Sunday, May 24, 2015

ONLINE TRAVEL SPECIAL .........................Online Travel's Second Wind

Online Travel's Second Wind


A clutch of travel startups are veering away from a well trodden path

For the past 15 years travel portals have revolutionised a hidebound industry, giving consumers the power to search for and book air, rail and even bus tickets online.
Not content with that, these ventures then took the next step, giving users a platform to find ways to book hotel rooms and even holidays without the discomfort of long queues or visits to offices.
Having seen these businesses grow and redefine the contours of travel, a new clutch of entrepreneurs is buzzing about trying a range of new business models. If the MakeMyTrip-driven phase was mostly transaction driven, this time around start ups are taking a crack at something new.
“Most online travel ventures have been traditionally transactional in nature,“ says Deepak Wadhwa, chief executive and co founder of WeAreHolidays, an online travel discovery startup. “Holidays aren't transactional...we focus on discovery of holidays, itineraries and real trips taken by our community members.“
According to industry veterans, the growth of the first generation of online travel companies has helped show that big ticket transactions can happen online, pricing can be transparent and credit cards and bank details are (mostly) safe on the internet. This new generation of start ups is looking to build on this base to grow their businesses. “Travel is no longer an annual, planned expense,“ says Sachin Bhatia, a cofounder of MakeMyTrip and more recently of dating app TrulyMadly.
“People now go on impulse holidays and are constantly looking for something new to do or to go somewhere new.“
The cold realities of business too have persuaded these new startups to look beyond the traditional market for online travel. According to industry estimates, flight bookings command a margin of barely 3%, while it is 15% or more for hotels and holidays. What was a browser-centric business has also gone mobile rapidly and younger, nimbler startups are racing to prove that they can build their ventures only around this platform. “Technology adoption across mobile is hitting the roof,“ says Mayank Khanduja, vice-president of venture capital firm SAIF Partners. “This is especially the case for last-minute hotel deals and hunting for local tourist sights, most of which happen on the mobile.“ Investors such as Khanduja have flocked to these ventures. While SAIF Partners has backed TravelTriangle, which has built a platform to connect travellers and experts and agents, IDG Ventures has backed Tripoto, which is positioned as a one-stop destination for travellers. Elsewhere, TripHobo, a provider of crowdsourced trip-planning services, has raised funding from Mayfield Ventures and Kalaari Capital, while Sequoia Capital has invested in PressPlay, a Delhi-based provider of onthe-go entertainment services.
The cofounders of Snapdeal, Kunal Bahl and Rohit Bansal, along with Nikunj Jain, founder of FranklyMe, a celebrity chat app, have waded in too, by investing in Routofy, a technology-led travel routing firm. WeAreHolidays has raised venture capital backing from Matrix Partners, while OYO Rooms, an online market place for budget accommodation, raised $25 million from Lightspeed Venture Partners and Sequoia Capital.
According to data from Red Seer Consulting, a boutique consultancy in Bengaluru, India's travel and tourism industry is expected to grow from $89.2 billion in 2015 to $111 billion in 2020. This growth is on the back of growing spending, with the size of the Indian middle class expected to increase 10-fold between 2005 and 2025. While internet-based travel commerce accounts for around three-quarters of India's ecommerce market, online travel firms account for around a third of all bookings, as per industry estimates.
Industry executives say this proportion will only increase. A recent paper by telecom gear maker Ericsson forecast that the number of mobile broadband users would be 600 million in five years. With travel established as the most familiar ecommerce op tion in India, these startups are betting that this is just the beginning of rapid growth, with up to 50 different firms jousting for attention from consumers. While traditional online travel companies may have cornered most of the market for travel tickets, newer startups believe there is plenty of headroom for growth. There are, for instance, opportunities in holiday dis covery and planning, new forms of ac commodation, content and re views, and technology used by hospitality businesses themselves. “We are build ing a global travel commu nity and see ourselves as TripAdvisor 2.0,“ says An irudh Gupta, chief execu tive and cofounder of Tripo to. The original TripAdvisor, an American travel web site, was an early adopter of user-gen erated content, and provides reviews and in teractive travel forums.
