With the advent of new technology in 2009, however, this scenario is now only a critical part of the past and has no implications in the present, supposed to be non-existent in the future. The introduction of the travel portal industry, and implementation of new technologies in the traditional system, completely altered the business scenario. Over the last five to six years, the business scenario has changed completely. Now, booking a railway ticket is just a click on mouse away.
The online travel portals therefore, have been able to reduce both distance and time, thus allowing flexibility to be included into the business. In addition, travel portals have also facilitated the addition of several exciting offers, in order to gain competitive advantage. The low cost airlines have been introduced recently, which offer tickets ranging from Rs.4500 to Rs.5000. All these features, may be identified as the potential advantages and benefits provided to the customers, by the travel portals. In this way, they have revolutionized the traditional ways of conducting travel business, and have changed the main focus from travelling to pleasant travel experience.
The total gross travel booking in India, starting from the year 2009 has been compared with the consecutive years in the figure given above, which clearly shows that the travel industry has seen a steady growth since 2009. All this is a blessing of the online travel portals and their urge towards steady customer satisfaction.
Today, the entire planning of a trip can be done online, starting from booking a ticket whether through rail, water or air, accompanied by booking a room at a nearby hotel as well as, hiring a cab for convenience. The E- commerce sites have experienced a spurt in activity and sales over the recent years and the entire credit for this, goes to the travel portals.
The online travel industry in India commands a 77% share of the total E-commerce market. An Edelweiss report states that in terms of gross value of online bookings, the online travel segment in India is about USD 8.4 billion. Thus, clearly online travel portal industry is a very vast industry, spreading its wings across the whole world. Competition has provided the customers with lucrative offers, so that the online portals become the better way of communication, compared to traditional travel agents. The prices and tariffs also account for about 10% to 15% low, compared to other alternatives. The travel portals provide with a great amount of customization, and the customers can visit various travel sites according to their need and interest.
Unique Visitors and Time Spent on the Online Portals
VC Investment in Online Travel Portals
|Year||Travel Portal||VC||Investment ($ Million)|
|2005||Makemytrip||Soft Bank Asia Infrastructure Fund||10|
|2006||Yatra||NVP, Reliance Capital and TV18||5|
|2006||Cleartrip||Kleiner Perkins Caufield and Byers||2.7 – 3|
|2006||Travelguru||WestBridge Capital Partners||N.A.|
The travel portals, therefore, have a large back up and they also benefit from small town residents, who do not have access to traditionally well established and popular travel agents. Besides, the portals also provide links to various low cost food stalls as well as expensive and premium cuisines on their websites, based on the customer behavior. They do this by tracking the consumer interests, on basis of the pages the consumers click on. These online actions of the consumers are tracked and noted by the portals, in lieu of which, they provide detailed and customized information about the customer likings. This helps in enhancing their business to a large extent.
Online travel portals are essential tools, designed specifically for the travel industry, and it consists of all the features and functions of an automated travel portal. Several business needs are fulfilled through a single medium:
- Ticket Bookings
- Hotel Bookings
- Car, Bus or Taxi bookings
The Automated travel portal solution for the travel industry provides a range of necessary benefits, which help in attracting and retaining customers. Some of the benefits they provide may be:
- Attractive interface
- Newsletter subscriptions
- Advanced search options
- SMS gateway integrations
- Payment gateway integrations
- Feedback and review options
Different Strategies to Build Customer Trust
These online travel portals, designed in user friendly and interactive ways, accompanied by flexible follow up operations like E – mail sending, direct calling, faxing and video calling, leads to trust building and generation and execution of a large number of conversions. The travel portals showcase their business partners, media partners and achievements, in order to gain customer trust. They also offer automated billing and invoicing services, B2B and B2C management applications, as well as E – recharge and money refunding in case of necessity. So, in these ways, they follow an effective strategy for trust generation and conversions.
