More Drama in the India OTA space: Travelocity & Expedia set to arrive

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“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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