Cover Story

A graduating market

Travellers have traditionally been categorised as FITs, groups, families or MICE. But a segment that has existed simultaneously but not given too much weight - the students - is now showing signs of maturing. By Andrea Lopez

The great aim of education is not knowledge but action, said Herbert Spencer, an English philosopher. So while the student fraternity in India is aiming to get an education overseas, the various tourism stakeholders are acting on this and offering the eager, wide-eyed, and often a first-time international traveller, packages that were not dreamed of before.

This is indicative of a maturing student travel market, which is showing continuous growth. Perth for instance has seen a steep increase in Indian students. The Perth Education City (PEC), a body funded under a joint industry government initiative, is a unique consortium of Perth's leading private and public universities, colleges and schools that provide educational services to the international community. Says Jamal Qureshi, South Asia regional marketing manager, Western Australia Trade Office, PEC, "We have seen a phenomenal increase in the number of Indian students coming to Perth during our two annual intakes in February and July."

Such a part does the student traffic play in the total number of visitors that the average rises or falls depending on whether it is accounted for or not. According to Carmel Beattie, group manager (International Markets) for Tourism New South Wales, the average length of stay for an India traveller in New South Wales is 40 days. "But this figure is largely skewed by the student market in Sydney. If we leave out this segment, the average length of stay plummets to five to seven days. We are therefore looking to increase the incoming student traffic," she says.

Tapping emerging markets

Apart from Australia, the traditional markets for students like the US and the UK continue to grow strong. Singapore, although active in promoting its universities through fairs and exhibitions, still has a long way to go before it can join the league of the US and the UK, feels Thomas Pappachan, VP (Outbound) Harvey India. "We have seen that 90 per cent of students prefer to travel to Europe. In comparison, Singapore has not fully opened up to students and contributes to around 10 per cent of the share of Indian student traffic," he says.

The country has however been actively positioning itself as a superior destination for students and hosted the Singapore Education Fair earlier this year in Mumbai and Chennai. The country received more than 86,000 students of 120 nationalities in 2007. This was an increase of 7.5 per cent relative to the same period in 2006 and 46 per cent since the Singapore Education started cultivating its international student market in 2003. India stands at number six among the top source markets for international students in the country and Singapore Education hopes to increase the number to 1,50,000 by 2015.

This is still in stark contrast to Australia where Bond University has averaged a 22 per cent increase from the India market. Russia and Germany, even though not spoken about much, get their share of Indian students. The interesting aspect is that newer destinations coming to India to promote themselves as tourist destinations are even addressing students. The tourism board of Hong Kong was in Mumbai recently and expressed interest in the segment. Says Pappachan, "Although the student traffic to Hong Kong from India is a mere three per cent, the tourism office is still looking at promoting itself in this space. This only goes to show that the market for student travel and exchange programmes is a very good one to tap."

But how lucrative is this business for an operator? Pappachan is of the opinion that since the business is seasonal, the margins aren't that high to specialise exclusively in student travel. "To become a niche operator and specialise in students travelling abroad, one would have to market oneself exclusively for at least two years to be well-known. In the third year, if marketed properly, you would perhaps get 20 per cent of the total volume," he opines.

The situation is different for larger operators like Cox & Kings that has a separate division to design student packages. Says Karan Anand, its head (Business Development), "Typically this segment comes to us for airline tickets, insurance, assistance and foreign exchange. We make presentations to various student bodies and colleges from where we get business. Since Cox & Kings is a category II license holder of foreign exchange we can also help students pay their tuition fees and all other expenses directly through us. We also provide them with rebates on foreign exchange and airport assistance facility."

Going strong - educational tours

Looking beyond overseas academic travel is another segment of student travel - those travelling within the country or even abroad on educational tours/study trips. This segment falls more into the category of special interest tours, but nevertheless contributes to the pie of student movement. The more recent trend is that foreign educational trips for students have become a part of the agenda as more international schools enter India.

Some tour operators have in fact gone exclusive and are known to specialise in educational tours, although the numbers are still small. Bigger names in the market like SOTC and Cox & Kings have a special educational tours division to cater to this market. Cox & Kings has registered a 10-15 per cent growth from this segment. SOTC Corporate Tours specialises in educational and study tours, where its objective is to answer the needs of educational institutions.

The itineraries are designed to help youngsters inculcate a sense of history and awareness of local habits and customs. Says Srinivas P, senior VP, Special Interest Tours, SOTC, "This division organises dozens of groups of school children every year to send them to places like Europe, Singapore, Malaysia. We mainly cater to the needs of schools when they contact us and package destinations as per their budget. For lower budgets of Rs 35,000-Rs 45,000 we recommend places like Singapore and Malaysia. But for higher budgets we suggest Switzerland and France."