Top Travel Companies in India
- Make My Trip
- Thomas Cook
- Cox and Kings
- Travel Guru
- Akbar Travels
Top Travel Portals Globally
- Trip Advisor
- Yahoo Travels
- Lonely Planet
- Wiki Travel
Top Startup Travel Portals
- Plan My Travel
- India Untravelled.com
- Travel Khana.com
- Get Off Ur Ass
- The Greener Pastures
- You and India
Strategies of the Startup Portals
These start up portals have come up with unique and innovative ideas to help the travel portal industry grow and sustain, as well as add value to themselves, through the process. Now a days, the rising start up portals follow various specialized targeting strategies like hiring travel and destination experts to plan your trips, providing unique travel experience for foreign tourists, providing opportunities to explore unseen rural gateways, providing focus on specialized adventure trips, implementing opportunities to create a network of friends while travelling, making arrangements for offbeat trips, offering authentic experiences and also providing human assisted travel information aggregator.
Smartglobetraveler – A Brief Study of a Startup
Smartglobetraveler.in, an emerging travel portal uses unbelievable low budget and providing research information, as its main USP to develop and maintain business. The site has an attractive layout, with the blue color of sky, being used as its front page color. The site provides details on its USP, in form of a note, where it notifies about the following factors for differentiation:
- Non – Conventionality
- Fully Guided Itinerary
- Personal Experience and
The website also gives details about the cheap travel packages it offers, as well as provides adequate research information and also showcases the personal learnings. The testimonials section of the website gives an idea about customer feedback, which has been impressive till now. So, this website combines low budget along with personal travel guidance, in order to establish a competitive advantage.
Small screenshots of the portal demonstrates its attractiveness, and also showcases the fantastic layout, that it has. The screenshot portrays the main USP of the portal, to the target audience.
Other Startup Portals
Thrillophilia, a website which provides experiential travel, has done a turnover of Rs.3 Crores, last year, and thus has merged with a growth rate of 200% compared to the past three years. iExperience, a Delhi based startup portal, aggregates over 200 experiences, and provides lucrative offers ranging from Rs.220 to Rs.35000. iXigo.com comes with a trip planner, which provides suggestions to customers for free. In this way, a large number or startup portals are slowly becoming accomplished.
Comparison between the Startups and Established players
When compared with the already established portals, the following points can be noted:
- The established portals have a large consumer base, most of which are loyal customers. In case of the startup portals, their consumer base is still to be developed.
- The established portals like Make My Trip, tie up with large marketing and advertising agencies, in order to ensure efficient promotion. The startup portals, on the other hand, tie up with local websites, and utilize geo targeting to reach out to their target segments.
- The startup portals come up with more innovative specializations, compared to established ones, as they closely analyze the unidentified and over looked needs, before starting out on a new venture.
- The startup portals follow specialized marketing while the established portals follow and implement mass marketing.
- The established portals, are slowly merging some of the innovative USPs of the startup ones, into a single package, and implementing them on a larger scale.
- The startup portals generally target the middle income group, while the established portals target the middle as well as the upper income groups.
- The startup portals generally focus on pleasant experience and networking, while the established portals focus on pleasant experience and customer satisfaction.
- The startup portals spend an adequate amount of money in adwords marketing, while the established portals spend a large sum of money on Google adwords.
- The established portals aim at category points of parity (Category POP) and individual points of differentiation (POD).
- The startup portals aim at individual points of parity (POP) and unique points of differentiation (POD).
How the portals operate? – The Business Model
The travel portal market in India is an uprising sector in the market, the providers of which are mostly the IT or VC backed companies, entering the segment. Most of the portals come up with an online strategy of innovative thinking and execution of neglected needs. The providers of such portals, do a lot of research on the neglected needs of the sector, and focus on them, to reach out to the target audience. As travel portals sector is a huge sector with strong competition amongst the players, the business model of the portals, both established and uprising, depends upon the following factors:
- Channel Partners
- Travel Agencies
- Hotels & Restaurants
- Travelling mediums
- Tourism Boards
- Intangible Factors
These factors solely define the business model of the travel portals, and the following diagram will demonstrate how these factors are interrelated in the business model.
The diagram depicted above shows the business and marketing model of the Online Travel Portals. The tourists or the customers, as the case may be, can contact directly with the online portals concerned, and also contact indirectly through Travel Agencies and Channel Partners.
