EyeforTravel Event Round up

Online ho!

The EyeforTravel Travel Distribution India 2007 was held on October 16-17, 2007 at the Taj Lands End, Mumbai. In its second year, the event was focussed and looked deeper into the problems and perhaps the role of online distribution in the coming years. Express TravelWorld reports

The second annual EyeforTravel (EFT) promised to be an exciting two-day affair, with speakers from the travel, aviation, hospitality and technology fraternity discussing topics ranging from where the Indian online travel industry is heading, significance of user-generated content in the Web 2.0 environment, to mobile marketing and distribution and most importantly, customer loyalty in the online environment, to name a few.

Where is the online travel space heading?

At present, India is amongst the most potential markets in the world and being a land of over a billion people, it provides an equal number of opportunities for many businesses. Thus in this lucrative environment, in order to realise what it takes to 'click' with the audience and with the young population of India, the internet is definitely a medium to be tapped.

So far, the Indian travel market in 2007 is worth Rs 650 billion and the online business accounts for almost six per cent of the same. Incidentally, the hotel bookings are worth Rs 219 billion out of which three per cent is done online. Even globally e-commerce is dominated by the travel segment with 84 per cent of shoppers booking their respective travel online. While air tickets are currently the talk of the online world, hotels, car rentals and other ancillary services are soon to find their place on local websites.

According to Brett Henry, vice president (Agency Marketing), Abacus, "The Indian internet purchase will reach US$ 209 billion by 2010, with a year on year growth of 22 per cent, and with online airline purchase growing at 89 per cent from 2006 to 2010, India will soon be placed among the top ten markets for internet air bookings."

With this opportunity placed before the online players, Deep Kalra, founder and CEO of India's leading OTA, MakeMyTrip.com said, "The year 2008-09 will be one of reckoning and the Indian OTA space will be similar to that of the US online market five-six years ago when the players did crazy things to gain market share, such as discounting below cost."

David Scowsill, Madhavan Menon, Stuart Crighton, Dhruv Shringi, Sharat Dhall and Urrshila Kerkar in a panel discussion

With tremendous competition in the industry and with the Indian OTA space riding purely on funding from venture capitalists, there certainly exists a high amount of capital expenditure on technology. At the same time, even the traditional agents have entered the online space, further adding to the competition. "The coming years will see 'mega' IPOs," stated Kalra, "and ultimately there will be three successful OTAs - two competing with each other and the third, a surviving player."

Even the airlines have realised the benefits of online distribution to their costs. Gaurang Shetty, vice president (marketing), Jet Airways justified, "The consumer today wants to be in charge of his travel right from purchasing his tickets to hotel reservations to the journey back home and it is no doubt that the OTAs are the key drivers of distribution of airline tickets. For any airline, cost of selling is of vital importance and accordingly they will partner with those who deliver value and content. In the coming years we will see convergence of internet and mobile to establish a direct communication at the lowest possible cost."

Even when it comes to hotels, Indians now prefer to book online. Elaborating on that Puneet Mahindroo, corporate director of revenue management and global distribution, Taj Hotels and Palaces, said, "Today we are witnessing the birth of the 'echo boomers', whose cultural disposition is more attuned to travel and varied experience. As they rely heavily on technology, there is a need to have mobile integration, self-service kiosks, online concierge services, and e-stores, and slowly, the essence of Web 2.0 is also hitting the sub-continent."

While all the above seems to reaffirm faith in the online travel distribution, the truth is quite different. At present, despite the fact that the youth is more attracted towards technology, a majority of the Indian population is more familiar with booking their travel offline and 65 per cent of transactions are still done in cash. The scenario is similar even in the US, where about 46 per cent of the booking is done offline. Even online, especially with the OTAs, there is no room for brand loyalty and the consumer hops from one site to the other in search of a better deal. As a result, brands have started to focus on brand awareness and differentiating themselves, which is looming large as the next phase of 'war' on the OTA space before the era of consolidation ultimately steps in.

