Online travel market has been one of the most exciting ones over past few years from a growth standpoint. Starting with IRCTC, and then followed up by Online travel agents (OTAs), this category has seen a decisive shift online. Amongst other things, it has also helped bring a large base of shoppers online, and demonstrated the viability of the “assisted ecommerce†model in India through retail points.
As a category becomes large, specialized plays become feasible – focus on specific products, business models, customer segments or experiences can create a second tier of businesses that can create and realize value. In my view, online travel is reaching that stage. Following are some of the opportunities that we are seeing in the market and in many of these, entrepreneurs have started to build new businesses.
- Product centric online properties: Be it bus ticketing or hotel bookings, India still does not have large swathes of inventory available electronically. New startups are working to bring this inventory online. Typically, this involved automating the inventory management of primary suppliers (bus operators and hotels) as well, unless the startup works on allocation basis. The key risks in this area include scale questions with regards to online adoption, and ability to amortize customer acquisition costs over few products. However, global success stories exist, and if successful, these businesses would be ripe acquisition candidates by large OTAs. In some cases, such startups are taking a character of GDSs, and the margin concerns might be more acute there.
- Metasearch is becoming a reality – once you have multiple supplier websites and OTAs, the customer wants to be able to search across those and find the best deal. Again, a globally proven model, the key risk here is perhaps the ability of these businesses to compete with relatively large marketing spends of OTAs, since the central promise of both remains “cheapest faresâ€.
- Experience driven sites – such as content sites and travel planning sites. Timing and business model risks are the most significant here, though with the right consumer driven model, it could be a very valuable play over time.
- New segments – Corporate travel and B2B businesses are coming up to service different segments of the market, other than the consumer segment that has been most focused on so far. This space has the potential to get crowded quickly, given that most OTAs are also servicing these segments in part. Intimate understanding on unique needs to these segments (such as expense management) and ability to cater them well lead to success here. Similarly products focused on travel suppliers themselves, such as revenue optimization or cross-sales enablers could be interesting opportunities.
Travel is the biggest and one of the fastest segments to take off on the Internet. Entrepreneurs and investors are now looking for niche opportunities that can scale over time. Would love to get your views on what plays you find most interesting and scalable.
crossposted here.
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Yep! Tour planning for Religious places , specially in India can offer good value to the user. I see it because of the following reasons
1. Sheer traffic. Shirdi accounts for 5500K visitors / day for darshan on a festival. Angkor Vat in Cambodia meets up with 700K visitors / day
2. Unorganized methods of transport available today if you need and end to end transport to a religious place. You either end up doing group escorted tours (which are fixed in nature) or roughing it up yourself.
3. Less documented places of stay at these places.
4. Choice of routes (Asynchronous in nature, cross-timings)- Local Transport information
Challenge is with respect to the business model. Though its a welcome move, how can a B2C product here make money
@Deepak – thoughts!
Deeps
I think there’s room for religious tour planning.
Another niche is in packaged adventure trips, common abroad,almost unknown here. Could be as easy as setting up a climbing/rafting/cycling tour but organizing the equipment as well.
Then there’s a niche for leasing out Club Mahindra and other timeshare holidays for those who can’t use up their holidays in a year.
As more bargain-hungry people are getting onboard to shop travel, niche plays will be a clear value-add from a B2C and B2B perspective both.
There is one more area (probably in the new segments classification). Tour Agents and Operator in India specifically have fragmented access to technology. Bits and pieces here and there (using 1 GDS, 1 offline VB solution for managing invoices, rest all on paper). On top of it, their tryst with the looming OTAs, on them.
Value Add to the offline Agents and Tour operators , may it be through deep inventory access, or connected backoffice solutions – there lies opportunity here.
At least in India its painful to see that the entire outsourcing industry which is built on the promise that work can be done just as efficiently offshore without physical colocation, doesn’t apply that same principle down their own teams with telecommuting. One can understand the need when working with freshers or 2-3 year experience people, but IMHO beyond that someone is not practicing what they preach.
I didn’t really think of telecommutings impact on real-estate, its an interesting perspective – maybe will reduce demand of commercial real-estate and increase demand of larger homes which have a SOHO?
As for shorting, I think India is in such early stages of development that its easy to say that any over-supply in developed real-estate has to be temporary. But “for once” they had certainly overpriced and overdeveloped – surplus of residential/office/retail spaces and all of it overpriced.
Talk of telepresence and I hear the real estate biggies creak and squeal… That industry has been badly mauled and all are left with high price land inventory that they can never build on or sell at remunerative prices. And we are talking of something that is sure to leave them redundant…Go short on DLF/Unitech/Shobha/Orbit/Parsvnath et al…?