BackHow online travel agents came back from the brink
Online travel agents decided to de-risk their business model by increasing their focus on the holiday business
Premium(MakeMyTrip Ltd, a leader in the online travel space, started bundling hotel reservations, airline tickets and holiday packages. )
THE SITUATION
In late 2008, many domestic and foreign airlines switched to a zero-commission regime (they had been paying 5%). In retaliation, many travel agents boycotted these airlines. The agents, including those who operated online, faced a bleak future.
THE BIG IDEA
Online travel agents decided to de-risk their business model by increasing their focus on the holiday business.
Firms that run travel websites realized that margins were much better in selling holidays.
THE IMPLEMENTATION
MakeMyTrip Ltd, a leader in the online travel space, started bundling hotel reservations, airline tickets and holiday packages. Rival Cleartrip Pvt. Ltd also rolled out similar travel packages. MakeMyTrip has also rolled out last-minute hotel deals in association with 800 hotels. Another online travel agency, Yatra.com, has similar deals on offer.
THE MANAGEMENT PAYOFF
While those sites that remained pure-play air ticketing platforms shut down, those that innovated have managed to hold their own despite the absence of airline commissions on tickets. The three online travel agencies have even managed to secure funding from strategic investors to expand their business.
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