Infrastructure for success

The above mentioned challenges are, however, only the tip of the iceberg affecting online travel distribution in the country. In reality, lack of broadband and credit card penetration, and security of transaction over the web are affairs that trouble consumers the most.

Stuart Spiteri, director - Asia Pacific, Akamai Technologies said, "The internet is inherently unpredictable and unreliable. Also, while there is a lack of broadband connectivity in India, even the technologically advanced countries face similar issues. People have to wait in a queue while others are still on the page, which could also be the reason why consumers hop from one portal to another resulting in zero brand loyalty."

"The OTAs at the moment are focussed only on domestic air ticketing and neglect other services, thus equating their role with mere online ticketing agents. For the rest of the services especially foreign travel, customers don't have much faith in the virtual world. Thus, issues such as foreign exchange, hotel bookings, travel insurance are still resolved only in the offline world, which has given way to the so-called 'hybrid models'. Therefore, there is still a long way to go for the OTAs to be really called online travel agents," emphatically stated Amitabh Pandey, president and head - e-Business, Thomas Cook.

At the same time, when it comes to the general idea of 'purchasing online', the Indian population is highly sceptical regarding issues such as credit card details being stolen and other fraudulent activities taking place. Akif Khan, PhD and head of client and technical services, CyberSource added, "With the low credit card penetration and also less acceptability of international cards by merchants, about 80 per cent of orders are still received manually. Online booking involves a lot of checks to ensure that it is not a fraudulent transaction. Thus, one needs a centralised decision management system for varied information, which will make the companies focus on profits and not frauds."

In spite of all these hurdles, the IRCTC has done a commendable job. On an average it sells more than 54,000 tickets online per day, with the non-air condition travelling passengers accounting for 60 per cent of total reservations. Says Sanjay Aggarwal, general manager (Operations), IRCTC, "The success achieved by us is merely through eight to ten per cent of the total Indian railways online. About 30 per cent of IRCTC's business comes from the website which offers convenience to passengers by allowing them the option of booking without going through crowded reservation counters. In addition, to further extend the reach and acceptability of online bookings we have incorporated the use of cash cards to ensure no fraudulent dealings and we have 12,000 agents who account for 20 per cent of our business, and which have no chargebacks."

In a bid to garner brand loyalty

Online booking engines have taken the travel world by storm. They have helped the industry enormously in generating better economics. However, if one looks through a wide-angle lens, the traditional offline model is still very much a force to reckon with. So where does the future of the Indian travel industry lie? Is there a need to develop a pure online model or should the focus be on developing a hybrid of both online and offline models? The CRM session made an attempt to answer these questions by looking at the relative merits of the online and offline customer experience. "We have witnessed a shift in the mindset of the people and they are now exploring their options for the best deal apart from the traditional choice," said Dhruv Shringi, CEO and co-founder, Yatra.com. Madhavan Menon, MD, Thomas Cook, India mentioned that though the online model has revolutionised the travel industry, it would never fully replace the offline medium. Throwing light on the advantages of the offline model as compared to its online counterpart, Urrshila Kerkar, CEO, Cox and Kings, said, "Offline players have stronger brands and a much wider physical presence. While there is no doubt that an online model has helped in increasing bookings for the industry, they have their own set of limitations like card security fears, language problems, etc." The impression that emerged was that there is space for both kinds of models - online and offline - to do well. As Sharat Dhall, managing director, Expedia India, said, "What it boils down to is focus on the consumer - delivering their needs and being consistent in doing so. If one manages that, one is sure to do well." The outcome of the session was that along with a hybrid of online-offline models, what would really matter is the creation of a loyal brand. As Shringi puts it, "The key is to develop a brand which is trustworthy and appealing, ensuring customer loyalty towards the company."

