The online travel market, currently pegged at $800 million, is at a nascent stage and has huge growth possibilities.
KOLKATA: The online travel market, currently pegged at $800 million, is at a nascent stage and has huge growth possibilities. Ironically, however, players are seriously looking at offline options to bolster business.
For most online travel players, a brick-and-mortar point of contact is becoming necessary, primarily because clients prefer to settle large transactions offline. Also, there are issues related to visas and basic travel quota (BTQ), which cannot be handled online.
“India will soon see a hybrid model evolving,” says Manoj Gursahani, chairman, Travelmartindia.
Among others, Travelmartindia is setting up a 75-seat support centre in Mumbai shortly. Makemytrip is also augmenting its offline distribution channels, with plans to open offices in Mumbai and Bangalore after having been launched one in Ahmedabad. Meanwhile, Travelguru has set aside about $6 million from its recently injected funding of $15 million from Battery Ventures and Sequoia Capital for an offline acquisition with a strong competency in vacations and outbound travel.
“People prefer to buy long duration vacation packages, of 7-10 days, across the counter, says Deep Kalra, founder and CEO, Makemytrip.
Agrees Ashwin Damera, CEO, Travelguru: “Selling packages require the touch and feel factor. Clients often have too many queries which can’t be answered online.”
However, say industry sources, online players will now face the challenge of international biggies like Travelocity and Expedia which are looking to make an Indian entry in 2007. The onslaught from at least four offline players - Thomas Cook, Cox & Kings, Kuoni and Raj Travels - which are launchingre-launching their online sites, cannot be ignored either.
“In the UK, when traditional players like Thomson, Thomas Cook and TUI launched their online initiatives, the impact was immediate. Once a traditional player goes online, its marketshare goes up substantially. Expedia lost marketshare in comparison,” says Urrshila Kerkar, CEO, Cox & Kings India. “But both traditional and online players must cut costs by increasing automation and efficiency.”
There are other reasons, too. For instance, rules are not well-defined in India with regard to merchant establishment charge-backs. For instance, if a prospective customer makes an overseas hotel booking through an online player, but does not make the payment, the latter has to pick up the 15% cancellation charges. Overseas, this tab is picked up by the travel insurance company.
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