Consumers today use a mix of online and offline research while booking their sojourns, thereby forcing travel companies to innovate if they are to stay ahead of the curve.
Gone are the days when people were satisfied with one big holiday during summer or winter vacations. Today, travel seems to be on everyone’s agenda, thanks to higher disposable incomes and the pop culture of sharing one’s travels on social media.
Till a decade or so back, planning one’s travel meant either visiting a local travel agent, referring to a guidebook or relying on the recommendations of friends and family. However, today, owing to technological advancements, individuals can book and plan their entire travel online starting from booking flights and hotels, to staying in a stranger’s house via bread-and-breakfast options, reading reviews on smartphones, and much more.
As per the Demystifying the Indian Online Traveller report by The Boston Consulting Group (BGC) and Google, the Indian travel market is projected to grow at 11-11.5% to $48 billion by 2020, with domestic demand (business and leisure) and foreign demand driving this growth.
Karan Anand, head — relationships, Cox and Kings, says, “Today, travel has become more aspirational. People take multiple vacations.” Why has this happened? Tourist destinations have opened up and connectivity is not an issue anymore. According to Directorate General of Civil Aviation (DGCA), Indian domestic air travel had crossed the 100 million mark in 2017, which is double that of the previous year. The government has also increased spending on tourism infrastructure and has proposed a 100% FDI in tourism. A booming sector spells fierce competition — so how are travel companies altering their strategies?
Changes in customer behaviour have brought the online versus offline debate to the fore for the travel sector as well.
As per a BCG and Google report, Digital Footprint, a metric which quantifies Indian consumers with internet access has more than doubled in the last three years. This trend is expected to continue, as is evident from the growing base of internet users projected to expand from 332 million users in 2016 to over 650 million users in 2020. This only means that the war has intensified with both offline and online players going beyond the usual to attract the travel-hungry customer.
Cox & Kings, which is celebrating its 260th anniversary this year, currently has a diverse set of businesses. At a group level, about 20% of its business happens online. “Our India business is readily available to transact online, but customers are quite happy to deal face-to-face. I think the question has now changed to what we can do to improve the service that we offer customers, both offline and online,” informs Anand.
For years now, the company boasts of innovation in both product and service offerings. Apart from the usual packages, it has also launched two new brands. The first is Enable Travel, which is an accessible holiday specialist designed by the disabled for the disabled. The second is Trip 360, which is a sustainable tourism platform aiming to redefine adventure tourism in a sustainable way.
The changing mindsets of people bring a lot of opportunities along with disruptions in the marketplace. For instance, Thomas Cook (India) has launched virtual reality experiences based on the ‘try before you fly’ concept as well as a Holiday Basket, which enables travellers to avail four different holidays under one single product at regular intervals of their choice (within a period of 24 months). “Our growth is also coming in from our online business — contributing to almost 30% of our growth y-o-y,” points out Abraham Alapatt — president and group head — marketing, service quality, financial services and innovation, Thomas Cook (India).
With growing internet penetration and more players entering the fray of online travel, this space is likely to witness attractive pricing to entice more consumers. And with the advent of online travel agents like Yatra, MakeMyTrip, etc people have become DIY travellers who plan, manage and book travel online. “To ease the customer experience, we have launched features like a Facebook chatbot to enable booking tickets, a self-serve platform to address customer queries, a marketplace chat platform to enable travellers to chat in real-time with sellers and also integrated with Truecaller for easy on boarding and verification process,” points out Sharat Dhall, COO (B2C), Yatra.com.
If innovative offers were not enough, Ixigo.com has launched a virtual travel currency. “It has helped us to improve retention,” informs Aloke Bajpai, CTO and co-founder, Ixigo.com while adding that the company has announced the launch of its upcoming artificial intelligence travel assistant — TARA. It is voice enabled, 100% AI-driven and helps users discover, plan, book and manage their travel. Having said that, what is also interesting is that though online research is becoming critical, word-of-mouth still remains a big factor on where and what to book. Globally, hotel bookings are being digitised with online penetration greater than 45-50% in developed markets such as the US, the UK, Germany and France. India is relatively late on the digital adoption curve, with 17% of its hotel bookings made online today.
Spreading its wings
For many Indian consumers, a vacation is an event planned in advance as opposed to being an impulsive purchase. Consumers typically spend 46 days on an average in planning their trip, 49 minutes online on their travel research and visit as many as 17 touchpoints during their booking journey. This opens up a big opportunity for players to engage with consumers across all touchpoints.
GroupM South Asia chief growth officer Lakshmi Narasimhan says, “2015-17 witnessed advertising demand from online travel and tourism, growing at around 70%. This segment contributes to nearly 10-12% of e-commerce advertising across media.”
Print and digital ad spends stand at a 50:50 ratio for most players. However, customisation plays an important role. Being a travel marketplace, the customer base is much wider. While some may book holidays upwards of Rs 1 lakh, there are others booking a bus or a train ticket for Rs 500. Also, most travel players agree that while growth is still coming in from the top cities and metros, there is an emerging growth from tier II and III markets as well. Thus, leading travel companies to increase their marketing and advertising budgets. For instance, as per Yatra.com’s Q3 FY18 results, marketing and sales promotion expenses have increased by 66% to Rs 103 crore from Rs 62 crore in the three months ending December 31, 2016. While the Indian travel industry is expected to continue to grow in double digits for the next decade, it faces many challenges too, one of them being that the Indian traveller today has a long and complex booking journey with low brand loyalty. But with innovative offerings, it’s anyone’s guess on who will soar in the eyes of the customer.