Accessing accommodation

While domestic air tickets currently bring in the revenue for OTAs, the subsequent focus will be on hotels. India, being a vast country, makes reserving hotels a little difficult. As a result, for online distribution of hotels to be successful, concentrating on tier two and three cities also becomes important. Ashwin Damera, founder and CEO, Travelguru.com said, "Smaller towns and villages are coming up and joining distribution networks online, which are adding to the total revenue. The OTAs should be flexible about price in order to get inventory. After all, a premium can be charged on the availability of the room." However Abinash Manghani- head (sales & marketing), Fortune Park Hotel, a fully owned subsidiary of ITC WelcomGroup, argues that it is important for the hotels to have control of their tariffs and be able to ratify deals made by operators. He further added, "Last minute availability of rooms is another focus that online booking needs to keep in mind with respect to low occupancy and low rates linked to the booking experience, together with the easy payment gateway."

In the hotel industry, the growth in the mid-market sector has been enormous and this is also an area which needs to be tapped by online travel agents and websites alike. The travelling Indian population is still primarily the business oriented; hence the development in the mid-market segment. Himanshu Singh, managing director, Travelocity India, drew attention to the similar ongoing trends in the sphere of online bookings for hotels and using these trends more favourably for the online sector, particularly internet distribution and its role as a communication channel.

Another interesting aspect that Singh brought to light was the representation abroad. He said, "The Indian inventory is underrepresented abroad, thus making it crucial for hotels to choose the correct electronic distribution partner."

Concluding the session, Rahul Pandit, vice president (operations), Lemon Tree discussed, "The changing paradigm of the consumers who are creating the content for hotels themselves, changing 'word of mouth' to 'word of mouse'." This is a new and upcoming aspect of online hotel booking. He also added, "The basic challenge will be to retain the attention of the rich, who are poor time managers, and who constantly reject marketing strategies. This provides an opportunity to create a credible online experience for the users in terms of booking."

Research versus advertisement

Days of meta search are now being phased out by travel search engines (TSE). However, as Aloke Bajpai, founder and CEO, iXiGO.com said, "The concern here is the quality of organic search and the loss of popularity of the paid for links." As can be seen from emerging trends, Indians tend to research more from websites rather than listening to personal recommendations. What is required, therefore, is to allocate separate budgets to develop local search options, thereby optimising efficiency. Mahesh Murthy, founder & CEO, Pinstorm elaborated on what needs to kept in mind when marketing on the internet. According to him, "It is important to optimise for costs and not value, accordingly also measuring conversions; not just on a monthly basis but every 24 hours." The key however lies in the correct use of ad-words, in terms of both, ad-related pages and research-oriented searches. Long tailed searches need not be avoided for fear of irrelevant results. As a matter of fact, this is exactly what is required to get relevant results. Deep Malhotra, group sales manager, Google India, adds that it is important to keep in mind five things to market on the internet. These include optimising keywords and ad-word results, never turning away interested customers and hence ensuring a daily budget, keeping an eye out for advertising positions, searching the market to enhance national search results and keeping in mind that offline activity generates search queries.

User, the great

How can one guarantee what the websites tell and sell is true? User generated content on websites or perhaps websites devoted to user generated content (UGC) is the latest solution. "This is best leveraged for the hotel industry, as the user can use his own images and review them, and then accordingly also participate by responding to other reviews," says Arun Menon, product head, Holiday IQ. "UGC answers various issues like scaling independent hotels against hotel chains, and also providing a neutral standing to hotel reviews," he adds. Ayesha Kapur, business head, Raahi.com further added, "Users are moving towards research-based solutions, more than just relying on advertisements, and this is the gap that UGC needs to fill." The world of the internet works on advertising and direct links and the UGC website, hence providing a massive scope for advertising directly to the user. This helps the user to reach conclusions. Parthasarthi Mandal, manager, OkTaTaByeBye.com said, "With the help of RSS or really simple syndication, it becomes easy for the user to book hotels, get more information, as well as helping with conversion." He described RSS as being similar to a ticker tape running across the computer screen. In comparison to complicated advertisements, these are much easier to embed. Credibility of such content, however, is crucial to the entire system of UGC. This relates to what check and balances systems are there or need to be adopted to avoid any sort of bias which can affect the judgment of the user reading the content. As Ashok Lalla, director (internet marketing), Taj Hotels and Resorts discussed, "There is always a big risk of the content being manipulated and in an effort to ensure something for everyone, the required content is often lost. Also being loud does not help, as one needs to co-create rather than seek coercion."

