WHL Network. We also have operational partnerships in place covering system development, hosting, and payment. In addition we have operational partnerships with development agencies providing on the ground support to members through consultancy and training.We actively seek operational partnerships/alliances with parties sharing our vision. These include development agencies and tourism firms.
7) Current outreach:
We are at the Scaling Up stage. Current outreach is Cambodia, Czech Republic, Laos, Samoa, Thailand and Vietnam. Sites due to launch in September/October include China, India, Indonesia, Fiji, Vanuatu, Australia, New Zealand, and Singapore. Sites due later in 2005 include Caribbean, Africa, and Slovakia. Given that each destination or city is a potential site for WHL the total number of sites is potentially very large.
How many clients have benefited from your product/service in total? Over the last year? About 450 accommodation enterprises have received booking in the past year (and in total) from their WHL websites. We do not know how many employees work in the 450 enterprises.
What percentage of your clients is below the poverty line ($2 per day)? 0% We do not know the number or proportion of employees
working in our client enterprises who would be below the
poverty line of $2.
What is the order of magnitude of the potential demand for your products or services? Which
other low-income groups, countries or regions could benefit from it? Try to quantify (number
of clients, market size in currency):
Tourism is a growth sector and critical to the development of at least 80 developing countries (Millenium Development Goals) for whom tourism is the main foreign exchange earner. Use of the internet for business is also growing rapidly and tourism is the fastest growing sector. The accommodation segment of tourism is significant and travellers have shown that they appreciate the choice and value offered by internet accommodation marketplaces. We estimate that we can achieve a network of some 10,000 destinations averaging 60 accommodation providers by 2015. This would be equivalent to about 14 million bookings annually with a total value of over US $14 billion. The local marketplace operator would receive an income of US $140,000 and pay a fee to WHL of about $7200.
8) Scale-up strategy:
How many low-income individuals do you plan to benefit in three years from now? How are you planning to scale up or replicate your solution? What are the major constraints to scale up?
Our scale-up strategy is to recruit network partners for new destination each of whom will recruit members (average 60; range 40-80). We do this by web-marketing and working through business and development alliances. We estimate expanding to 30 destinationsites by late 2005, 200 by late 2006 and 10,000 by 2015. Each destination will have about 60 accommodation provider members. Numbers of client accommodation enterprises are therefore approximately late 2005- 1800, late 2006- 6000, 2015 - 600,000. Constraints are partner recruitment and on-ground capacity building in developing countries
Which specific areas - and why - in your field would benefit most from investment by corporations, foundations, and other investors:
Specific areas for investment in the WHL are partners with existing linkages in tourism or in capacity-building in developing countries, particularly in Africa and South America. In order to achieve the growth rate potential we need to leverage a global brand in communicating the opportunity to the small local enterprises we target for each destination city. An alliance with a major brand would be powerful. Also of particular interest is investment and collaboration with foundations with a shared interest, eg. regional, educational, or cultural.
9) The organization: How does the initiative fit with your overall organization's strategic goals and priorities? How did the initiative start?
The organisation was founded for the specific purpose by individuals working within the Export Promotion Program in the Mekong Private Sector Development Facility (www.mpdf.org ). This facility serves Cambodia, Laos and Vietnam. The original program commenced with a specific task in Siem Reap. As a result MPDF encouraged a cooperative program amongst the small hotels and guesthouses in Siem Reap. The web-site www.angkorhotels.org was subsequently followed by other operations in Laos and Vietnam. WHL (www.worldhotel- link.com) was formed to scale up to global and extend into other developing areas, initially Eastern Europe, South Pacific, South Asia, Africa and China. It has no other goals or objectives. It is equity-funded by the team, in addition it has a business loan.
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10) On the mosaic diagram, which of these factors is the primary focus of your work?
- Factor: Limited purchasing power of individual clients
- Principle: Design products and services that tap into the wealth of poor
- Other: Factor : Limited marketing power of small enterprises in global markets Principle: Design products and services that the poor need to compete in global markets
Contact Information:
Name: Dr Bill Spencer - Director
Organization: Worldhotel-link.com
Mailing address: Room 1206-7, 12/F Victory House, 93-103 Wing Lok St, Central, Hong Kong
Country: Hong Kong
Email: info@worldhotel-link.com
Tel: +852 8303 1772
Fax: +852 8303 1773
Website: www.worldhotel-link.com
Organization's legal status: private company incorporated in Hong Kong
Number of Employees: 10
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