Co-edited by Dhiral & Karishma
Why we want to invest in travel?
Indians love to travel. Whether it was the protagonists in epics like Mahabharata/Ramayana travelling far and wide to fulfil their duties or Mahatma Gandhi travelling across the country to identify and abolish the evils of British rule; India and Indians have travel embedded in their culture.
Post-independence, governments pursued socialist policies to cut spending on expensive leisure travel. Red tape & licensing was extensively used to clamp the airline industry to prevent the outflow of precious foreign exchange to purchase fuel and planes. The hospitality and railway industries weren’t treated much differently. It wasn’t until the liberalisation in the 1990s and infrastructure boom in the late 2000s that the presence of airports, airlines, buses and hotels skyrocketed. Thereafter, the state & central governments actively invested in such projects to make life easier for travellers.
As per the data available from the Ministry of Tourism the number of trips taken by resident Indians for business or leisure (not employment) touched 1.6 billion in 2016 more than doubling from the 748 million trips taken in 2010. The impressive CAGR of 13.6% is more than twice the pace of growth in the overall economy! The ever-increasing internet penetration only made discovering and booking trips worldwide more accessible to consumers and in turn catalysed the growth of this sector. As per an IAMAI report travel makes up 56% of all online transactions in 2016 at Rs.95,200 crores ($14.9 billion) and is estimated to grow almost 50% to $22.5 billion in 2017. The TREND is clear – The fraction of wealth from the Indian wallet allocated to travel has clearly increased and will continue to do so.
Source: CEIC Data
Furthermore, the UDAN scheme that subsidizes air travel in tier 2 & 3 cities will increase the number of mango people that are able to afford flights, therefore increasing airline traffic. This would also allow the impressive CAGR of domestic passenger traffic – 11.8% (2010-2017) to continue on an upward trend.
What are the problems worth solving?
- Corporate Travel
According to the Federation of Hotel & Restaurant Associations of India, 59.2% of all hotel bookings are made for business purposes. As any executive or their assistant (who actually books their travel) will tell you, there is no sole platform that understands and resolves every requirement of a business traveller. OTA’s today are solely competing on the basis of who can provide the steepest discount and burning holes in their own pockets in that process.
Corporate travellers however, are more concerned with the efficiency and convenience of platforms that would save even a minute of their precious time. Any EA/PA out there would tell you that booking travel for their bosses is a royal pain in the *** and that they would unquestionably spend the extra $$ to get it done without the headache of having to deal with it themselves. A top executive at Google went to the extent of saying that the main reason his EA/PA’s were quitting was due to the stress of organizing his hectic travel schedule.
I suggest that a set of smart founders sit down with EA/PA’s to study the pain points in the process and design a platform that incrementally solves the problems. This platform would not only be responsible for finding the best route or price, but also do it keeping in mind each individuals preferences, loyalty program memberships and the discounts offered by their credit/debit card companies. The founders can work closely with flight operators, OTAs, hotels, taxi operators, etc to amalgamate the process of organizing travel by making it a stress free procedure.
Initially the platform could promote itself as a free tool for EA/PAs and monetize affiliate commissions. However once it is up and running full swing with additional features like restaurant suggestions & bookings, expense reimbursements, etc. it could switch over to a monthly subscription model. I have no doubt that EA/PAs would convince their bosses to pay the minor fee in exchange for avoiding the million hassles. (read: EA/PAs have a lot of power). I do have other ancillary benefits in mind including revenue streams from data mining, AI and even credit schemes but I’d like to meet a team capable of making this a reality before disclosing more elaborate plans.
- Door-to-Door Travel Management & Multi-Modal Travel
It is essential that we create a platform that amalgamates the process of organizing travel from start to finish, from initial planning all the way through the effortlessly executing every logistic along the way to ensure an enjoyable and pleasant experience to every traveller. Pre-travel approval/gathering travel information, poor booking experience and travel debrief with travel departments are amongst the top 5 challenges faced by Asian travellers as per the latest Global Business Travel Association (GBTA) survey conducted in 2017.
Imagine a rome2rio platform that not only allows a user to conduct a meta search amongst all travel options (airlines, buses, trains, taxis, etc) to get a person from point A to point B but also manages the entire process ; from booking the taxi that would take you to/from bus or train station all the way to checking you in according into your seat preferences 24 hours before your flight.
Such a venture would act as the layer on top of all the current players entirely avoiding any form of competition with them as it would be foolhardy to compete with the incumbents OTAs’ business model where they spend more on promotions than the revenues they make from them.
Why should a founding team in the travel space choose Artha?
A large portion of my previous portfolio at Artha India Ventures was invested in travel. We took early positions in companies like Maximojo, OYO rooms, Repup, Confirmtkt, Roadhouse Hostels and have been a part of their struggles and growth from close quarters. Therefore, our strategies & advice have been refined over time from real experience in the sector. My family also has a vast network in the hospitality industry which would facilitate the opportunity for start-ups to reach out to relevant people and give them the opportunity to test their ideas immediately.
I am convinced that travel as a sector will continue to outperform the economy and I have made a personal commitment to invest in this sector. If you or someone you know wants us to review their business proposal, then ask them to email me on firstname.lastname@example.org