Getting the final clicks

So in a time of no brand loyalty in the online space, what does one have to do to get those clicks eventually? Advertising is obviously the best option, but not every one can afford it. In such situations, one needs to analyse their respective online distribution channels and convert the prospective customer to end customer. This could be achieved by using web analytics, and focussing on keywords to achieve the desired results, as a large number of people worldwide still prefer using Google as their first step for their travel plans.

Also, one should invest sensibly in technology when focussing on internet distribution. Says Gaurav Chiripal, CEO, Quadlabs, "Planning product offering, marketing strategy and understanding one's operations is important. Technology comes with challenges as the travel business is very dynamic. Those investing in technology constantly need to upgrade, as a result of which budgets over shoot."

Accessibility is the key

Ashwin Damera makes a point while Abinash Manghani, Himanshu Singh and Rahul Pandit look on

In today's world, when people are constantly on the move, a mobile phone is the only device that is truly pervasive and thus it cannot be ignored as a channel of distribution. There are over 200 million mobile users in India, with approximately 27 new users being added every minute. Vivek Gawri, assistant vice president (Mobile), MakeMyTrip.com said, "About 50 per cent of all SMSes are read or viewed and 85 per cent of mobile users keep a phone next to them, all the time. Think about the potential of the mobile platform when banks are struggling to serve their customers because of lack of infrastructure." However, there are multiple issues that need to be resolved, viz. choice of mobile media, screen size and resolution, platform (SMS, GPRS, Java, etc), and compatibility issues with different mobile operators.

Distribution without GDS?

In the recent past, IATA's directive to the airline industry was to 'Simplify the Business'. This has made the airlines adopt technology - eTickets, self check-in kiosks, mobile ticketing and check-in, etc - and reduce their over all costs. Another aspect hovering in the trade circles is that of reduced use of the global distribution systems (GDS) especially by the airlines because of their fees, thus questioning the role that the GDS will play in the coming years.

Charles Carneiro, head - marketing & corporate communications, Bird Group started off the discussion. He said, "The GDS assists in the entire experience and not merely with ticketing. With the customers being more knowledgeable today, the role of the GDS is to help develop a common platform and be an integrator of technology within the travel industry to deliver seamless passenger journey." Adding further to the role of the GDS, Emmanuel Phillips, managing director, Sabre Travel Network said, "The GDS add value to the distributors. There have been 70 million bookings on the GDS in the last seven months alone, and we become a primary distribution channel for global reach - which becomes all the more relevant when the Indian carriers are on the brink of going international. The GDS can be simply called the content warehouse!"

"Over the next three years, Asia will overtake North America as the world's largest aviation market. In the last year alone, there was a 76 per cent load factor on the airlines and 90 per cent of the international tickets were booked through the GDS. With the OTAs booming, about 25 per cent of the tickets would be booked through them in 2008 as compared to 19 per cent today," stated Timothy Tan, director, Global Accounts & Regional Operations, South Asia, Abacus. He further stated, "With emerging niches such as FIT, MICE, business travel, VFR (Visiting Friends and Relatives), SMERFs (Social, Military, Friends, Relatives, Fraternity), medical tourism and even a high number of individual women travellers, the GDS provide the best platform for all the services - airline ticketing, car rentals, hotels, etc, that one may need during travel."

Final word

Online distribution is without a doubt an efficient channel of distribution as it provides maximum reach at a fixed cost. While there are certain hindrances in terms of acceptability, technological barriers and other factors related to booking online, India will eventually be a lucrative market for online transactions because of its young population who are definitely more tech-savvy as compared to the former generations.

(With inputs from Chetan Kapoor, Sayoni Bhaduri and Dinkar Farwaha)