Why Expedia, Travelocity struggle in India

SINGAPORE – Within India, regional reach and local brand loyalties tend to triumph over national brands and strategies. That was the view of panellists at the Web in Travel session called “Market Ideas: India” at ITB Asia.

Such a trend is not surprising the travel experts said, considering the Indian marketplace has 25 official languages and over one billion people.

“It is important to adopt a multi-lingual approach given India’s economic, cultural and demographic landscape, to understand the critical aspects of India’s travel and online travel, the dynamics that make this market so unique, and the essential strategies required for success,” said Dhruv Shiringi, CEO of India-based Yatra.com.

“It is for this reason that international portals such as Expedia and Travelocity had been unsuccessful in making inroads into the Indian online travel market,” Shiringi explained.

Online travel portal Yatra.Com, generates a monthly turnover of US$17.5 million, the bulk of which comes from domestic flights.

Phanindra Sama, co-founder and CEO of Redbus, India’s largest bus tickets aggregator, made it clear that it was important to identify a target market and concentrate on servicing this sector. The top 10% of income earners is responsible for 30% of the market turnover, he said.

Members of the panel agreed that the financial meltdown in the global market had little impact on India’s online travel market which is predominantly based on domestic travel.

In fact, travel is the largest e-commerce category in India. There are at least a dozen portals in India’s online travel market, which is pegged at around US$2 billion and expected to grow to US$6 billion by 2010, according to PhoCusWright Inc.

Wanderlust-struck Indians are visiting these sites to hunt for the most affordable airline tickets, hotel rooms and tour packages, said session moderator, Ram Badrinathan, senior director, research of PhoCusWright Inc.

The speakers at the session agreed that India’s online travel market was at the intermediate stage with a great deal of potential for significant expansion.

“India has achieved this level of growth with third grade infrastructure, so there is much more that can be achieved,” said Keyur Joshi co-founder of Makemytrip.com. “Investment is pouring into the travel industry in India across the value chain, including aviation infrastructure (airports), roads, railways, airlines, hospitality and travel retailing.”

Makemytrip.com is one of the major tour operators in the country with 22 locations in India.

According to PhoCusWright, the total base of internet users in India is estimated at 49.4 million, with one in five users coming from rural areas.

Of these, 82% of online Indians come from urban areas while 18% are from rural areas. At these levels, the penetration of internet stands at 4.5% of the total population of India.