June 23, 2010

Roundtable on Online Travel: Details

So finally here are some important learning from the discussion.
It’s been a while and I was not able to understand half of my notes written in shorthand, so I would request to use your discretion before reaching to any conclusion after reading this.
Date:  11th June, 2010
Venue: The Leela Kempinski, Gurgaon.

Here are some of the points that were highlighted during the discussion:

- Credibility is one of the major issues this is being faced by the online players. Thus some of them are evaluating a brick and mortar support as well.

- The complex and high engagement non air products are difficult to sell online whereas most of the ticketing as moved online (thanks to IRCTC)

- Cost of acquisition is still too high being Google being the major source. Thus companies to find other routes for acquiring leads in order to avoid ‘Google Tax’.

- Payment infrastructure is also a major concern. With 50-65% success rates of payment gateways, there is a huge scope for improving here

-  More focus on consumer is required for providing him a greater value online

Details of the discussion
Subhash Goel (Chairman, STIC Group)
  • Airlines saved multi-million when they started posting their inventory online
  • STIC also tied up with successful portals and achieved enormous targets.
  • Portals enhanced the  business of distributors and they started “riding the wave”
  • STIC still has 40 offices because they want a ‘seamless’ execution. Only around 10 office were shutdown since they started posting inventory online
    His suggestions
  • Portals should have their own clearing house
  • They should focus more of Holidays and less on Tickets
  • Man is a social animal, they someone to talk to for clarifying his doubts and promise done on the internet. e.g. most of the common treatments are available on internet, but people still prefer going to the doctor.
  • There is a lack of experience related to travel in the call center executives’ e.g.  An international connecting flight was sold with a gap of 90 mins however there was minimum 3hrs required to change the flight as the terminals were different.

Harish Bahl (Founder & CEO, Smile Interactive Technologies Group)
  • His biggest concern was that most of the online travel companies are making money for Google. They pay so much money for lead generation, but the user doesn’t end up buying. Thus companies have to think of alternative sources of generating cheaper leads
  • They should focus less on Bought Media (SEM, Ads) and more of Earned Media (Tie ups, FB communities)
  • Travel is a big boy’s game and needs serious investment and expertise
  • Credibility of the portals is one of the biggest challenge. People end up paying more to offline agencies but are not comfortable buying high engagement products online
  • Users do their entire research online and use the online prices to negotiate with travel agencies
  • It’s a shame that user spends 30 min on site and portals are still not able to sell him. If we compare it with the offline market, a good sales guy would hardy need 5-10 min to convince the client and close the sale.
  • Instead of cleaning up the internal differences (coordination between different stakeholders in the value chain) focus should move to the consumer.

Dhruv Shrinigi (Founder & CEO, Yatra.com)
  • Online travel industry in India is new and does not have a legacy to learn from
  • Everything in India works on Jugaad, so we need to be aware of it. e.g.  credit card fraud detection logic failed (Name of the card should be same as that of user) since some of the customers were genuinely borrowing from friends and family to book tickets online
  • If the value proposition is great users will find a way to transact with you 
  • 55% of the air tickets are booked online in US and 30% in India
   Some of the challenges:
  • Hotel’s online inventory  need to increase and they should update of availability status
  • “Online transactions are unsafe” is a myth  and users need to be made aware of this
  • Online payment infrastructure needs to be improved, current success ratio is merely 50-60%
  • Mobile access, since for many users the first interaction with internet will be on mobile.
  • Customers are booking tickets online but holidays offline.
  • Social Media can play a “joker” here

Kamal Hingorani (VP Sales & Distribution, Spicejet)
  • Spicejet has only online presence and that has helped them immensely in keeping the cost low
  • 25% of the entire ticket booking is direct 
  • 60% of the total tickets are booked online

Devdutta Banerjee (Regional Director of Revenue & Distribution, Starwood Hotels) 
  • They too have seen a surge in business after posting the inventory online
  • More information is required while booking a hotel online 
  • Complexity of taxation for international holidays need to be reduced
  • Aggregation is important since there are now so many small and big players in the online travel booking space

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