The drive for consumerism

By Sunil Gupta
COO (Outbound), Kuoni India

The Indian outbound is presently undergoing a very promising phase as compared to other international markets - while leisure holidays are becoming a great option to beat stress, outbound travel for conventions, incentives and business is also growing.

Tourism in India is booming. Multiple travel destinations have emerged and online bookings are surging on the back of increasing internet penetration. The travel market is growing and the number of online offerings is also growing steadily. Moreover, smaller towns are emerging as growth hubs and an enhanced distribution through brick and mortar and the web is becoming critical. As the market evolves, customers get segmented according to price, life-stage and activity therefore stress ing on product innovation.

The cost of a foreign holiday is a considerable portion of the customers' disposable income, making them very price-conscious. For the first-time traveller, the intangible product seems undifferentiated and he can switch between alternatives at no cost. This reduces the pricing power of the industry in India.

The projected figure for 2020 by the World Tourism Organisation is 50 million travellers. The figures indicate that there is great potential in the travel industry. To a certain extent, this can be attributed to the entry of low-cost carriers in India and liberalisation of aviation policies.

Some of the reasons for increase in outbound tourism are:

• The Indian society is being increasingly driven by consumerism. Foreign holidays are becoming more aspirational by nature. As a result, the society-conscious Indian is making an international holiday an essential element of their annual plan.
• As the average Indian's spending power has gone up, so has the interest in overseas travel and the willingness to shell out money. The rise in disposable incomes has led to more families opting for annual foreign holidays.
• With a larger number of international airlines entering the Indian skies, there has been a rise in capacities and airfares have become more competitive thereby benefiting the customer.
• Over the last few years there has been subsequent reduction in tour prices and increase in value-added offers like holiday now, pay later.

Noticeable changes in travel habits witnessed in the last few years are late bookings and individual travel. Tour operators are increasingly trying to bridge the gap between destinations and products in the market. This has led to increase in the flexibility of products they offer.

This year, travellers are looking for exciting/unique destinations, great getaways, attractive/discounted packages, a hassle-free holiday, Indian meals, exciting activities that travellers can enjoy with family or friends, preferring destinations for which visas can be granted easily.

Year 2006 saw a rise in golfing and spa vacations. Upmarket tourists, as well as the experienced ones, are increasingly travelling to foreign shores to try their hand at putting or to enjoy a rejuvenating spa massage. While Britain, South Africa and Dubai are looking to cash-in on golfing holidays, Singapore and Egypt are focusing on spa experiences.

In future, we can see two segments emerge - the customer segment and the product segment. In case of the customer segment we will have various categories like the youth, senior citizens, students, etc. In terms of products, we will have packages like adventure sports, medical tourism, and premium holiday packages. Specialised tours will also gain importance and one will see more and more travellers opting for health holidays, spiritual getaways, adventure, and wildlife vacations amongst others. Today, their numbers might not be so substantial, but these specialised and short-haul holidays will drive the Indian tourism industry forward in the future.

Recognition of shifting realities and the ability to fine-tune operations accordingly are of critical importance. Thus, success will be found through innovation and customer focus. The industry must become accustomed to creating products for niche markets and at the same time cater to the populace through focus on all markets separately.

Moreover, online bookings are surging on the back of increasing internet penetration. From hotels to airlines, railways to travel agencies - virtually every segment of the travel business is seeing a surge in online bookings. This is virtually wiping out the agents' intermediary role.

The World Travel and Tourism Council (WTTC) estimates a 4.5 per cent per annum increase in the total amount of travel and tourism economic activity between 2002 and 2012. This is largely attributed to a rise in global wealth, liberalisation of international airspace, cheaper flights and the use of the internet as a travel tool.