The increasing internet and smart phone penetration along with a growing consumer concentration towards m-commerce is expected to push the online travel services market to US$34 bn by 2019
The online travel industry has come a long way since American Airlines introduced first automated booking system in 1946 and switched to switched to Sabre, an automated airline reservation system in 1959. The year 1976 saw the launch of Travicom, the first Global Distribution System for airline ticket as well as United Airlines granting access to travel agents via a computerised reservation system. However, the noticeable growth in the online travel space started in 90’s and thereafter. The industry witnessed the first online airline ticket getting booked in 1995, and in 1996 Microsoft launched Expedia and American Airlines subsidiary launched Travelocity. In 1998, Priceline.com was launched and the first Meta- search Farechase was launched in 1999. It was 2000 when MakeMyTrip launched online travel booking platform in India. Thereafter, we have seen multiple players coming into the picture and expanding the horizon of online travel market.
It is now truth that the internet age has transformed the way a traveller chooses and executes his travel plans. Travellers are increasingly using the internet to research and book flight tickets and hotel accommodation, swapping traditional travel agents for online travel agents (OTAs). The deepening penetration of internet usage and smart phones in India has led to increased booking of airlines, hotels, rail, bus and other activities through online portals and applications in recent times. While the number of internet users is growing with 26.8 per cent CAGR, during 2012 to 2018, the number of smart phone users in India is growing with 90.5 per cent CAGR. It is estimated that the number of internet users in India will touch 500 million mark by 2018 and the number of smart phone users will zoom to 382 million by this year end. The forecast suggests that 8.4 million Indians are likely to book hotels online by 2016 up from 3.5 million in 2014.
Current and emerging scenario:
According to Simon Fiquet, General Manager, SEA & India, Expedia, the total travel market gross bookings will reach INR 181,335 crore by 2017, growing 37 per cent over 2014. “India’s online travel market will also prosper in tandem. Online gross bookings will grow faster than the total market through the forecast period; online travel penetration will increase from 39 per cent in 2014 to 44 per cent by 2017. OTAs will also grow faster than suppliers through 2017, and their share of online travel will increase to 39 per cent by 2017,” Fiquet adds.
Mohit Gupta, Chief Operating Officer – Online, MakeMyTrip, feels that India is at the edge of another boom in online travel industry with more people planning and booking their travel themselves. “This time it will be driven by hotels category, fuelled by increasing smartphone penetration and app adoption. Mobile apps are changing the way in which customers interact with brands and vice versa. With smartphone adoption growing at a phenomenal rate, the number of travel-related searches and bookings via mobiles has sky-rocketed in the past year,” Gupta says that the MakeMyTrip continues to be very excited with the rapid growth of online users in India. “We also remain confident about India’s rising long-term growth prospects and the concomitant travel demand that will be generated by the expanding middle class,” he adds.
Neelu Singh, CEO& Director, Ezeego1, states that the advent of technology and the rapid changes has ensured that the consumer today has a lot of options and choices available to him for taking informed decision in travel. “With Digitisation and convergence of data, all necessary information is available to the consumer at finger tips. So, how the travel agencies can acquire and retain customers through service by adapting to technology for providing the right content at the right time with faster response is the key. Quality of service and achieving economies of scale are the key drivers and this is only possibly by automation.”
Top trends in online travel:
Today with the ever evolving technology in the travel space, every player is looking to implement novel and innovative products to lure customers. Gupta enlists top five technology trends as; Mobile first, Personalised travel, Big data, Virtual-reality travel and Internet of Things. According to him, internet of things will be widely accepted in the hospitality industry including travel. “As per a recent report by InterGlobe, the IOT market is set to grow by 30 per cent in 2016. By connecting smart devices, systems, processes and people in new ways, it is streamlining the back-end operations of airlines, hotels, resorts, cruise lines and rental car fleets. And, thus creating exciting opportunities for the travel and hospitality industry,” he opines.
Fiquet says that there are a couple of trends we are observing now that the general process for booking is getting considerably more complex. “We see our users now shop across more sites than ever before. We see two big things happening that are changing the business of travel. The new trend that is emerging in our consumers is also Homeaway and vacation rentals. Some of the emerging trends in travel technology this year would be: Mobile First, Personalisation and IoT based services,” he says. Singh also outlines the same trends suggesting that mobile apps in travel, data convergence and digital transformation, personalisation, social media and alternate accommodation and travel options are the new trends in travel technology.
Mobile: Matching bookings frequency
With the growing penetration of smart phones, more and more people are turning to mobile to plan and book their travel. The new product-enhancements and features are being developed with a ‘mobile-first’ approach.
“The run rate for mobile growth is long and we have consequently made mobile an important strategic priority for the business. We have mobile interface in five vernacular languages to nurture deeper engagements with user specifically in tier II and beyond towns and cities across the country. At MakeMyTrip, the hotel business was taking a long time to pick up but has now moved so fast thanks to mobile and aggressive pricing. We now have nearly 52 per cent of Indian online visitors reaching us via the mobile platform versus 21 per cent a year ago. We ended 2015 with more than 18.5 million life to date downloads of our apps. In Q4, more than 70 per cent of online hotel transactions and 40 per cent of flights bookings in India were booked through mobile devices,” he says adding that MakeMyTrip also supports flight-booking in Hindi via the mobile site and we will continue dedicating more effort and resources towards enhancing our mobile users’ experience.
Also, Indians who are in the mood to plan multiple short trips to places around their cities, mostly book through their mobile apps. “With more Indians researching and booking travel on handheld devices, mobile travel gross bookings will reach $3.2 billion by 2017, up 350 per cent over 2014. Mobile gross bookings will account for 25 per cent of the online market and 11 per cent of the total travel market in 2017.The lodging segment and a surge in mobile transactions are driving exceptional growth in the online travel category,” Fiquet says.