He adds, "The difference between leisure holidays and study tours is that when parents accompany their children, it is purely fun whereas in study tours, education and leisure go hand in hand. Since kids are involved, we have to take special care for which we have created a separate unit."

Smaller operators too do not want to be left behind. Mumbai-based Mars Tours and Nature Explorers organises domestic educational trips for city schools. The tours are mostly designed around, as the name suggests, nature-based activities. The company's director, Amol Hendre, says that the business gets lucrative after you have established yourself in the market, since city schools will want long-term tie-ups with one operator who will offer the best deals and packages.

"There would be a handful of operators in this space - say around 15-20. But it has good potential, since almost all schools take their students on educational trips. Moreover, as more IB schools establish themselves in different parts of the country, they will look for educational tour operators." The downside however is that since schools work on smaller budgets, the margins for an operator are much lower than FITs or group tours. Still, long-term tie-ups ensure that one stays in business even if profits may not be that high.

'We expect the number of students coming to Gold Coast to increase by 20% p.a'

Martin Winter, CEO, Gold Coast Tourism What potential do you see in tapping this segment? The education segment is often under-estimated with regard to tourism, but it is a valuable part of the mix with up to 45,000 international students currently studying on the Gold Coast at our schools, universities, colleges and TAFEs. They contribute significantly to the Gold Coast economy as during their study, they tend to experience as much of the destination as possible. Further, many of the long-stay students entice their friends and family to visit the city. Airlines have been awarding freebies to students by increasing baggage allowances. What are you doing to increase visibility as a preferred destination for education? The work of Gold Coast Tourism is multilayered; we actively market the city as a leisure and business tourism destination, but we also promote the underlying assets such as our education credentials. We have partnered with key education institutions such as Bond University, Griffith University and Study Gold Coast in various markets including India in an effort to raise the profile of the destination and our education providers. Any plans to work with the airlines for promotions through exhibitions and education fairs? Gold Coast Tourism aims to work with all airline partners to increase access to the destination. Throughout the year we deliver campaigns targeting holiday, VFRs, business and other market segments. Education is certainly one segment we are increasing our activity for, though there have not been any dedicated campaigns yet. How do you think this segment will fare in the long run? We expect the number of visitors coming to Gold Coast to further their education will continue to increase substantially, as it has in recent years by around 20 per cent per annum. The city is expanding its offering with new institutions and constantly developing programmes of international standard. This quality of service, coupled with the high desirability of the region as a place to live in and visit is the unique proposition of Gold Coast for this segment.

Off to a flying start

Adding momentum to the growth in student traffic are the airlines, who have been in recent years trying to be more student-friendly. Earlier this year, British Airways launched a special campaign, valid between May and November 2008 - 'Don't leave your favourite things behind' aimed at student going to the UK, where it allowed 23 kgs of extra baggage. Other carriers like Qantas are also following suit.

'StudentConnect' was one of the earliest packages to be designed specifically for this market segment. The package included attractive fares, special deals for foreign exchange, bank account arrangements prior to departure, additional baggage allowance and special SIM card rates on Australia-based cell numbers among other features. When asked about the margins that this segment earns versus others, Khursheed Lam, manager (India & South Asia), Qantas Airways, said, "We do not assess margins by individual market segments. However, the student segment is accorded high priority by Qantas, giving them preference of early seat confirmations. Based on the destinations that we serve from India, Australia draws a far larger number of students than New Zealand. However, we see prospects for significant growth for New Zealand as well."

Meanwhile, Jet Airways has been expanding its international operations since 2007 while keeping an eye on India's outbound student market. Sonu Kripalani, its VP (International Sales), says, "There has been major growth in the Indian student travel segment, which encompasses not only scholarship holders but also private students at the undergraduate and postgraduate levels. The last few years have also seen student traffic from India expand beyond the traditional USA, UK universities to enrollments in universities in Germany, Austria, Switzerland, Canada, Singapore and China."

Having begun operations to the USA/Canada only in end-2007, the correct picture in terms of student traffic numbers flown by Jet Airways will emerge only in 2008-09. She however added that the airline expected to fly approximately 10,000 students during the current financial year 2008-09. "Student traffic has become one of the major segments of the private travel category since it is not limited to once-a-year and sometimes results in repeat travel, extending to family as well. Therefore, with regard to segment margins, we are looking beyond single carriage trips with the expectation of converting these students into repeat travellers during the course of their study tenures and subsequent professional lives," says Kripalani.

Evidently, the opportunities this space presents the tourism industry are enormous. Australia is a good example of a market that has tapped this segment well. The figures, both in terms of number of students and visiting family and friends speak for themselves. As Elise Beck, manager (International Programmes), Bond University - Gold Coast, pointed out, the university is averaging a 22 per cent growth from the Indian market presently. That other tourism boards are now coming into India with the student market on their agenda is also a good sign.

(With inputs from Chetan Kapoor, Mumbai)