They maintain a two way communication, with hotels and restaurants, travelling mediums as well as the tourism boards, in order to convey information to the tourists. The portals also tie up with popular telecommunication networks like Airtel, Vodafone as well as popular operating systems like Android, Windows in order to launch mobile versions of the web portals, as well as Operating Systems specific applications, where customers can easily view information and also take call to actions, then and there only.
In this way, the portals, not only market themselves, but also prove way to efficient conducting of the business. These processes also act as an efficient tool for promotion, through advertising, buzz marketing and word of mouth. These help the portals in gaining steady stream of traffic, as well as visitors converted into closures.
The travel portals provide a large number of services. Right from providing valuable information to booking tickets at the lowest price, it provides us all. In order to ensure a constant customer attraction and conversion into sales, the portals follow a set of certain business strategies or a mix of business strategies.
Business Strategy Mix
- Real time support
- Offline advertising
- Feedback and reviews
- Up selling
- Information support
- Niche marketing
- Personal advice
- Media aggregations
- Limited funds
- B2B and B2C portal development
- Technological implications
- Other innovative strategies
Business Strategies – Explained
- Real time support: The online portals provide back up and customer support, in real time. Any customer queries support or after sales service, is supplied by them, instantly and free of cost.
- Offline advertising: In addition to online advertising, the travel portals also opt for offline advertising. It is for this cause only, that one can see big banners or print ads of reputed travel portals like MakeMyTrip, Travelguru etc.
- Feedback and reviews: Most and in fact all of the travel portals today, allow users and customers, to post feedbacks in their site as well as review the sites, and provide valuable information, both on website development as well as customer services.
- Up selling: The online travel portals follow a policy of up selling, in which they maintain a valuable database of their existing customer’s habits and preferences, and approach them with any new offers available, which resembles their likes closely.
- Information support: The travel portals now-a-days, follow a general rule of providing the customers with relevant data they require, in forming an idea about the past performances of the portal as well its current status. It also provides FAQ section where mostly asked questions along with their answers are given. These information help the customer in solving queries, and also helps in building customer trust.
- Niche marketing: Travel portals that specialize in certain aspects, like those focusing on adventure tours only, follow and apply the process of niche marketing.
- Personal advice: Portals also give personal insights and advice to customers, based on their preferences and likings, which in turn motivates customers and persuades them to take a call to action.
- Media aggregations: Portals tie up with a wide range of media, so that, their span may be increased. This is done to implement maximum visibility, draw maximum leads, and result into maximum conversions.
- Limited funds: The travel startup portals follow the policy of implementing minimum funds and utilization of maximum resources. Being startups in the market, they need to preserve funds for a large number of uses, for which they invest limited funds in a smart and effective way.
- B2B and B2C portal development: The portals utilize this form of specialization based on the type of end users. They opt for both business and customer transactions. They even opt for specialized lucrative offers in both of these areas, and their websites are always specifically differentiated according to these criteria.
- Technological implications: The startup travel portals are mostly found by tech savvy people, or else, they include tech savvy people in their circles. A portal is developed by the idea of one, and in the hands of another. This another person needs to be technologically strong and also adept to technological programming languages and sharing platforms.
- Other innovative strategies: Travel portals follow more or less of all of these strategies, for better profit making in business. Additionally, they also implement attractive strategies based on situations of market and customer demands, which in turn multiplies their sales and net profit.
The startup travel portals use a large number of strategies to grow and expand. Their diversified coverage and customer attraction and retention, depends up on their methods of growth. These methods are large in number and vary accordingly, with specificity of the websites. However, generally they are of following ways:
- Form of communication: The startup portals have to follow an efficient form of communication, to communicate with media, channel partners as well as customers. The form of communication plays an important role here. As the message conveyed to the person sitting on the other side is always dependent on the analytical ability of the person concerned as well as the language, gesture and tone used for communication. These should be used and implemented wisely, for efficient growth via communication.
