There are only two serious OTAs; the rest are insignificant

Updated: Oct 30 2012, 06:48am hrs
Its been an action-packed year for travel portal The year began with the acquisition of events and deals website Buzzintown. In March it made quite a buzz by signing Bollywood superstar Salman Khan not just as its brand ambassador but a stakeholder in the company as well. This was followed by the acquisition of another on-line travel agent (OTA) Travelguru in June. Yatras head of marketing and strategic relations Pratik Mazumder speaks with Brandwagon on reasons behind picking up Khan as ambassador as well as a partner and on the future strategy for acquired brands.

Edited excerpts:

The OTA space is quite cluttered with so many small and big players vying for a share of the pie. How does that impact your job

I beg to differ. There are only two OTAs in the marketMakeMy Trip and us. The rest are insignificant. When we sit for our brand review meetings there are only two brands to discuss MakeMyTrip and Yatra. The gap is significant between the top two players and rest of the travel websites. Our topline is about R 3500-4000 crore and MakeMyTrip clocks around Rs 4200 crore annually. Other players have not even touched Rs 1,000 crore. So there is no conversation about those brands who are four times smaller than us. And why are we just talking about the on-line space OTAs constitute only 10-20% of the total travel space. There are mom-and-pop travel stores that have many customers and they clutter the space. Its these stores who will have to consolidate and partner with a large OTA like us. Already about 5,000 agents are using the back-end system provided by us and in the front-end they continue to use Aggarwal Travels or a Guptaji Tour Agent as their identity. Its a matter of time before we see these mom-and-pop stores go for a face-lift and consolidate.

What was the idea behind changing the strategy from selling cheap air tickets to selling more of hotels and holidays

Yes, we are focusing on hotels and holidays. Its low lying fruit. In fact, we acquired Travelguru because it had a very large hotel inventory. As a business model, selling only air tickets doesnt work where margins are between 1% and 2%. Even as an on-line business you need to invest in marketing, people and technology. And that costs.

These expenses cant be met with paltry air ticket commissions. Only two players realised this three years backMakeMyTrip and us and we changed our business strategy. Our marketing, advertising and all that we talk about is hotels and holidays. There is no customer communication that we did for flights. About 30% of my working time is spent with our customer relationship management (CRM) agencydepending on the kind of products customers are buying we group them in four to five clusters. Its like a department store model where customers buy four products from a single store, but a fifth one from a different store because they did not know that the fifth product was also available at the first store. So our CRM activity is about telling the customer that we sell hotels and she should buy from us when she logs in to book air tickets.

Will you operate Travelguru as a separate brand

Yes, we will run Travelguru and Yatra as two separate brands. The customer can choose which brand she wants to engage with. In fact, we are investing in the marketing of Travelguru. Salman Khan will do ads only for Yatra. While for Yatra we have earmarked a R50 crore marketing budget this fiscal, for Travelguru we are still working on the marketing budget which will be separate. We need to make very big investments in Travelguru to revive the brand and increase its recall.

How has the popularity of Salman Khan helped brand Yatra

In the months of April and May we ran the multimedia campaign that featured Salman Khan. Post that, we have witnessed a 60% surge in demand in terms of calls at the call centre and traffic on the site. Even now, when the campaign is off-air, we are trending 30-40% above what we were in the pre-April period. So this means the campaign has significantly worked. Also, it has increased our page views from17 million to 22 million. We will be rolling out new ads where he will promote specific products such as hotels or international holidays. We zeroed down on Salman Khan because he has a mass appeal and is quite popular in tier 2 and tier 3 cities, which we want to penetrate. Nearly 50% of our business is now coming from small towns. I see this trend continuing.

The online travel industry is constantly evolving. How has the customer profile changed over the years

We cover a much larger spectrum now. Earlier, our customers were typically from the top three metros and in the age group of 25-35 years. Now the mix is changing and we cover far more number of cities including small towns. Like telecom brands, everyone is using our services. We have lot of under-25 youngsters who are in their first jobs booking on our site. The share of women users has also grown from 8-9% to 13% because they are now comfortable booking on-line and are smarter and savvier. Also, many senior citizens are booking on-line, especially those who find it difficult to go to the travel agent.