With the current lull in the Indian travel trade, it is about time to focus all human and financial resources in building strategies and charting a course for the forthcoming season, says Raadia Mukadam...

The recent spate of adversities were deep jolts to Indian tourism, but it got the travel agents and tour operators thinking: what lies ahead? How do we lure the travellers back? Innovation became the name of the game.

This decline of tourism can be illustrated by the decline in tourist figures of visitors to India. To get out of the rut, some strategies are presented below.

Focus On The Domestic Market

For India, with a drop in outbound numbers, Travel Service Providers (TSP) may benefit by concentrating on selling India in the domestic market. The potential of the domestic market has not been adequately explored. With a proactive tourism ministry, an increasing number of states are trying to promote themselves. TSPs could do well by thinking about innovative ways and means to sell India.

Incentivising Local Travel

TSPs, in addition to emphasising their foreign affiliations, need to project a localised identity. For example, Thomas Cook is using ‘Paisa Vasool’ in its adverts and Cox & Kings is promoting a ‘Bharat Dekho’ and `Duniya Dekho’ while Raj Travels promotes local flavours on all tours right from the Eiffel Tower to the Taj Mahal. Large amounts of money are being pumped into the local travel segment towards incentives which includes ‘credit’ and ‘free holidays’ with ‘free spouse travel’ and ‘free travel for the next five years’. These schemes were highly successful in persuading the elusive traveller into embarking on a leisure tour. .

Selling India - A Safe Haven

In the recent past, several countries issued travel advisories advising their citizens to avoid travelling to India. Some asked their citizens in India to return back. There is a great need for this impression of India as an unsafe country to be changed. TSP’s are well equipped to address this issue. They would need to devise ways to regain the confidence of their customers - local and overseas - by projecting India as an exotic place but at the same time a safe and viable destination.

Corroborating this view, Sharukh Kapadia, managing director, Magnum Travels states, "One of the major challenges that face the Indian tourism industry is to project the high level of safety and security at major tourist destinations of the country. For this, it is not only the role of the public sector to change the image but the private sector also needs to play a key role, particularly in the marketing of tourism generated countries".

SAARC Countries - A Viable Target

Since it is expected that long-haul travel may not revive in the immediate future, one of the challenges facing India is to identify ways and means of generating tourist traffic from neighbouring countries. Short-haul travel from selected countries in the neighbourhood and concrete steps to encourage movement of traffic within the SAARC regions should be a focus area. Currently, 25 per cent of traffic in the SAARC region, equivalent to approximately 1.2 million tourists, are generated from within the seven countries themselves. Appropriate steps need to be taken and adequate measures put in place to market tourism destinations to SAARC countries.

Restrategise Offerings To Corporate Clients

Due to modern technology like video conferencing, networking and other means of collaborative commerce, it is anticipated that an increase in business activity will not lead to a commensurate increase in business travel. Today, the business travel segment contributes significantly to the TSP’s revenue pie. This segment is critical to the TSP’s business strategy. Thus it is imperative that new services be introduced for this segment.

One of the ways could be that of providing a dedicated travel desk with an inventory of tickets, foreign exchange, hotel bookings, car rentals/local conveyance and related services.

Another way would include repositioning as a travel consultant where end-to-end holiday and business trips and event planning can be provided.

Internet travel deals have more or less blown apart the travel agents and today, almost any deal offered on the Net is cheaper than what the agent can work out. The real challenge of the travel industry would be to move away from the ‘done way’ and reach out for those off-the-beaten track places and holiday sites. With the modern trend of tourists wanting to do things differently, the demand for a normal two-week sun-and-sea holiday will now change to a week of exotic destinations, adventure camps, sport vacations, spas, cruises and cultural tours.

Cooperation Among Competitors

In these competitive times, it is necessary that the agents adhere to a code of conduct that was once established by travel associations such as the Travel Agents Association of India (TAAI). There is considerable merit for TSP’s in following these guidelines for a conducive operating environment.

With the passage of time, practices do change. For eg. though discounting was considered wrong in the past, it is today an accepted trade practice. Hence, it is essential that the code of conduct be constantly updated to keep pace with the times. This may be done in joint consultation with the players involved.

In the new paradigm, self-discipline among TSPs is a key step toward strengthening the system. It is also recommended that a body consisting of representatives from all three areas, viz. airlines, travel agents and government be formed to enforce certain rules and norms to bring about good trade practices.

Introducing a Travel Industry Act would help in this endeavour. It would further strengthen the system. The concerned authority could promptly deal with agents found guilty of non-adherence. The crux is that the code of conduct needs to get some teeth and for this end there is a need for cooperation among
competitors.

Better Harmony Among Associations

Associated with the increasing number of travel associations in the trade is the potential problem of further fragmentation of the TSP fraternity. It would be desirable if existing associations like TAAI, Travel Agents Federation of India (TAFI), Indian Association of Tour Operators (IATO) or even Enterprising Travel Agents Association (ETAA) share their problems and address issues jointly. Fragmentation of the industry into various associations has contributed to the non-adherence of the code of conduct. Travel associations like TAAI and the TAFI need to work in tandem to become stronger and effective in their functioning, as a synergistic enforcing group.

The associations need to lobby jointly to make the voice of the industry heard at the right forums. They also need to operate professionally by incorporating modern day management techniques.

It is also important to regulate the entry of those entering the business. The time has come to differentiate between a travel agent and a professional travel agent. Certain pre-requisites need to be established and administered before a travel agent gets a license to operate. The uncontrollable increase in agents has diluted the culture and respect of the trade.

