Indian online travel agencies - mobile, holiday package challenges, and more

In a recent conference (STB-WIT India Travel Executive Forum) run by Singapore Tourism Board and WebInTravel in Bangalore, India, three of the the country's leading online travel agencies discussed past challenges, mobile trends and more.

A recent comScore report report about Indian travel website rankings (by traffic) puts MakeMyTrip, Yatra and Cleartrip at second, third and fifth most visited travel websites in India.

MakeMyTrip receives 8.3 million unique visitors per month, Yatra gets 5.5. million UV per month and Cleartrip gets 6 million UV per month.

The discussion is presented in a Q&A format below. Answers are edited for readability and structure.

What did you have to deal with when you started?

Cleartrip (CT): When we started in 2006, the travel agency market was fragmented, and there was not much resistance. When it comes to the online world, the first mover advantage is definitely there.

Yatra (Y): When we launched in 2006, things were much better, ecommerce was just starting to gain momentum in India, and there was not much resistance at that point.

MakeMyTrip (MMT): When we started in 2000, India was not online enough, and no significant business was happening online in India.

Biggest challenge in early days?

CT: We had an internal challenge, we had to decide between building the technology platform or buying it, eventually we decided to build it in-house. The first two years was a challenge in building the systems in-house.

MMT: Our challenges were to sustain the company, getting consumers onboard to use our platform, and also to get the infrastructure in place. In the early days, we changed the focus from India to US because of the maturity of the market. However, the big Indian OTA story started in the year 2005/06.

What's your big turning point?

CT: For us, the turning point was mobile adoption. In 2012-13 the traffic from mobile was 5%, but the growth was phenomenal in the past six months.

MMT: Transition of consumers from offline to online - led by air ticketing - the years between 2007 and 2010 marked a big turning point. We noticed a significant adoption of online as a platform for air ticketing, but the challenge was to maintain this growth but still be profitable. Precisely, 2008-2009 was a big turning point when we fixed our business model.

Mobile payment is an issue?

CT: In the high-end smartphone users category, we see people comfortably using credit cards to transact in mobile than desktop. However, in low-end phones, payment is still an issue. Recently, we enabled pay-at-hotel option to address issues like these.

Have OTAs reached a saturation point?

Y: There is still headroom to grow. Hotels and holidays is where the big growth will come in future.

MMT: There are plenty of growth opportunities. India attracts about 14-15 million overseas travellers, also the new Indian government gives great importance to tourism. To me, OTAs are still scratching the power of technology, we have probably covered 2% of the actual potential of the market.

Which companies are you watching closely?

CT: Google. With Priceline buying OpenTable and Buuteeq, you never know where the competition is coming from.

MMT: We are also watching Priceline - to see how they are addressing consumers. In the east, we keep a close watch on Qunar.

With the Concur investment, will Cleartrip get into corporate business?

CT: Concur wants to get some consumerization in to the corporate world, we will leverage Concur technology and continue to be a consumer brand.

How are you doing on mobile?

CT: Mobile bookings for our lines of business: flight - 20%, hotels - 25%, and trains - 50%. In the next 6-12 months, we believe mobile bookings will be 50%, also our mobile site traffic is growing at the same pace as our mobile app. More details about Cleartrip's mobile and tablet adoption - here.

Y: Mobile flight bookings are fewer than we get in desktop site. But, the percentage of traffic from mobile (vs desktop) is very high during weekend.

MMT: In six months from now, traffic and bookings from our mobile channels will cross 50%.

How scalable is the holiday packages business from a technology standpoint?

CT: In our flight business, we have achieved 95% automation. One of the reason we have not gotten into holiday packages business is because its the least scalable in terms of technology.

MMT: Once the challenge of selling holiday packages online is solved, it will bring higher returns, but the barrier to entry is high. We are focused on solving this challenge. There are a number of challenges, including the fact that Indian hotel supply is not automated, last minute inventory is not maintained, hotels don't use a property management system, etc.

Currently, the market is driven by consumers, they are ahead of the industry. But, the real challenge is how and when businesses are going to take over and offer more complex products like flight + hotel and holiday packages on mobile.

What does MMT have to offer in holiday packages over traditional travel agents?

MMT: Leverage of technology is the biggest difference. Perhaps the travel agent can give five or ten different options, but certainly they can't offer over 1500 options and the ability to compare packages. Increasingly, internet is becoming the repository of content.

A lot of companies are selling packages, but not many are making packages searchable online and consumable. So, we need to make the content searchable, consumable and more importantly - vernacular.

Panelists in the discussion were: