Travelocity, Expedia set to enter India

The Indian online travel segment is one of the fastest growing sector in the e-commerce story. The Internet and Mobile Association of India has estimated that the average number of online travel transactions has increased nearly fourfold from 207,000 a month in 2003-04 to 795,000 in 2005-06. The entry of two global online giants — Travelocity and Expedia.com — couldn’t have been more perfect as they attempt to expand their reach in the country. While Travelocity will be entering India with its Singapore-based online company Zuji, Expedia is yet to announce its detailed plans. Expedia.com is one of the leading online travel providers, with $4,261 million as gross booking for the third quarter ended September 30, 2006, and revenue for the same period was $613.9 million.

The company claimed to have attended to about 25 million travellers per month. Similarly, Travelocity’s gross travel bookings were $7.4 billion for 2005, translating to a revenue of $830 million for the same period. According to the press release on Zuji’s site, it plans to establish a specialist online travel team in India with a view to launch a ‘Travelocity India’ site. The team will be based in Mumbai and will be supported by Zuji’s regional headquarters team in Singapore. The company has already identified Himanshu Singh to head the Indian Travelocity team. Indian online players such as Makemytrip, Yatra, Travelguru and Cleartrip are not too perturbed by the move. Makemytrip, the leader in this segment, has 2.5 lakh registered users (looking at the 5 lakh figure soon) and clocks 3,000-4,000 transactions on its site everyday.

Yatra, the second largest portal in this space, has about 40,000-50,000 unique visits a day. Deep Kalra, founder and CEO, Makemytrip, said the entry of the biggies was an obvious and expected move because of the market that India offered. “The domestic online travel industry is roughly about $800 million (around Rs 3,600 crore). This would include suppliers such as carriers, hotels and OTAs and IRCTC. But these international players still need to build on their brand,” he added. Dhruv Shringi, founder and executive director, Yatra, asserted that it was good to have competition. “We welcome it.” With internet usage growing at 50 per cent per year, and e-commerce projected to double by 2007, industry experts are pegging the market to touch the $2 billion mark by 2008.

The entry of these portals in India not only validates the opportunity that Indian online ticketing market has but it might also set in some best practices in place. However, Cleartrip CEO Sandeep Murthy had a few words of caution. “It’s fine for them to come to India but this market is very complicated and it takes time to build trust among the stakeholders like the airline, hotels and others.” Almost all the players feel that the entry of global players is positive and challenging. Ashwin Damera, CEO and founder, Cleartrip, says, “It shows that the consumer base is growing. But the advent of these global bigwigs is also challenging as they come with a ready-made experience and customer base.” With the advent of low-cost carriers, the Indian market is following in the footsteps of the European and the US markets. Though the tier-I cities show the maximum online transactions, industry experts feel that in the coming years this growth will come from tier II and III cities. The players are also looking to extend the offering to other services such as hotels and care reservations.

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