<div><em>Startups betting on the dometic forex market worth $18 billion to scale up business, writes <strong>Vishal Krishna</strong></em></div><div> </div><div>With Makemytrip, the travel ticketing portal, acquiring a 28 per cent stake in Bangalore-based holiday planning company, HolidayIQ for Rs 93 crore, the travel portal industry is fast heading towards raising large funds. The market size for the travel booking industry is $120 billion in India and the organised players have only 2 per cent market share. According to the Indian Brand Equity Foundation, the forex earned from the domestic travel industry can be as high as $18 billion. This opportunity had already started a customer acquisition war like the one that we are witnessing in the etail business and all the money raised will be spent on hiring large sales teams. They will build market share in acquiring properties to be listed on their portals and create a bidding war of consumers. Surely television channels, Google and Facebook will benefit from all this. But what about the business itself? </div><div> </div><div>The funding will create many startups, to set shop, and ultimately drive them towards consolidation or make them shut down. For now the system is all geared up for a massive launch. With rumours floating around that Oyo Rooms is raising Rs 630 crore from Softbank, the industry could trickle down more money. The deal would make startups like iTraveller, Stayzilla, TripHobo, Tripoto, Travel Triangle and ZipRooms to raise more money with existing investors or look for funding. Today a startup, which has raised Rs 10 crore or more, spends Rs 1 lakh per day on Facebook and Google advertising. This would mean that Rs 3.6 crore is spent per year by a small startup to increase customer traction. </div><div> </div><div>“We look at bettering customer experience and manage customer repeats that book on the site when they are traveling to smaller towns,” says Yogendra Vasupal, founder of Chennai-based Stayzilla. He adds that increasing traffic volumes on to the site and app is not the end game. Stayzilla raised $20 million from Nexus Ventures and Matrix Partners recently. </div><div> </div><div>By not focusing on customer service, the travel industry can distance consumers. Today, like every etail business, there have been customer complaints about the less than average experience after booking from several travel sites. No doubt the money will make them improve processes. But this industry too will become a victim to heavy discounting to increase consumer traffic. In the off season too prices may drop to a point where the consumer benefits with a holiday package. iTraveller’s founder Shiju Radhakrishnan says that there is a need to organise the travel industry and that the discounting model is not the right way to go about it. </div><div> </div><div>“You need good data about regions and the properties. So you need to organise the suppliers who provide you this data in India,” says Shiju Radhakrishnan, founder of iTraveller. He adds that India will primarily remain a customer acquisition market, through heavy rotation of television ads, because of the nascent nature of the startup industry. “Consolidation is on the cards. But the opportunity to be independent, as a startup, is large because technology is going to disrupt the travel industry by getting rid of middlemen,” says Radhakrishnan. iTraveller recently closed a round of $1 million from LetsVenture.</div><div> </div><div>Ticketing is dominated by Goibibo and Makemytrip and these large portals do not have holiday planning tools that are customised for individuals. These new startups provide discovery, booking, planning and experience tools that become obvious acquisition targets. Let us hope that at least this industry is deep rooted in common sense and that it does not get lost in the story of valuations and wealth creation only for fund houses. </div><div> </div><div> </div><div> </div><div> </div>
