New Delhi: With competition increasing in the domestic market, online travel companies are eyeing a slice of the customized holidays segment—typically a feature of traditional travel firms that can directly interact with tourists.
Currently, many online travel agencies offer pre-packaged holidays through their websites and customized holidays through call centres or retail outlets, though the latter hasn’t found much demand.
“It is mainly because of the easy availability of small-time travel agents next door and cautious approach towards online transactions,” said Neeraj Dev Singh, head of outbound products at Yatra Online Pvt. Ltd.
Although no independent data is available on the size of the customized holidays market, it’s a growing business and leading online travel firms including Yatra and MakeMyTrip Ltd are working towards getting a bigger share of it.
“We are going to launch an online engine for holidaying in the next two-three months,” said Singh. “Customers then will be able to pick their own transport, flights, airports and hotels to make a package without having to interact with the third person.”
MakeMyTrip expects to have a similar facility online in four to six months.
“Customization holidaying will be critical going ahead and a way to go forward,” said chief operating officer and co-founder Keyur Joshi. “We have been wanting this to be online for a long time now.”
Holiday packages constitute around 20% of the company’s revenue, Joshi said. Online travel firms earn a large portion of their revenues from air ticketing and hotel bookings.
Industry experts say competition has increased in the online travel business and companies need to reach different sets of people.
“They are trying to get into a market that is slightly different than run-of-the-mill travellers,” said P.R. Srinivas, former India head for hospitality and travel at Deloitte Haskins and Sells, a part of Deloitte Touche Tohmatsu Ltd, and now an independent analyst. “These companies are trying to open up new markets... those who have higher disposable income and those who are tech-savvy.”
In a way, Indian online travel companies have little other option as foreign firms entering the country are offering travellers customized packages.
Expedia India, the local arm of the world’s largest online travel company, has been ramping up its operations in India for about a year. It plans to invest Rs 60-75 crore in 2012 on marketing, against Rs 25 crore last year.
It has earmarked $20 million (around Rs 100 crore) over three years for upgrading its technology in India. “We do not sell packaged holidays but empower consumers to build their own packages with travel ticket options, hotels, car rentals and more than 5,000 holiday experiences through shopping cart concept,” said Manmeet Ahluwalia, marketing head, Expedia India. “Today 70% of our consumers do not need forced products.”
Traffic on Expedia India’s website grew by 150% and outbound and domestic business grew by 200% in 2011, Ahluwalia said, but declined to share the exact numbers.
Ram Badrinathan, an analyst with PhoCusWright, a travel industry research firm, said the move by online travel firms to offer customized holidays is a natural progression already present in other countries.
Some online travel companies said it might be a long shot to convince holiday goers to buy customised packages from them.
“Traditional travel agents and small-time travel agents have always been relied upon by customers for customized holidays. It might take a few years before this happens,” said Hrush Bhatt, co-founder and director, product and strategy, Cleartrip Travel Services Pvt. Ltd.
“At present, if you look at online travel space, lots of activities for price manipulation are going on, but it won’t change customers’ experience in any way,” he said. “Enhancing the overall experience and taking the services to the next level would take longer.”
The travel industry in India is growing at 15% year-on-year and the online travel business at around 35%. Online travel was a $1 billion industry in India in 2009 and is likely to more than double to $2.6 billion in 2012, according to PhoCusWright.