The last few months have been tough on online travel companies. As margins get squeezed out of the air ticketing business, the market leader has aggressively started moving more of its business to adjacent areas such as hotel bookings and tour packages. “The aviation sector itself hasn’t grown much in the last 12 months, and I think that’s the worrying part,” says Aloke Bajpai, the Chief Executive Officer and Co-Founder of travel search engine ixigo. “The overall industry growth will continue to support 3-4 dominant players,” Bajpai said in an interview with NextBigWhat. Edited Excerpts.
Are revenues from air ticketing dipping for online travel agents?
I don’t think revenues overall are dipping. They continue to grow along with the overall online travel market, however in India, for flights the online travel industry itself is reaching remarkable maturity with 60%+ domestic flight bookings now happening online. We continue to see a shift in offline to online business, but the pace of that shift has decreased over the last year. The aviation sector itself hasn’t grown much in the last 12 months, and I think that’s the worrying part. As soon as growth picks up for the sector (perhaps with Air Asia’s entry ?), we expect to see growth in air bookings bounce back for all online players. Having said that, international bookings continues a pretty healthy growth, specially for short to mid-haul sectors such as south-east Asia, middle-east and east Asia.
What about Hotels and Packages revenue, is it picking up, do you have any data points to support that?
Hotels and Packages is growing very strongly for all online travel agencies as well as research and planning sites. Definitely it’s a higher margin product, but it’s also a high involvement product. As in mature markets, this part of the industry matures later than the airline industry, and I expect the next 5 years to see rapid growth, innovation and new entrants in the hotels and packages space, as mobile and social continue to influence these booking decisions.
An important factor impeding the growth is the maturity of the hotel industry in dealing with and managing the online distribution channels. When used smartly, they can bring down distribution costs, and achieve better occupancies.
However, many smaller hoteliers are still far from using online distribution in a more optimal manner, and do not respect price parity for offline vs. online bookings. In fact, the most savvy hoteliers should be selling hotels cheaper online than offline, but for quite a few in India, it continues to remain the opposite.
What is NextBigWhat for Indian OTA’s and Travel websites?
OTAs in India are fairly mature from a product capability and market-adoption perspective. The overall industry growth will continue to support 3-4 dominant players. Offline, the mid-sized or Large travel agents going online haven’t been able to create a dent in this market, so we will continue seeing small and mid-sized travel agencies either becoming redundant or merging into larger brands.
My bet is that travel research, inspiration and trip planning combined will outgrow the travel commerce in terms of mindshare and traffic within the next 1-2 years.
Can you share some perspective from global point of view, what is the trend globally?
Globally, there are 3 big trends
- Mobile and Tablet are driving rapid growth and apps are creating new categories by solving specific use-cases for travellers (e.g. last minute hotel bookings with HotelTonight).
- Social and Local travel startups continue to innovate and grow. Gogobot in the US is an example. Travel is a social activity – we travel with family, friends, relatives etc. So there is a natural fit. Similarly, using location as a context and finding in-destination activities or showing directions or guiding travelers with augmented reality is an idea whose time has come.
- Meta-search continues to grow and grow. Kayak, skyscanner, trivago etc. continue to grow in most markets they operate in. As consumers get savvier and smarter, they continue to seek out better deals and better research/comparison tools. This is what drives the growth of meta-search. With Google and Tripadvisor also entering meta-search, it’s an irreversible trend. The next level of competition on meta-search will be semantic search, where human queries are understood and answered with structured data in a user-friendly format.
What is the scenario with ixigo.com for the same, are you witnessing any transition, what?
ixigo.com has evolved from being a meta-search for travel to being a complete trip-planning website, with modes of transportation, destination content, places to visit, things to do, hotels, restaurants, itineraries, traveller stories and more. We are therefore a lot broader in our reach, as well as more relevant for the entire trip planning and research phase in the customer adoption life cycle. Additionally, we have consciously paid more attention to mobile as a growth driver. Our philosophy there has been – “every travel need deserves an app!”. We have launched 5 apps in the last 6 months for road travel, buses, PNR status & trip management, in-destination guides (for goa) and flights & hotels. Across web and mobile, we are growing by 15-18% month on month, so we’re expecting to double our user-base in 4-5 months time.
Recommended Video- The iXiGo Story [Aloke Bajpai @UnPluggd]