Online travel takes small Indian towns by storm

Netizens in small towns are as savvy as their urban cousins in using the web for purchasing goods and services, with 74 per cent of all online transactions traced back to non-metros. Far from the popular perception that only people from big cities use the Internet to plan their travel, including book tickets, it has come to light that web users hailing from small cities like Surat and Bhubaneswar are second to none in using the net for e-Commerce, travel portal Makemytrip.com's founder and CEO Deep Kalra said at the Travel Distribution Summit 2006. Given the high credit card usage in India, where industry estimates suggest 70 per cent of all online purchases are made with plastic money, the web marketplace is emerging as a convenient and cheaper alternative for shopping -- be it clothes or airline tickets. Kalra said there were around 30 million credit card users and 40 million Internet users in the country.

However, the future of this market heavily depends on online travel agents diversifying their service basket like offering hotel bookings in addition to e-ticket sales. Making travel arrangements online is becoming a habit with the emerging middle class, who would grow to become 400 million-strong by 2009, and would generate an income of around 420 billion dollars, travel portal Yatra's co-founder Dhruv Shringi said, adding travelling for business is still the most frequent bookings online as leisure travel is still a fairly small but fast growing segment. "Travel distribution in India is highly fragmented with 20,000 agents accounting for over 80 per cent of the business and online distribution mainly focussed on sale of flight tickets with hotels accounting for just 10 per cent of the business," Shringi said and added much deeper Internet and credit card penetration was required for the market to grow.

But he added that India had a huge potential in this area as 50 per cent of its considerable population was under the age of 25 and within the age of 18-35, which accounts for the highest numbers of online air tickets purchases. "No money is to be made with low cost carriers as margins are pretty low. Although, there are volumes in selling airline tickets of LCC," Travelguru.com founder and CEO Ashwin Damera said. Travelguru is just over a year old and plans to increase its headcount from 250 at present to 350 by end of March 2007 and open 20 retail outlets in five to seven cities, especially Delhi and Mumbai, by the end of next year. "We are about to invest 10 million dollars in the expansion plan which would be through venture funding," Damera said, adding that the company was expecting 40 to 45 million dollar revenues at the end of this year.

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