- Customer orientation: Customer orientation plays a very important role in managing growth. The business of an enterprise will only grow, if the orientation of the company suits that of the customers. It can be considered as the second step that follows target segmentation. Understanding the customers, helps in immense growth.
- Territorial specialization: Today, startup portals follow a rule of territorial specialization, in which they design their websites according to the need, mentality and language of the customers, of that specific territory, under consideration. For this, the portals involve in a lot of efficient primary research.
- Media coverage and advertisement: The more a portal can engage itself with media and advertising, the more quickly shall it grow and expand. Portals rising today, therefore spend an adequate amount of money on media advertising, both traditional and modern techniques. These techniques help them to get positioned in the minds of customers, and create an impulse to stimuli. This indirectly connects with the customer minds, and increases growth.
- Marketing mix: A proper mix of marketing strategies, pricing, distribution, advertisement and marketing is necessary for the purpose of growth and expansion. Instead of deciding upon large strategies for each of the individual categories, the marketing mix strategy is adopted, which is generally used for the purpose of growth via affordable pathway.
- Seasonal factors: The seasonal factors play a very important role in growth. The marketing and advertisement of the portals increases during summers, showing ads of cold areas. In winter, these portals broadcast ads of warm areas. These seasonal strategies are adopted by the online startup portals, in order to extend itself to customers, aiming at total customer satisfaction.
- Location factors: Another important point to be considered is the location of client. So, websites are developed based on locations, adjusting to the orientation of customers there and display ads and promote places, attractive and far away from there. Research information and personal advice regarding those places is also included, which leads to increased traffic, growth and closures.
Growth of the Industry in 2010 (Source: ViziSense)
Source of Income
Tourism has always proved to be a major social phenomenon for any society. It requires a proper grid of connected places, networking as well as proper execution. The developers need to understand the cultures, religions as well as orientations of the people diversified across many regions and territories.
Tourism being one of the largest industries, plays a large role in achieving the socio-economic goals of the nation. It does not only have the potential to grow at a rapid rate, but also simulate other economic sectors through its backward and forward linkages and socio-economic development of the country, through generation of foreign income. Developing a business definitely involves income generation.
Avenues to generate revenue
- Ticket booking: Ticket booking through portals leads to generation of a large percentage of income, for the portals. For every ticket booked for a specific travel medium, be it air, water or land, the travel portals claim for about 30% to 35% of the total revenue generated. In case of startups, it may vary according to the reputation. In case of travel agents who do mass booking via travel portals, there is a fixed percentage of the revenue, which the portals claim from both the parties. In this way, ticket booking plays a major source of income for portals.
- Accommodation: Travel portals have tie up with a large range of hotels starting from small budget to high budget hotels. For every booking conversion that a hotel gains due to a portal or for a collection of such gains from each portal, the hotel authorities have to pay a hefty amount to the portal governing bodies.
- Travel insurance: Travel insurance can act as a major money maker for a travel portal. Travel insurance rates are surprisingly low in open market, and becomes lower in case of a large number of customers. This dropping of rates, leads to more commission for a portal.
- Advertises: The travel portals especially the startup ones, let other established sites, display ads on their websites. This not only increases their visibility, but also leads to high revenue generation. The companies displaying their ads on the website, pay for their ad according to traffic, and it acts as a primary source of fund for the future growth.
- Packaged tours and corporate travels: Portals now-a-days, implement innovative packaged tours as well as corporate travel schemes, which ultimately lead to increased profits. The tour packages like 11 days in Singapore as well as corporate offers, generally attract a niche portion of customers, which through repeated actions, become their loyal customers, and this is how their profit becomes three fold.
How the generated Revenue is used for growth?
- To develop the websites
- To improve channel and media coverage
- To spread across a wider range of cultures
E-commerce has turned out to be the sphere of tourism, and the sector is growing at a rapid rate. Continuous functionality enhancements stipulate significant investments in the development of web portals. For a successful web portal, conversion into sales is the most important factor.
According to the United Nations World Tourism Organization’s (UNWTO) research Tourism 2020 Vision, international arrivals are expected to reach nearly 1.6 billion by the year 2020. Of these arrivals in 2020 all over the world, 1.2 billion will be intraregional and 378 million will be long-haul travelers.
