Around The World, When You Want, How You Want
Tech startups are busy transforming the Indian travel industry with opportunities for all stakeholders
Life, they say, is a journey. In today’s India, however, to travel far and wide is life. At least, it’s living the good life.
Startups with technology enabling new services have long since sniffed out new opportunities and completely transformed the face of travel. From that seed of a thought on going somewhere, to returning safe and sound, every step of the way is anything but the way it used to be.
With all the information and recommendations available at a click, Indians have become globetrotters, willing to venture out to discover new places that are off the beaten tourist track.
Ask Seema Kothari, a 45-year-old corporate lawyer. She’s ready to set off on a 10-day trip to Iceland, of all places, in June with her husband and two children. “We diligently take a trip abroad every summer and we love to discover uncommon places,” she says. “We are enamoured with the idea of travelling. We started reading up on the Internet about six months ago on the probable countries we could visit and that’s where Iceland happened to us,” she says, adding that they wouldn’t have thought of going there if they hadn’t spent time online and grown fascinated with the country. Kothari planned the trip all by herself — online — without the help of a travel agent.
About 40 per cent travellers have moved away from the “physical” travel agent. Booking today is a matter of a few clicks. Other aspects of travel have become so much easier that the number of outbound tourists has gone up significantly over the past few years.
On The Upswing
According to The World Bank, the number of outbound tourists from India went up to 18.33 million in 2014 from 16.62 million in 2013. In 2012, the number stood at 14.92 million. This, notwithstanding the economic slowdown, devalued rupee, and general pessimistic sentiments globally that spread to India, too.
India today is emerging as the world’s fastest–growing outbound market, and in absolute numbers, it is currently second only to China.
In 1991, the year India opened to reforms, there were just 1.94 million Indians who travelled abroad, according to Confederation of Indian Industry (CII). In 2014, the figure stood at 18.33 million, a CAGR of 10.25 per cent.
“With over 1.1 billion population and GDP increasing by more than 7 per cent every year, India definitely offers enormous potential for future growth in outbound travel,” says Chandrajit Banerjee, director general at CII.
Tourism has become a significant contributor to the domestic economy, almost on par with the IT sector. The former contributes over 6 per cent to the country’s GDP, while the latter around 7.5 per cent.
Much of India’s outbound growth can be attributed to a growing disposable income and a lifestyle that is changing with increased use of technology that is bringing travel possibilities in focus and offering a variety of services from travel startups. Also, the ease of arranging documentation, visa on arrival and availability of affordable travel packages are making travel more popular.
According to the United Nations World Tourism Organisation (UNTWO), India will account for 50 million outbound tourists by 2020.
The New Way
Every aspect of the travel and hospitality business has changed because of startups creating services. It has also given rise to new peripheral businesses such as traveller hostels, in-destination activities, local guides, etc. Most of these operate on an asset-light marketplace model.
According to travel search engine ixigo, travel startups have grown from about 50 in 2011 to over 250 in 2015. It also says that the Indian airlines industry, which is a big beneficiary of the travel booking ecosystem, is growing at a CAGR of 24 per cent and the momentum is expected to continue over the next four to five years. Today, India has about 12 domestic airlines, of which six fly international. Besides, there are over 35,000 hotels, guesthouses, dorms across the country. In terms of hotel rooms, the number stands close to 1.2 lakh as of 2015.
Traveling today is less about landing directly at your typical destination, but is more an enlivening experience that begins from the moment the thought takes root.
“Half the fun is in the planning, the choices, the recommendations from friends, the decisions,” says Vandana Puri, who recently returned from a two-week trip to Langkawi, Malaysia. “Even finding the cheapest deals in hotels and flights is great fun.”
With the digital penetration and emergence of startups that offer more customised travel, the traditional next-door tour operator has had to reinvent to capture the new class of traveller who likes DIY travel.
A typical journey today has five stages — inspiration, research, planning, booking and in-destination. “Travel tech startups have emerged and evolved in each of these stages. There is huge room for all of them to grow and help boost the tourism industry,” says Aloke Bajpai, CEO and co-founder of ixigo.
Travelling, even a decade ago was about going wherever the agent fixed up and doing what everyone else did — visiting a few museums and tourist spots, restaurant hopping an shopping. Today, the traveller is more informed and connected through mobile devices, tablets and various applications which help in searching, planning and booking travel itineraries.
“We have implemented capabilities to track a single consumer’s journey across multiple devices including the desktop, laptop, mobile and tablet,” says Manmeet Ahluwalia, marketing head, Expedia India.
Praveer Kochhar, founder & CEO at social discovery app for travel within India, Shouut, says: “Consumers want information with just one click: they no longer want to call ten people, download five apps and look at several blogs to figure out the great things around them.”
“Tourists are now open to exploring exotic locations. They love travelling abroad for leisure, sports events and shopping trips apart from business,” says Rajesh Magow, co-founder and CEO-India, MakeMyTrip.
“With exposure levels going up, people now are increasingly taking longer holidays. Indian travellers have become much more adventurous and experimental,” says Magow. “From solo-travel, to women-only travel, three to four long weekend breaks a year and a couple of short holidays during the festive season — Indians are discovering new ways to holiday.”
Travel is no longer an annual event. People have started taking longer international holidays — such as two-week itineraries. This is driven by the desire to completely experience and discover a new place to where they may not return in future. What’s more, they simultaneously also do a short haul foreign trip to destinations in Thailand, Maylasia, and UAE, among others.
