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Travel portals beat slowdown trends

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Refusing to acknowledge the spillover effect of the falling rupee and inflation on their business, travel portals are optimistic about delivering profitable bottom-lines.

MakeMyTrip, which sells an average of 4,000 hotel-room-nights per day, has set a growth rate target of 60 per cent for this year on the back of domestic and international bookings. Deep Kalra, Co-Founder and CEO, MakeMyTrip told Pitch, “The net revenue generated from Hotels and Packages (H&P) business grew by 65.7 per cent, while the transactions improved by 65.6 per cent in FY13. In the past three years, our hotel business has been growing at a steady pace of 60 per cent.”

The company attributes this healthy growth to consolidated holiday bookings, which have gone up by 30 per cent. Despite some recent concerns due to currency depreciation, MakeMyTrip has not seen any de-growth since advance packages for the summer holiday season have been pre-booked in most cases.

Since a partial component of international holidays is paid in advance while booking, the impact is on the partial cost of the holiday. Experts are of the view that while most international travelers are willing to bear this additional cost, some are looking at short-haul destinations instead of long-haul ones to optimise their holiday budgets.

More varied mix of prices and packages

Tour operators offer different kinds of pricing in the market – a single-price holiday in INR or a dual price with a forex component and an INR component. A majority of MakeMyTrip packages are booked as a single-price (INR) holiday. According to Kalra, “For a traveller, the best buy in a volatile market is a single price holiday, as it saves them from currency fluctuations and prevents the possibility of facing a price variance at the time of final payment due to forex variance.”

Mr. Deep Kalra, Co-Founder and CEO, MakeMyTrip

Mr. Deep Kalra, Co-Founder and CEO, MakeMyTrip

Expedia India witnessed 200 per cent growth in 2012, and is expecting to close this year with a triple digit growth rate as well. Vikram Malhi, General Manager, South And Southeast Asia, Expedia remarked, “Though there has been slowdown, people have not cancelled their trips. Instead, they have either decreased the total length of their trip from seven to five days, or downgraded their hotel from 5 Star to 4 or 3 Star properties, to keep a check on their budgets.”

The mix of travellers ranges from middle-class families, with all or most members working, to businessmen, from DINKS to families, from individual women to friends travelling in groups. Due to rising work stress, one to two vacations in a year are becoming a norm to de-stress and rejuvenate.

Malhi further said, “Our consumer has a lot of choice and discounts to pick from, because we are offering up to 70 per cent off on room rates. Currently, we have special discounts for weekend getaways for monsoon destinations like Goa, Jaipur, Udaipur, Munnar, Mahabaleshwar, Kovalam and Kathmandu.”

For international travel, Expedia is offering up to 50 per cent off on hotels in Singapore, Bangkok, Phuket, Pattaya, Kuala Lumpur, Ko Samui, Hong Kong and Dubai for bookings made till August 15, 2013 and a travel period up to September 30, 2013.

Market upbeat for newer players too

As the big players firm their base in the $22 billion online travel market in India, newer players are also garnering good returns on the back of aggressive BTL activities, which is considered as a key to success in the online travel industry. One such player is EaseMyTrip.com, which entered the market in 2008 and has reaped huge profits. Rikant Pitti, Co-founder, EaseMyTrip.com shared, “From sales of Rs 33 crore in the first year of operations, the company has grown to Rs 364 crore in four years since its inception, and is eyeing turnover of Rs 680 crore in 2013-14.”

Pitti added, “We also have sales promotions like festival discounts, round trip ticket discounts, best deal of the month, as also special offers to different holiday destinations.”

Considering the fact that mobile phone users exceed the number of PC and laptop users, travel companies have also been launching their travel apps. MakeMyTrip came out with the Tripalong app, which helps in tracking the travel itinerary to enable a customer to connect with his friends while on the move.

Kalra said, “We are using technology to innovate and reach out to more customers on platforms such as mobile. The product offerings too have expanded to append newer categories like car rentals, rail and bus to drive new revenue-streams.”

International research from communications experts, Pitney Bowes, has revealed that travelling is where Indians are planning to spend the most as compared to other leisure activities.

The study, entitled ‘Recovery Signals’, asked consumers where they would be looking to increase their spending once the economy improves, and it showed that 50 per cent Indians would rather spend on travelling and holidaying than on other activities like shopping or eating out.

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