Customer Retention and Acquisition Techniques
- Implement advanced search option.
- Include call to action.
- Automated sending of emails for registration confirmation, ticket booking, cancellation as well as newsletter subscription.
- Travel insurance option.
- Secured payment process.
- Up sell opportunities.
- Real time customer support.
- Mobile supportability.
- Territorial and language specifications.
- Provide destiny weather conditions, places to visit, currency available, shopping places as well as historical importance and geographical significance.
- Display innovative and lucrative offers on the landing page.
- Fill in the market gap.
- Building brand identity, and ensuring brand trust.
- Effective marketing and promotion, through online and offline techniques.
Risks involved in the Industry
- The established portals are too costly.
- Leakage of personal information can take place.
- No authentic document support is available in some cases.
- Lack of trust due to absence of human bodies at service.
- No face to face interaction.
- Higher amount of taxes and other charges.
- Large number of players.
- Adaptability to government policies.
- Political unrest.
- Lack of adequate security.
- Unstable world currencies.
- No proper arrangements for Visa facilitation.
- Difference between stated facts and actual facts.
- Strict competition.
- Lack of adequate funds.
Challenges faced by the Startups
The travel industry is experiencing rapid change recently, as the young consumers are focusing more on experiences rather than destinations. The Indian online industry has therefore rushed ahead for catering to this need of the emerging customers. This has given rise to the online travel portals, still in startup state, but having a promising future. The whole industry is divided into a large number of small and large players, each with its unique and differentiated services. However, a new entrant has to face a large number of challenges, in the form of following points:
- Lack of adequate resources.
- Ideas being copied by established portals.
- Slow implementation and execution.
- Lack of trust in customers
- Lack of proper orientation
- Grow profitably,
- Tie up with big names for establishment.
- Very thin margins.
- In effective distribution.
- Lack of point to point focus.
Future Plans for the Growth of this Industry
The Indian online industry has also buckled up to cater to this new segment. Travel sites have started focusing on localized experiences than vanilla sightseeing. Startups are walking an extra mile to bring fresh and innovative ideas to engage users.
For example Thrillophilia, is a website for experiential travel. The three year old marketplace of unique activities, things to do and experiences currently lists more than 900 experiences across 74 cities in India. The firm did a turnover of Rs 3 crores last year with a growth rate of 200% from past three years. Currently it serves more than 2200 customers a month and is planning to empower local vendors feature on the website to take SMS bookings.
iExperience, a Delhi based startup focusing on a similar theme, now aggregates over 200 experiences at prices ranging from Rs 220 to Rs 30,000, making it an attractive proposition for the budget conscious and savvy youngsters. The company operates in 15 cities.
Tushky, another Mumbai based startup wants to bring extraordinary experiences to people. Part of the 6th batch of 500 startups, Tushky aggregates things to do from different categories such as Health, Adventure, Cooking, Fashion, Music, and Photography among others.
According to Abhishek Daga Co-Founder, Thrillophilia, Indian activity travel market is around $2 billion in contrast to global market size, which is around $142 billion. “Online travel has the largest share in Indian ecommerce industry. According to an estimate, it will constitute 71% of the total ecommerce market of Rs 62,967 crores by the end of 2013.” Globally, activities and experience based things to do are in huge demand, especially in US and Europe. Of the global spend done on tourism in 2011, nearly 20% is on adventure and activity travel, which was just 7% in 2000 according to a report by Xola, a global adventure consultancy firm.
Portals like Viator, GetYourGuide, SafariDesk serve travelers looking for unique things to do, around the world.
A large number of companies have shown interest and funded or made investments in travel portals. As from the above section, the travel portal industry and its rapid growth, can already be shown. Some of the leading companies, who have invested in the travel portals are:
- Hyderabad Angels
- ilabs Venture
- Mumbai Angels
- Tiger Global
- SAIF Partners
- Blume Ventures
- Turtle Yogi Technologies
- Vox Pop Clothing
- Deal Curry
- Make My Trip
- HDFC Bank
Make My Trip and SAIF Partners have invested in iXigo.com. They have bought about 76.6% shares of the company.