The World Bank data shows that international travel expenditures have gone up from $13.84 billion in 2013 to $17.49 billion in 2014. “Indians are increasingly spending significant amounts at destination by adding on activities to their itinerary while on tour,” says Magow, adding that shopping is another big spend for Indian tourists across the globe.
India’s GDP per capita crossed $1,500 in 2014. Historically, in developed countries, this is the income threshold at which people’s willingness to spend on travel spikes up, according to Tripoto, a travel community and travel search engine portal established in 2013. This can explain the advent and success of startups such as OYO Rooms and budget airlines in India in the past two years.
“What we are seeing is that Indian travellers are very discerning. They have their first trip to Europe, perhaps to Rome, Paris and Berlin. Now they are starting to venture into the next tier of cities such as Prague or Budapest, says Alexander Schlaubitz, vice-president, Global Marketing, Lufthansa.
The fact that Indians splurge on shopping and dining out naturally makes them the favourites of various countries. In fact, in a bid to woo Indian tourists, foreign tourism boards across countries are increasingly setting up their own offices in the country. “In India, we are especially targeting families, young travellers and honeymooners. Vienna’s imperial heritage along with contemporary attractions and young neighbourhoods offer something for everyone in an Indian family,” says a spokeswoman from the Vienna Tourist Board.
Back in late ‘90s or early 2000, the fad among travellers was to go to South East Asia and visit countries such as Thailand and Malaysia. Those who went to Bali, Indonesia, considered themselves lucky.
S. Ramesh, a corporate executive, and his wife, travelled to Europe for the first time in 2004. “We had never gone for a vacation abroad before as it was almost unaffordable,” says Ramesh. The couple with their five-year- old son visited London, Paris and Switzerland in a span of six days. “We restricted ourselves to the more touristy destinations and now to think of it, it was just touch-and-go,” he says. This year, the couple is taking a 10-day tour to London and Scotland to see the interiors extensively.
While traditional European destinations such as London, Paris, Switzerland, and those in Italy apart from UAE, South-East Asia and the US remain among the top destinations, there is an increase in footfall in rather unique places such as Norway, Poland and Russia. In fact, in what emerged as an interesting trend in 2015 is the fact that Amsterdam overtook London as the most talked-about city in Europe and “adventure” overtook “culture” as the most sought-out category for travel, as per Tripoto. “Going forward, Iceland will continue to attract Indian tourists in 2016 and cities such as Amsterdam and Prague will feature in the top cities to visit, alongside mainstream destinations such as London and Paris,” says Michael Lyngdoh, co-founder at Tripoto.
In today’s world of globalisation, when business travel, holiday and visiting-friends-and-relatives trips are dominating outbound volumes, travellers are also increasingly opting for niche services such as sports tourism, luxury travels, MICE, honeymoon packages and cruises. According to Tripoto, Thailand has overtaken Maldives as the preferred honeymoon destination, while Australia and Sri Lanka are trending destinations and adventure sports such as scuba diving are key attractions. Greece and Iceland were extremely popular in the 18-30 -years demographic.
Funded by indulgent parents, Priya and Myra are just back from a Europe tour. The two of them planned every aspect of the trip including AirBnb stays, which trains to take between places, what to see and where to hang out. One may not find this unusual today except, the two girls are just seventeen. A few years ago, they wouldn’t have been allowed to venture that far alone, but now youngsters are off on their own.
Today, 65 per cent of population of India is below the age of 35 and the travel industry is certainly seeing considerable growth driven by the younger generation. As per estimates by ixigo, about 61 per cent are below 40 years.
“They are looking beyond a normal vacation for which they have started to travel beyond the regular destinations to explore neighbouring locations,” says Ahluwalia of Expedia India. “These travellers are in the mood to plan multiple short trips to places around their cities, mostly booked through their mobile apps,” he adds.
Even when a group trip is planned, it has to be customised for the members. The group travel industry — which had become quite slow — is now once again gaining popularity, especially as people are venturing out on solo trips. Travelling with new people, getting to know them and learning as you travel is now becoming the next big thing.
“Group trips are still a trend but with a twist. Traditionally group trips were family trips or official sales incentive trips. Now it is like-minded people travelling together and exploring interesting destinations of their choice. There are group trips for single women travellers, adventure sports lovers, golfers, older people and even those with disabilities, among others,” says CII’s Banerjee.
Prime Minister Narendra Modi recently said that adventure tourism, in the north eastern region, has the potential to become the biggest employer in the country. North East, sure, is blessed with natural scenic beauty that offers great scope for mountaineering and trekking.
Already, the government is trying to promote tourism in a significant way and is taking measures to attract foreign tourists in the country. The ministry of tourism, which has been working closely with the ministry of home affairs and the ministry of external affairs for easing the visa regime in the country, has recently supported the initiative of implementing tourist visa on arrival.
Destinations that have become popular in the last few years are Ladakh and North-east India. These aside, Goa, Delhi, Mumbai, Kasol and Pondicherry are amongst the most popular destination.
With the penetration of technology, the hospitality industry in India has undergone a makeover and given rise to home stays, Airbnb and Oyo Rooms. “The Airbnb concept is gaining popularity in India, as more and more people are letting out apartments and homes to people through the Internet. It has almost doubled its listing in India year-on-year,” says Ixigo’s Bajpai.
The government too, on its part, has formulated an action plan for “Incredible India Bed & Breakfast /Home Stay Scheme”, which will throw up significant business opportunities for many in the country.
All in all, travelling abroad is no longer a cumbersome and uncertain process. With the amount of information and services available, thanks to technology, any destination is just a click away.
This article was published in BW Businessworld issue dated 'June 27, 2016' with cover story titled 'Ambani's Next Marathon'
Around The World