More Drama in the India OTA space: Travelocity & Expedia set to arrive
“More competition, more fun” was what Himanshu Singh (MD, Travelocity India) reportedly had to say about their foray into the Indian market. Travelocity is already in India, offering hotel bookings for now, but they will start airline tickets by the end of this year. The Big Boy of online travel – Expedia – is set to arrive early next year (as early as January). With Yatra preparing for an IPO, MMT raising money, it looks like the OTA market is going to get crazier than Bangalore traffic. We could see some consolidation as well, mostly to gain user base – I don’t see any differentiated service offering in this space yet. Ah yes, some more money on TV ads.
They’re fighting for big moolah, though. Travel & related (hotels) spend is pegged at $46 billion, 25 of it on air travel alone. Current market penetration for OTA is 3% (meaning, 3% of all travel related bookings happen online) and is expected to grow t0 10% by the end of 2008 – more than tripling the the pie. Sources(1, 2, 3).
One insight into the Indian travel market I can lend to Expedia/Travelocity: The travel agent in India is more than someone who calls up the airline and hotel and makes your bookings, especially if you are doing international travel -an area that is still untapped by the existing OTA. The travel agent arranges for visas (actually goes to the embassy to collect your passport), forex, medical insurance and knows the written and unwritten rules of administration. You’ll need more than online transactions to provide this value to the customer.
What is your read of this situation? Where do you think this is all headed?
p.s.: Read all our previous coverage on the Online Travel Industry in India.
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Related posts:
- Travel industry wrapup: MMT to foray into bus ticketing, Expedia to enter Indian market
- Travelocity Acquires TravelGuru
- TravelGuru sells majority stake to Expedia
- Travel Industry set for consolidation : TravelGuru grabs Desiya for 100 crores, Travelocity hunting for one..
- Egencia, Expedia’s Corporate Travel Arm Launches it’s Service in India
About the author - 
Expedia is having really bad reputation in USA. They need to move since people are realizing how bad they are: http://www.expedianews.com
Problem with OTA is that they are not working on increasing the size of market . They are busy undercutting each other .
Don’t tell me that its a Airline capacity issue . most of the time a typical low cost don’t run on 100% capacity utilization . there is a mad rush at Tatkaal [ immediate ] reservation counters at Railway Station . Even for AC First Class . where cost is very comparable to Airlines . i don’t see anyone addressing it .
@Prashant: Good insight. The railways consider low-cost airlines as a threat, but apparently the airlines don’t think of railways as one.
Right now the focus for OTAs is to gain market share (= revenue = higher valuation). We have seen that happen in other spaces as well – like software services for instance.
hi sowmya,
i read your story and would like to contact you. is it possible to get your number or e-mail id.
[...] As expected, Travelocity India has added flight bookings and now offers both national and international booking. [...]
There’s one travel company in India ( profitable from day one and grossing the highest turenover in the country) that does not make the noise these guys do, but is making waves nevertheless (where the buck matters.) With a clear differentiator, they not only lead with visionary insights of market potential, but also provide the right seeding for the industy’s growth. Unlike these guys, this company does not approach the market to kill / undercut and destroy but to facilitate, nurture and grow together. They are the leaders in flight ticketing sales in India and are the pioneers to evolve a GDS system for bus bookings in India. They have turned around the entire travel industry and cash registers are ringing in the remotest corners of India… best is, they work quietly and diligently(without spending a single buck on publicity, except where it matters). They are the guys who are really impacting the market in India-The Company name is- VIA ! They were called Flight Raja earlier.