The world’s largest online travel provider, Expedia Inc., which makes online bookings worth $20 billion (Rs79,400 crore) a year on its Expedia.com travel portal, will start its Indian operations early next year.
Bellevue, Washington-based Expedia, which was originally promoted by software major Microsoft in 1996, is starting an exclusive website for India to facilitate online purchases of tickets for domestic and international travel.
The company offers a choice of more than 80,000 hotels across the globe.
Expedia’s plans for the Indian online travel space, already crowded by struggling domestic start-ups, coincides with the consolidation by another international player, Travelocity.com LP, here.
Travelocity.com, which had started hotel bookings in India in March, will start selling airline tickets on the Internet by December, a month before Expedia.com.
Online travel agents, better known as OTAs, are Internet-based travel agents that help customers in booking airline tickets, hotel reservations, car rentals, cruises, vacation packages and other services online.
Leading Indian OTAs are MakeMyTrip (India) Pvt. Ltd, Yatra Online Pvt. Ltd and ezeego1 Travels & Tours Pvt. Ltd, all three of which run eponymous travel portals, and Travelguru.com. Besides Expedia.com and Travelocity.com, other leading global OTAs include Priceline.com and Hotwire.com.
“The total travel spend in India (including hotels) is estimated at $46 billion. Out of this, 3% is done through OTAs. With this kind of growth, the travel spend is expected to grow sevenfold and the share for OTAs will shoot up to $5 billion by 2010,” said Vish A. Viswanathan, vice-president, business development, at Sabre Holdings, the parent company of Travelocity.
Worldwide, the total spending on travel is estimated at $1 trillion and 25% of this done through the Internet.
Executives at Indian OTAs— mostly financed by venture capital funds—while attending a seminar organized here by Eyefortravel, a global online publisher focusing on distribution, marketing and technology developments in the travel and tourism industries, admitted they are losing money and hoped that the sector would turn profitable in the next two to three years.
“We will be starting our own website in India shortly. We have the strength of our international experience and exposure. Based on that, we will build our Indian operations with a long-term view,” said Sharat Dhall, managing director for India at Expedia.
“We are very much aware about the challenges, including existing players, less Internet penetration and broadband connectivity. But timing and pricing are going to be the critical factors,” he added.
The response of Himanshu Singh, managing director (India) of Travelocity, was succinct: “More competition, more fun.”
Reflecting the views of domestic players, Neelu Singh, chief operating officer with ezeego1, noted that a new set of travellers are emerging with the boom in the travel market, who have started opting for online purchases of air tickets and hotel reservations.
According to Naresh Prabhu R., business analyst with Blue Star Infotech Ltd, a provider of travel technology solutions, and part of the Blue Star Group, domestic online firms need to heavily invest in their IT infrastructure to compete with global players and should explore international travel prospects, which are not currently tapped at all.
Cape Town-based online travel provider Travelstart.co.za was planning to start operations in India by the end of this year. “But we have decided to stay back for the time being after seeing the mad rush in the Indian online travel scene. We may test the market with some online marketing tools initially,” said Stephan Ekbergh, chief executive officer of Travelstart.
“I don’t know when we can enter the Indian market,” he added. Agreed Gurjit Singh Ahuja, executive director of JourneyMart, an OTA that is a division of New Delhi-based Interzign Solutions Pvt. Ltd: “There is insanity in the market. We are managing to break even now, though we were among the first to start an online travel agency concept in 2000.”
But there is no stopping new OTAs from entering the market. Hyderabad-based Travelspice.in, funded by a Chicago-based venture capital fund, will start operations shortly.
And, a Belgium company, Gateway NV, and New Delhi-based Belair Travel & Cargo (P) Ltd are joining hands to start another travel portal in India.
“All travel agents in India are getting into online space every second day. We will be strictly focusing only on premium airlines in India, with international travel facilitation in mind,” said Michael Jain, director of business development at Belair