Indians travel the online highway

India Dispatch: While Indians like looking at holidays on the internet to see what is on offer, they are reluctant to make payments via the Web. At the same time, they remain cost-conscious. What are travel companies to do?

The Indian Railways was the busiest travel site, with 8.4 million visitors, up 8 per cent from the previous year. Punit Paranjpe / AFP

Indians love to holiday at home. After all, their country has everything a great holiday destination can offer - good weather, interesting sights and fabulous food. So why go elsewhere?

At the same time, Indians are possibly the most cost-conscious travellers, wanting always to have the best deals, for flights, hotels, tour packages and much else.

The global economic slowdown and the weakening rupee have made them even more careful with their money. Indians are casting their nets wider in their search for bargain holidays.

It is a competitive market as Thomas Cook, the UK travel operator, discovered much to its cost. The company is now thinking of selling its Indian operations.

"If the offers are attractive, then we will consider selling our stake and using the proceeds to continue to strengthen the group's balance sheet," says Sam Weihagen, the chief executive of Thomas Cook. The company has been trying to weather turbulent travel market conditions in India as well as in Europe.

It appears to have decided to exit its Indian operations at a time when traditional travel operators are very much threatened by nimble online outfits.

"More and more people are researching travel online, thus increasing the need for brick-and-mortar organisations to have an online presence," says Varun Chadha, the chief operating officer of JourneyMart.com. "However, merely having an online presence doesn't help [if] there is no visibility and credibility. Some of the big tour operators in India are focusing on acquiring customers online,"

Indians have grabbed the opportunity to shop online for the best travel deals, according to a study by comScore, a market research agency.

It found that the number of visitors to travel sites increased 32 per cent last year from 2010 for a total of 18.5 million visitors.

The biggest growth in India will come from domestic travel both in business and leisure segments, according to research by the Confederation of Indian Industry and PricewaterhouseCoopers India.

"In India, domestic travel is the biggest segment and is growing at a fast pace," says Timmy Kandhari, an executive director and leader, hospitality and leisure at PricewaterhouseCoopers India. "The Indian domestic tourism has seen better marketing and promotions with lot of branded hotels in mid-segment emerging for quality experience and affordability. Also, with new airports coming up, the country's infrastructure has improved."

The travel market for domestic tourists in India is getting increasingly competitive - and the online travel sites want more of the business.

"With newer technologies and platforms being introduced rapidly, more players are flooding the market. The competition is going to be strong, but it will only push us to innovate and better ourselves. People are becoming more internet-friendly and there is a growing trend in moving towards m-commerce [mobile commerce]," says Keyur Joshi, a co-founder of the online travel site MakeMyTrip.com.

So what are people looking for when they are surfing for a break?

Not surprisingly, Indian Railways was the busiest travel site, with 8.4 million visitors, up 8 per cent from the previous year, according to comScore.

But it is the online travel operators that experienced the most growth. MakeMyTrip reached nearly 3.9 million visitors in 2010-2011, up by 63 per cent from a year earlier, followed by Yatra Online, with 3.5 million visitors, up by 82 per cent, and Cleartrip.com, with more than 2.1 million visitors, up 80 per cent. International sites such as Expedia also received millions of hits.

And the momentum is likely to continue. Currently, only about 7 per cent of India's population, or 80 million people, use the internet, according to a study from the financial services company Avendus.

Only about 10 per cent of Indians - about 8 million - conduct transactions online. The increase in internet penetration is not the only driver of online travel operators.

"Emergence of smartphones and internet-compatible phones where it is slated that more people will experience the internet on the phones rather than PCs," says Mr Chadha. "The internet provides convenience and choice of travel information and booking options."

Despite the rush to go online, the industry is still in its infancy. Most Indians still do not have credit cards, which are the primary payment method at online travel sites.

And while the Indian consumer loves the convenience of browsing travel destinations online, he or she still prefers to talk to a person while booking, especially leisure travel, the experts noted.

"Consumers are using the internet as a research tool and are booking offline as the ticket value per transaction is high. This leads to a higher cost of service, forcing online travel agents to operate back-end service centres," Mr Chadha says.

Operating in cyberspace alone is not enough, but even online companies need to establish credible operations to fight the current turbulent market conditions and to serve the demanding Indian client.

"In 2007, we decided to establish our offline presence across the country. This was in relation to consumer buying behaviour and it was evident that consumers were quite comfortable in wanting to interface with retail sales agents," says Mr Joshi. "Indians are more comfortable buying holidays offline, especially the ones who are not comfortable with the internet and making online transactions."

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