The Internet: Facilitator Not Foe

Though perceived by some as a threat, the truth is that the Internet serves as an opportunity and a facilitator to the travel agent since it has no geographical boundaries. Round-the-clock accessibility will allow TSPs to cross-sell their products across the globe.

Globally, customers want to deal with web based solutions. American Express Travel and other large TSPs are proactively working with airlines and GDS to exploit Internet to the hilt.

In the Indian context, the typical Indian client does not prefer buying from the Net and would rather avail of the services of his local brick and mortar travel agent. This spells a clear opportunity for the travel agent to explore the plethora of service options that the Internet has to offer to add value to his business and to the overall travel experience of his client.

Another good option for today’s TSP is to create their own website and package it in such a manner as to enable them to tap new clients and retain existing ones by not losing them to airlines or travel suppliers.

Unbundling Services - Charge For Work Components

With intense competition and the customers being wooed by airlines and TSP alike, running that extra mile is not enough. Members of the trade have to part with what is rightfully theirs and more, eventually impacting their yield management. The importance of unbundling services for a fee is increasingly gaining ground overseas and in India. United Airline, whilst reducing the amount of commission given to travel agents by two per cent, set the precedent for other airlines to follow. Similarly, in India, Jet Airways has reduced the commission to travel agents in response to the reduction in the airfare.

Though no time frame has been set, it seems to be the trend that the airlines’ eventual aim would be to stop the current practice of giving commission to agents, which means a diminishing income source for the TSP who in turn are addressing this issue by introducing service fees.

Setting Rates For a Service Fee

There is no set format as to the amount that should be charged. This allows a lot of scope for experimentation and customisation as per the agent’s market requirements. Ideally, any travel agent would like a customer to decide all his travel plans on his first visit. One can also charge the fee right from the onset. The three main categories under which the agent can charge his fees are:

1. The Service Charge, for the general performance of services.
2. The Professional Charge, for the expertise and experience of the travel agent. In this category the TSP will be well advised to enhance the services offered to the traveller including comprehensive end-to-end booking for airlines, road, cruise, entertainment, et al. Also, understanding the traveller’s language and culture, history of the places visited and such similar matters would enhance the value of the TSP thereby yielding better revenues.
3. The Penalty Charge, where the fee is designed to recover cost of cancellations and to compensate for the costs in redoing work that has already been done.

Ideally the rates can be set to local standards and in local currency for all customers. A tariff chart can be set in conjunction with other travel agents, so as to provide uniformity or, as it has happened before, competition would level the rates. It is recommended that the TSP do not charge on a percentage of the total ticket, as it is not a precise reflection of the amount of work done.

Corporate clients on the other hand may be charged as per actuals but at a different rate in ratio to the volume of business promised. The travel agent may lose some clients on initial implementation of the service fee, but they would not be the good clients. For many people, price is not the only reason that they buy something, it is always the service levels that accompany the product which earns customer loyalty. The indecisive customers with constant problems and high credit demands have opposed this change. They, as studies have shown, are not the profitable section of the TSP’s clientele, and agents do not suffer with the loss of their business. Less (of clients) will prove to be more (of business) in this case. With an increasing number of travel agents also beginning to charge fees, it will soon become an industry norm.

How should the agent inform the customer of the fee? Stating in the literature that service fees will be charged is a good option. The term ‘service charge/service fee’ need not be used and another term such as management or processing or professional fee will work just as well. This would relieve a travel agent of his dependence on the principal. By charging the fee, the travel agent would then earn a stable income based on the amount of work undertaken and he no longer has to leave his bottom line vulnerable to the law of averages. By doing so, he would be able to identify and focus on the more profitable customers.

Reinvent A Niche Market As A Travel Consultant

The most important factor to a travel agent’s business today and in future will be the offering of value added services. Technology, e-commerce and Internet will play an essential role in this initiative. Now more than ever, service will be the key component. Battles will need to be fought or lost at the front desk. No more does the consumer have time for queues to get a patient hearing.

The traveller needs a warm reception and should feel comfortable and his requirements understood. Destination travel as the average Indian is waking up to is all about the experience. Weave a dream and you will need to fulfil every aspect of this dream to discover the repeat customer.

Therein lies a new horizon, a new frontier, a great opportunity of evolution as a travel consultant. Travel agents cannot survive on revenue ticketing alone. They need to augment their income from sources other than ticketing. The TSP market has matured and moved in favour of the diversifier. Despite the fact that 9/11 affected most TSPs, some with vision and grit have been able to overcome the situation.

Niche marketing coupled with impeccable service and sophisticated technology will see the TSP through the tough and turbulent times ahead. The industry went through a whirlwind of change world-over, and it is an established fact that the way business was conducted earlier and the way it would be conducted in future will be significantly
different.

Technology will be the key solution and the significant way forward. An important factor to bear in mind is for agents to prepare to face the change and ensure they devise a plan to run a profitable business.

Suitable Strategy Evolution

Considering the current competitive situation in the TSP marketplace and the impact that the Internet and e-commerce is having on them, it is recommended that each TSP conducts a SWOT analysis and formulates a strategy that will ideally meet the organisation’s business environment.

For the tour operator sector, there are three ‘city-acceptable’ strategies developing:

• Single mega-brands: Become a large scale, high volume tour operator with significant market share in key outbound markets with increasing ownership/control of the products and services required
• Multiple brand managers: Become a mid-sized player with a range of specialist sub-brands linked by overlapping target markets.
• Niche operator: Become a niche operator with a large market-share of a smaller market.