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A package deal
The online travel agents have come a long way in the Indian
market. They have evolved from being pure air ticketing players and are now
attracting customers by selling packages. By Chetan Kapoor
Ever since the e-space came into being, there has been no looking back. People
not only continue to use services online but also expect companies to leave
no stone unturned in offering newer services. Coming to the travel segment in
particular, the online travel agents (OTAs), as a single community, are responsible
in bringing millions online for their travel needs. According to an Expedia
study, the Indian online travel is estimated to be at US$ 1.75 billion in 2007.
The country is the fifth largest market in the Asia Pacific region and is expected
to grow to over US$ 6 billion by 2010. Meanwhile, the online travel purchase
forms 11 per cent of the total APAC market and is expected to go up to 23 per
cent by 2010. It is currently dominated by domestic travel with 33 per cent
of domestic air tickets sold online.
The dynamism offered by the e-space is unlike any other medium.
The OTAs have therefore been able to move beyond air ticketing and look at selling
hotels and even have an offline presence. With such resources in hand, they
have recently gone a step further by offering packages - international and domestic.
Emerging portfolio
The industry views selling packages as a highly lucrative business opportunity.
Says Deep Kalra, CEO, MakeMyTrip.com, "Selling holiday packages is a category
that is growing satisfactorily for us but we would definitely like to see faster
growth since it offers more lucrative margins. Travellers have not shied at
the prospect of coming to us for a holiday package because we have demonstrated
that we can offer them the best deals." After all, it is the simplicity
of search-click-book that attracts the customer, asserts Neelu Singh, COO of
ezeego1.com. "It is the ease and convenience of booking a holiday on the
website that makes this the fastest growing segment and revenue generation is
on top of our mind," she says.
In this regard, for a diverse country like India it is the urban population
that shows a lot of traction in buying holiday packages online. Amit Kapoor,
assistant VP - Business Development (Leisure) at Travelguru.com says, "The
online market is primarily dominated by the metro markets and the working class
in particular. When they book for a holiday package online, they first prefer
the weekend holiday followed by a domestic and an international holiday as they
mature."
Given that while some OTAs offer readymade packages to destinations, especially
to countries offering visa on arrival, others are experimenting with do-it-yourself,
tailor-made packages. Take international OTAs like Expedia and Travelocity for
instance that offer the concept of 'dynamic packaging' which allows travellers
to select their own flights, hotels and itineraries. Himanshu Singh, managing
director of Travelocity India, mentions, "We believe that choice, convenience,
control, comfort and competitive pricing aid online selling of holiday packages.
Most of the packages available on our portal have received good response once
the right tools are provided, and we believe that there is great potential to
grow the online package business."
Adds an Expedia spokesperson, "We will be introducing dynamic packaging
(on our India portal) once we add the flight booking functionality. Our site
currently offers the option to create stay and a sightseeing itinerary. One
can create combinations of hotels and destination activities across the world
such as diving with sharks in Australia or going quad biking in Dubai."
Evolution needs time
Offering packages online however seems to serve as an advertisement for travellers
to buy the same offline due to barriers such as credit card limits, especially
in case of international holidays, and clarity over minute details (like ground
transfers, meal preferences, elaborated itinerary, visa processes, foreign exchange).
This is why the portals - MakeMyTrip.com, Yatra.com, ezeego1.com and very recently
Travelguru.com - are now opting for an offline presence to complement their
online one.
Stuart Crighton, COO of Cleartrip.com, says, "Packaging is an evolution
to this business but going offline is a different and difficult model to scale.
We don't want to push packages as yet as there are a good number of offline
tour operators who do that very well. The challenge to sell this online is building,
developing and ultimately selling packages. As the customers are changing by
buying complex products online, service becomes the ultimate differentiator."
Agrees Amitabh Pandey, president and head, e Business, Thomas Cook (India) that
recently launched its online portal where selling packages would be its key
offerings. "Booking air tickets reaps lower margins for OTAs so selling
packages online will soon become popular. But the truth is that not many people
will prefer buying it online as yet. The OTAs are no longer OTAs as it is only
the hybrid model that will work in the long run," he says.
Kalra confirms, "There is a slight barrier to selling online since it is
a high-involvement product but we have successfully managed to overcome that
by transitioning into a hybrid model. It is important to ensure that packages
sold online have a strong service delivery mechanism in place - offline fulfilment
for allied services such as visas, foreign exchange, insurance, etc. The growth
story will in time replicate that of the online ticket sales and grow at a faster
pace than the outbound holiday rate, which is currently estimated at 30 per
cent."
Going places
Moving beyond the argument of pure play OTAs v/s hybrid models, ultimately these
travel companies have stepped up their delivery mechanisms in selling packages
across the world. Also, customisation is a key aspect. "Every client’s
needs are different and customising the itinerary requires experience beyond
selling flight tickets and hotel rooms by our counter staff," says Kapoor,
adding that international countries offering visa on arrival like Maldives,
Malaysia and Mauritius are top sellers for families and leisure travellers during
summer holidays whereas the DINKS prefer travelling between the summers and
Diwali vacation when the rates have dropped. Alternately, last minute bookings
during off-season might just be available more cost-effectively.
Even B2B participation is being observed in this space. Neelu Singh emphasises,
"Our meta-search site was amongst the first to realise that there is a
very aggressive B2B market." Likewise, Travelocity India is en route to
launch its affiliate programme and Expedia is exploring the B2B space as well,
according to its spokesperson. Even MakeMyTrip.com's B2B focus areas include
Mumbai, Delhi/NCR, Chennai, Guwahati, Kolkata, Aurangabad, and Gujarat.
With inputs from Jyoti Koul, New Delhi
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