Stiff competition being the mother of all innovation, travel portals have been constantly innovating over time to survive and thrive, and increasingly moving beyond the Internet medium to reach out to customers and make some much needed conversions. Online travel companies are extending their services offline with tie-ups with retail chains and mobile versions.
And the results are showing. According to PhoCusWright, a travel industry research firm, travel portals in India did business to the tune of $800 million (of the total $15.5 billion travel market in the country) in 2006. The firm expects this to increase to $2 billion by 2008.
In a country with over one billion people, whose population is projected to exceed that of China’s by 2045 according to the United Nations, the market potential ultimately surpasses that of the US. and Europe combined. Moreover, in a statement issued by financial service provider Visa, airline ticket customers formed 40 per cent of online shoppers in India in the six months to June 30, 2006.
Interestingly, all the industry players report a conversion rate of well below 10 per cent for the Indian online travel market. It is estimated that most players have a conversion rate between 6 per cent and 8 per cent.
Nikhil Rungta, Head of Marketing, Yatra.com, believes that good service, value additions and promotional schemes will help in increasing the conversion rates in the industry. “Previously, it was value for money, but today it’s money for value. Customers are increasingly looking for more value rather than discounts these days. And most importantly, people are now willing to pay money if we show value,” he pointed out.
In terms of extending services beyond the Internet, Rungta claimed that Yatra.com was the first online travel portal to have mobile applications for booking tickets through mobile phones. “We have been trying to increase our value of services to our consumers with services like mCheck (mobile payment) and Cash on Delivery. In this endeavour, we have also tied up with Reliance Web World for selling the tickets,” he further said.
Hari V Krishnan, VP – Product and Marketing, Travelguru.com pointed out that his travel portal was more focussed towards hotel booking business rather than flight ticketing business, as the former was a high margin, low volume business as compared to the ticketing business, which was a low margin, high volume business. Speaking about the conversion rates for the company, Krishnan gave approximations that while the hotel business gave high double digit conversions, the flight ticketing business gave below 10 per cent conversions. “In my personal experience, there seems to be a lot more conversions through our call centres,” he remarked.
Addressing the issue of retaining consumers given the increasing number of online travel sites, Krishnan feels that pushing people through offline methods are useful. “In Tier II and III cities, as the Internet penetration is not that high, pushing people through offline modes is useful. We have tied up with Café Coffee Day and other retail chains, and in Karnataka we had pioneered SMS-based ticketing,” he explained.
Sandeep Murthy, CEO, Cleatrip.com, observed that the Indian customer’s mindset was that of a bargain seeker and would certainly compare products on sites before making a purchase decision. “The key to customers coming back to you is to provide a fantastic online experience and make this search for travel simple. Also, the differentiator lies in the level of service delivered, access to exclusive product/deals,” he added.
“We have 80,000 visitors daily on our site, of which 30 per cent are unique visitors,” claimed Murthy. He believes that with the simplicity, quick and high quality service, innovative deals and offers, and comprehensive availability of booking options helps the company in retaining its customers.
Commenting on Cleartrip’s offline activities, he explained, “Our perspective of offline distribution is to ensure we are strategically placed in the midst of qualified traffic, which is in keeping with our tie-up with the Future Group to be present in the Big Bazaar outlets. On the mobile front, at this point the phone will only be used to search for travel and we have created a unique travel product on the mobile that delivers best deals across all airlines through an SMS search.”
Although Indiatimes Travel and Makemytrip.com are quite well-known in this space, they couldn’t be reached for comments despite repeated attempts.
The indicators are all there to make this burgeoning industry expand its tentacles further beyond the Internet domain. Only time will tell the extent of this progress, but one thing is certain, due to this efforts, the consumer surely is spoilt for choices.