Just got of listerning to interesting Podcast (link) of Sandeep Murthy CEO of cleartrip.com. His take on online travel business is interesting. He believes largely the online travel industry is inviting investment due to the fact potential of growth available based on forecast of new airlines/hotel inventory being made available. But based on understanding of existing players like makemytip.com , traveljini.com . The sales have been largely driven by sales to destinations abroad or NRI’s taking advantage of booking online for travel to india. Rest of all online travel industry figures are based on transactions being performed on platforms/websites of airlines directly.
For bankers putting their money behind such companies. Should realize on focused opportunity where the travel portals should not be just using the money for bringing more and more people to use online medium for travel booking(un managed business/liesure travel) but also look at how managed travel planning or IATA agents can be made dependent on the technology or business.
India is a country where by just opening a call center would not bring the right offline pressence these online travel agencies feel to provide. Either they would need to follow shaadi.com method of franchising or making the travel agents dependent on them for driving businesses. This would not only help in building the brand but also help people get offline customer service at point near to them. I have shared this thought earlier also “people in india tend to have lot of time to waste” system has made people like this where time value of money is very little for people earning <3L per year. Which forms a very large population in india. Hence you have to reach out to these people. I will give an example a person who has made reservation with a travel agent in small cities will come to there office atleast 3 times before getting the ticket issued. First to check fare, second to check reservation, third time to get it issued. Keeping this in mind local pressence surely helps them to get satisfaction to walk-in and feel dealing with established player.
When i talked about Online DVD Rental business in india it could work as market does not even exist offline as lack of DVD rental stores commonly accessiable. Hence model exist. But Travel Industry is one of the important sector to india which is called “country of shop keepers”. Here a person who would like to start business either gets into general store,cloth merchant,tours and travel,chemist or eatery. The only way to grow business big is to carry this weight with you. Make these small people adapt their business and re-align to your businesses.
But again best of luck to businesses like cleartrip.com, yatra.com as the model is good but is it worth enough to invest 10 millions dollars in it is to be seen.