Travel firms Seek Hybrid Model To Boost Revenue Online travel agency Musafir has decided to launch its first offline agency this year with the intention of having a hybrid model. #DigitalErra Thought Corner With 14 stores in the GCC region, Musafir wants to create a similar model in the Indian market. The Mumbai-based travel agency felt that while it is easy to achieve scale in its online model, having a brick & wwww.digitalerra.com
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Travel firms Seek Hybrid Model To Boost Revenue
Online travel agency Musafir has decided to launch its first offline
agency this year with the intention of having a hybrid model.
#DigitalErra Thought Corner
With 14 stores in the GCC region, Musafir wants to create a
similar model in the Indian market. The Mumbai-based travel
agency felt that while it is easy to achieve scale in its online
model, having a brick & mortar presence will assure profitability
in the long run.
wwww.digitalerra.com
In the case of global travel management company FCM Travel
Solutions, they entered the country with its brick & mortar stores
under Flight Shop in 2014 by acquiring a local company. Now,
they seek to have an online presence on the back of its couple of
profitable offline stores.
Adoption OfHybrid Model By Travel Firms
Travel companies are vying with the opinion of having both an
online and offline presence to cater specific segments of travel
sector. While most online travel agencies are used for ticketing
purposes but when it comes to booking holidays, which comprises
the bulk of the travel business, it is offline agencies which
continue to dominate.
“We believe in a hybrid model where the customers can choose
how they want their services delivered. Today, 30 per cent of our
inquiry is sourced online. While we remain on investment mode,
we will consider an online initiative as well since a few Flight
Shops are already profitable,’’ says Rakshit Desai, Managing
Director, FCM Travel Solutions, which owns the Flight Shop stores.
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For instance, the Indian travel agency Orbit Tours & Travels was
acquired by PE fund- Emerging India. However, it will continue
with its 14-odd brick & mortar stores, while a new online
consumer facing brand under Goomo is being created for an
online presence.
Varun Gupta, CEO, Goomo, said: “While the OTAs are reeling
under losses, we would be setting up a travel tech company and
are ready to face the challenges in the Indian market.’’
Other names include new online companies like Travkart.com,
which has the backing of its offline profitable parent Sahibji Tours
& Travels.
At the same time, there are online companies like Yatra and Clear
Trip who are steering clear of the offline model.
“We started our offline stores to bring credibility to our online
brand of travel. Though we have a physical presence, it is not
easy to scale up like an online model,” said SharadDhall, COO,
Yatra.com.
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Why Both Online And Offline Model Good For Business?
Research shows that the Indian consumer’s path-to-purchase of
anything travel-related online is driven by the best deals. 95
percent of consumers search online before making a purchase.
While Indian users are willing to book travel tickets online,
booking hotels and stays are still more of an offline habit. Trust is
a key issue here, with consumers not fully happy with what they
are promised online and what is actually delivered when it comes
to hotels. Even as more people are coming online to book tickets
in tier II, tier III cities, offline stores are doing well for the when it
comes to the holidaying segment. There are several other
reasons for this like credit card limit that might not be sufficient
when it comes to international holidays and processes like visa
assistance and customization, which need offline assistance.They
are often aimed at increasing the comfort level of those wary of
booking online.This is where startups like Oyo Rooms are working
out to help Indian and international travelers alike.However, great
deals are still a huge driver of India’s travel ecommerce.
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“Offline travel companies tend to be profitable due to
consolidated bulk deals they strike with airlines for ticketing,
while online companies tend to have mark-ups on the net cost to
sell the inventories of hotels and airlines,” observes Manheer
Singh Sethi, Co-Founder, Travkart.
India’s Travel Industry Size
According to a research, India’s travel industry is worth around
$27.5 billion. The online bookings’ slice of the entire Indian travel
booking market is expanding, expected to make up 46 percent in
2017, up from 41 percent in 2014. Before the year 2020, over half
the Indian market will be booking their next holiday online.
Also, the mobile travel sales in India are on a high; and are further
expected to rise at 67.1 percent CAGR (Compound Annual Growth
Rate) from 2017 to 2020, reveals a study by Criteo conducted by
Euromonitor International.
Conclusion
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With Indians increasingly using smartphones in their daily lives,
travel tech has to tap the smaller screen for the Indian consumer.
Hybrid models bring its own challenges, but the speed and scope