Blume Ventures has invested in startup portals like Tripvillas, Indian Stage, Audio compass, Systemantics etc. Instamojo, Vox Pop Clothing, Kuliza, Turtle Yogi Technologies have also invested in Tripvillas.
iLabs Venture, Hyderabad Angels have invested in Thrillophilia. Tiger Global has made a large deal of investment in Holiday IQ. Blume Ventures, Make My Trip, Mumbai Angels have made an undisclosed investment on We Are Holidays.
Travel Guru, a hotel booking site, has been acquired by Yatra. It is seen that a large number of companies, investors as well as established portals, have invested in startup travel portals as well as some have been acquired fully.
Travel Aggregators – Who are they?
A site which combines results from various site, and provides the final output is called as a “Travel Aggregator”. E.g.: Kayak, a website which compares offers from various websites and provides the best deal. The travel aggregators mainly target to Leisure travelers, trip planners, community website travelers, young couples and business travelers.
Using a travel aggregator can help you get the best deal on a single platform, which saves your time as well as provides information, which is fast and easy to access. Aggregation can be done on basis of country, regions and territories, categories as well as planned offers. E.g.: Kelko, focuses mainly on 10 different countries including UK, France, Spain, Italy, Norway, Germany, Sweden, Denmark, Netherlands and Belgium. It also provides opportunities for bidding lowest prices for getting a competitive edge. The search type or criteria available for them is called as Meta search, which combines and compares multiple search results.
Examples of Travel Aggregators
- Hotel Aggregator
- We Go
- Trip Advisor
- Hot Wire
- Cheap Tickets
- Bing Travel
- Hotel Investigator
- Lodging Near Me
- Booking Buddy
Strategies of Travel Aggregators
- SEO Visibility
- Implementation of paid search
- Efficient Link building
- Vast media coverage
- Mega Search options
- Comparative analytics
- Unique idea generation and implementation
- Newsletter subscriptions
- Secured payment gateways
- Dynamic information
- Established channel partners
Introduce Packages of Different Slabs
For a new entrant in this industry, the competition is quite tough both in terms of pricing and quality. Also, initially, it might not be able to maintain a high margin thereby decreasing the profitability. Now, it becomes extremely important to retain the customers and expand the customer base. In order to do that, the new entrant can introduce combo packages of airline with cab services and hotel to attract customers of different income level. The cab service and hotel prices are available on different ranges. The online travel company can keep a margin on cab services and hotels unlike the aviation industry where LCC are abundant.
Long-Term Relationship with Hotel and Travel Partners
The online travel company needs to build long term partnerships with the hotels and the cab services. The benefit can be both ways. The hotels can recommend the other visitors who are unaware of the website. Similarly, this is applicable for the cab service providers. Introducing combo packages can indirectly build a partnership with the hotels and the cab players too. Thus, such a model will benefit all the three parties – the online travel portal, the hotel and the cab player to gain new customers and maintain a margin.
Introduce Travel Coupons
Similar to the Travelocity coupons, the online travel company can introduce discount coupons for several cases like:
- Discount on selected hotels with a minimum of stay period
- Discount on a particular combination of hotel, cab and flight
- Discount for the repeat customers
Identify both Business and Leisure Travelers
It is necessary for the online travel companies to identify both business travelers and leisure travelers. Also, corporate tie-ups with different companies and build a long term relationship with them can help the online travel players to retain customers. Business travelers can look for deals or options available to them when they travel for leisure. Also, the business travelers can back as leisure travelers. However, the primary focus should be on leisure travel which has grown 25% compared to 16% growth in business travels worldwide.
Focus on City and Touring Holidays
According to a report published by World Travel Monitor in 2013, during the period 2009 to 2013, the volume of city trips has increased by 47% while tours grew by 27% ahead of 25% growth in foreign holidays. This trend can help the online travel companies to introduce more city and touring holiday packages which will be less costly for the customers compared to the foreign leisure trips.