“We believe there are lots of improvements over a global brand, especial ly around the use of mobile and so cial media,“ adds Gupta.
Started around 18 months ago by Indian School of Business classmates Gupta and Michael Lyngdoh, Tripoto has seen its traffic double in the last three or four months, raised funding from IDG Ventures and Outbox Ventures and put together the building blocks for a global community from India. Already, the firm has around a million visitors and will soon raise a fresh round of funding to sustain this breathless growth.
If Tripoto wants to be a mobile and social media-driven reviews venture, then SeekSherpa wants to be your local guide once you reach your destination. “At every place we went to as travellers, we had an issue about what to see and where to go,“ says Dhruv Raj Gupta, cofounder of SeekSherpa, along with Sukhmani Singh. “New-age travellers want to have their plans defined, but want someone else doing it for them.“
A Shift in Market
Some startups are also sensing other shifts in the market. HolidayIQ, with an online community of three million travellers and backed by Accel Partners and Tiger Global, is one such venture. “Historically, leisure travel was a 27-plus segment ... but in the last six months to a year, we have seen a much younger crowd entering this market,“ says Hari Nair, chief executive and founder of HolidayIQ. It isn't just a younger crowd he's wooing, but a more discerning one too. “For a long time, people associated online travel with discounts...increasingly, people are turning to online for choice -this is a fundamental shift in consumers' minds.“
Times Internet, part of the same group that publishes this magazine, launched HappyTrips in February last year to tap this opportunity. The trip planning and accommodation site was launched with some 200 Indian destinations (and 100 around the globe).
As these startups begin to break the rules of the game (again), the first flush of travel portals is watching the changing scene with a mixture of worry, interest and expectation.For example, the most recognised name in the business, MakeMyTrip, acknowledges that it can't be everything for everyone. In late April this year, it acquired Mygola, an online travel guide to try to keep pace in a fastchanging market.
“We established the foundation for the industry over the past couple of decades,“ says Mohit Gupta, chief operating officer, online for MakeMyTrip. “But many of the new innovations may yet come from these upstarts.“ MakeMyTrip has set up a $15 million fund to back fledgling ventures looking to disrupt this space, he adds, and expects to announce a couple of investments in the next three or four months.
On the ground, MakeMyTrip has been slammed by investors, with its share price losing some 41% of its value since its muchvaunted IPO in August 2010. The share price had soared nearly 90% when it was listed, but has had its struggles since -it has reported losses for the last eight quarters.
As an investor in Yatra, an early entrant, and more recently in Tripoto, VC firm IDG Ventures has seen both phases up close.“Older firms such as Yatra have seen the growth of these startups and are keen to work and partner with them,“ says Karan Mohla, vice-president of IDG Ventures.“From a broad horizontal focus on travel, these companies will profit by focusing on specific niches.“
Not everyone is content playing in their own little corner. Many startup founders say they are ahead of the game compared to many larger and older companies. These startups looking to eat the lunch of MakeMyTrip and its peers aren't backing away in sympathy. “The online travel industry is broken...ticketing and hotels are commoditised and beyond that the market is highly fragmented,“ says Tripoto's Gupta. “There's a lot of innovation waiting to happen and we want to build on the sharing economy pioneered by the likes of Airbnb and Uber as this segment is completely re-invented.“
Dhruv Raj Gupta's SeekSherpa is under a year old, but is already thinking big. The startup's app has already been downloaded some 5,000 times and the founders have begun the process of reaching out to 10 new international markets to expand its services.Tripoto, meanwhile, is further ahead, with plans to double its page views in the next quarter itself, even as it prepares to raise a fresh round of funding. Founded in late 2012, WeAreHolidays is growing rapidly and expects to expand its team from around 80 to 200 or even 250 to keep pace.Budget room provider OYO Rooms wants to have 1,00,000 rooms in 100 cities across India. “The market in India is massive and I think all of us are just finding our feet,“ says cofounder Wadhwa of WeAreHolidays. “We could revolutionise the way people think of travel.“
Rahul Sachitanand

ETM17MAY15

No comments: