A clear voice

By Sandeep Murthy
CEO, Cleartrip.com

With high growth rates, mergers and acquisitions and global aspirations the Indian travel industry is one of the most exciting industries in the world today. On the domestic front, the rate of change in the aviation space is matched by the pace of new hotels across the country. On the global scene, Indian hoteliers are acquiring foreign properties while their airline counterparts continue to set new standards in international air service. Add to this the advent of an online distribution system and it is hard to find a more exciting market.

India's online travel space will be among the top 20 online retail travel markets by 2010 with growth at 270 per cent annually from 2006 to 2010. This compares to a projected growth of 17 per cent in the US during the same time. In 2006 the online travel market was a mere US$ 800 million representing 2.2 per cent of the overall Indian travel market. With over US$ 2 billion in sales online distribution is poised to reach 10 per cent of the overall Indian travel market by 2008. The primary drivers for this growth will be continued increase in online penetration, supplemented by innovative product offerings from OTAs and improved hotel content to facilitate hotel distribution.

This past year also saw a lot of change on the offline travel market. Some of the traditional brick and mortar travel agents began to enter the online market to compete with the OTAs who in turn decided to try their luck at offline distribution. Over the course of the past year we saw an increase in internet usage from smaller towns. While Cleartrip is currently experiencing over 300 per cent annualised growth in bookings, we are also conscious of the fact that 90 per cent of customers still buy travel in an offline environment. In an effort to address this base, we launched a pilot programme with Future Group's Big Bazaar to provide access to our technology-driven retail platform in Big Bazaar outlets.

The future

Growth, expansion and consolidation will continue to be the overriding themes in the Indian travel market. The Indian aviation market's appetite to service a broader base of global travellers will fuel more options for consumers in India and abroad. The domestic hotel market continues to face a critical shortage of hotel rooms, making the opportunity to invest in building out new affordable hotels not just a great opportunity, but a critical need. Along with these investments, the industry will continue to explore economical means of distribution.

With increasing internet penetration and innovative mobile service offerings, the future for travel distribution is going to be very exciting. The internet continues to redefine travel distribution in India, with customers buying their travel through an ever-increasing number of sources and channels. While Internet penetration is growing prolifically, it still covers only a small percentage of the over all population showing, tremendous potential. By 2011 markets like Australia and Japan will have 72 per cent and 95 per cent, respectively of their population connected. In contrast, by 2011 India will have fewer than 6 per cent of its population online. Given this paradox between a small percentage (but significant in numbers) of connected users and a large base of offline customers the mantra for the foreseeable future will focus on building a platform that can address both of these segments. Leveraging our strength in technology and merchandising with our relationship with Big Bazaar Cleartrip will be in a unique position to effectively address both online and offline segments with differentiated service and unique deals.

Offers and deals are important component for building awareness for a service. Since Cleartrip already represents over 35 per cent of the online travel market, this coming year will be more about incentives for our loyal customers than necessarily building awareness through deals. Deals will always be a part of our DNA and will be a pull factor for new online bookings to come to Cleartrip, but this next year will see the early adopters of online solutions start to choose their travel agents based on service level and ease of use rather than just deals. This is a fairly well versed path of new channel evolution. Customers are initially attracted to the channel for a deal and then as they become comfortable with the medium they migrate to the provider who most effectively addresses their need with a high level of service. This coming year will see the Indian online customer make a flight to quality, and as the leading service provider, Cleartrip is well positioned to address this customer need.

Competition is always a factor in every market and the OTA space is no different. As a leader in this market we are happy to welcome the global players that have identified the potential of the Indian market. While we hold ourselves to a very high standard, we are confident that global competition will ensure that we stay innovative. We also welcome their marketing muscle to help educate the large base of customers that is currently transacting offline.

The role of regulation and the government in travel can be seen nearly every day in the newspapers. Whether it is enabling domestic carriers to fly abroad or revising policies on FDI in real estate to enable the hotel boom, the government plays a key role in sustaining this growth. For the OTA space, the biggest factor that can drastically change the pace of growth in this space, will be the empowerment of OTAs to sell rail tickets. We are in constant communication with the Indian Railways and hope that this will be the year when OTAs can sell rail tickets.

As an OTA we do not fly the planes, nor do we run the hotels, therefore in order to sustain a position in this market, we must focus on finding ways to add value to both suppliers as well as customers. Our innovative reporting tools and willingness to invest in technology that simplifies the suppliers' distribution needs combined with our unrelenting focus on customer service, makes us confident that as change continues to sweep through the travel market, Cleartrip will always be a beacon of constant quality and service.