Ezeego1 has also seen tremendous growth in the area of mobile applications across verticals. “We have a focussed approach to scale up our mobile platform offerings and making solutions available for the consumers at their fingertips,” Singh says.
Dynamic packaging: Yet to be on same wavelength
According to Singh, dynamic packaging is still in nascent stage in India. “This is because no single service provider has had the dynamic packaging technology ready end-to-end. Flight + hotel options are ready; however a complete packaging solution is still not available in the Indian market. The travel segment is working on solutions and the success of such solutions will be dependent on the ease of the user interface and how flexible the solution is from an end user point of view. We are still two years away from a true dynamic packaging solution in India,” Singh reveals.
Fiquet believes that the latest development of the internet application in the tourism industry is dynamic packaging applications. “Today, consumers’ demands have changed. Indians prefer preparing their own holiday packages to purchasing predetermined holiday packages because they want more personal holidays and think that current pre-determined packages are not flexible enough .More consumers require more individualized, flexible and selectable holiday programs and discover travel products of the online world. Dynamic packaging is one of the most important innovations of online travel agencies,” he opines.
Gupta suggests that the growth of the travel industry lies in a customer-driven approach which is personalisation. “People now tend to look at mix of packages, individual products and self-organized travel. Consumers are spoilt for choice and have become more demanding. With the help of dynamic packaging, a customer is provided with a single, fully priced travel package that hides the price of the individual travel components. It helps airlines, online travel agencies and tour operators to tap into different supplier systems in real time and bundle travel components (air, hotel, car, entertainment) into a single reservation,” he opines.
Gaining Customer loyalty
Fiquet says that Expedia’s customer centric innovation and travel focused portfolio offers unparalleled value and insights that help us manage the consumers travel buying journey in a differentiated manner. “Our focus will be to sustain growth, to look at needs of the market, growing it and to continue to deliver an end to end seamless customer journey,” he adds
Gupta believes that customers today have many options – from full-service OTAs to those catering to a specific service only, niche websites offering expertise in destination-research or a particular aspect of travel and meta-search aggregators. Singh suggests that transparency and service is key to attain customer loyalty. “With technology changing rapidly and consumers becoming more tech savvy, it is imperative to quickly adopt automation and keep innovating – the key today is data convergence, reputation management, m Commerce, digital transformation and automation. The challenge is to ensure that the time needed to service a customer is fast and done at the right time. Today customers have multiple options and slight delay in services will make one lose the customer forever,” Singh says.
Changing landscape
A traveller nowadays has so many options to book a trip online. OTAs, Meta search engines, direct connect websites, offline agencies, and social media. Which booking method is gaining traction?
Fiquet opines that booking through OTA’s can help the travellers plan well. “There are many deals that are available on OTA’s and one can make a choice accordingly. OTA’s provides a wide range of options and acts as one stop solutions for airline, hotel, car rental and activity booking. Meta search is a search tool that uses another search engine’s data to produce their own results from the internet. Also, the traditional way of visiting an offline agency has decreased due to time and option constrain. Social media is a great platform to make people aware about the deals and discounts offered on the OTA’s and they also play a huge role in decision making through reviews, recommendations and options. It has becomes easier for people to evaluate their trips,” he says.
Gupta also feels the similar way. “As per the increasing customer traction on our website and mobile app, we can say that the online booking method is still gaining traction and has an edge over other booking methods. OTAs provide travellers with convenience and ease of booking experience along with providing comparative rates and customized package services which suits best to the needs of the customer,” he says.
Singh says that the consumer scouts for options on all possible channels and books where they get the maximum benefit or the best deals. “Mostly the booking channels are the OTAs or the supplier websites. OTAs today offer discounts and promotions to entice the customers to book on their sites. This trend would continue and would remain consumers preferred choice depending on requirement,” she says.
Business outlook
Expedia has grown immensely in the Indian market, owing to the innovative products, competitive offers and novel marketing campaigns witnessing a consistent growth. “Over the past years, we have built a strong reputation in India. We offer one of the largest inventories of hotels, airlines and choice of holiday activities across the globe. Our focus is to continue to increase the number of hotels/activities/airlines to provide the widest inventory. Further, we will also align our global acquisition to realize greater consumer value for this market. We aim at democratization of travel, by enhancing our reach to the emerging tier II/III towns and providing them with the flexibility of choosing and customizing their own vacation,” Fiquet informs.
MakeMyTrip, a market-leader with 47 per cent market-share, pioneered a revolution in the way travel is purchased in India. “We have been making aggressive efforts to expand the overall travel category by tapping audiences who are not in the online space as yet and catalysing the offline to online shift. The year 2015saw the online hotel bookings market opening up due to smartphone penetration and better bandwidth. We believe that this is just the beginning,” he says and adds that the Indian hotels market is still highly underpenetrated and fragmented and we have made aggressive efforts to tap into this segment. “We recently launched high-decibel campaign #BefikarBookKar featuring Ranveer Singh and Alia Bhatt. With this campaign, we seek to bring new customers into the online hotel category. In the coming years, our efforts will be focused on growing the share of the hotels and packages business in our overall revenue mix. The bigger picture is what we refer to as “Greater India” strategy,” he says.
Singh sees opportunities in global distribution of ezeego1’s platform and content and that will remain the focus and thrust the next 2 years. “Basis this we plan to launch Ezeego1 in new markets, expand our reach in tier 2/3 cities in India, introduce mobile applications for customer engagement apart from bookings. Digital marketing solutions and data convergence will also be the key areas we will be focussing on,” she adds.
