An overview of travel commerce in India. Top level understanding of the hotels & flights ecosystem and comparisons with online retailing.

1. Online Travel
Commerce
BY ASHISH DUA
5TH DECEMBER, 2015
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2. Never underestimate the power of a pretty travel picture with a wise sounding quote.

3. Agenda
 What is Online Travel Commerce?
 Trends
 The Indian Traveler
 5 Stages of Travel Purchase
 Transportation
 Flights
 Accommodation
 Hotels
 Industry Players: OTAs & Others
 New kids on the block
 Future of travel
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4. What’s Travel Commerce
 Travel Commerce refers to the buying, selling and renting of travel services via electronic
channels, primarily the Internet.
 An Online Travel Agency (OTA) is a company that engages in a business of selling online travel
products. Eg. MakeMyTrip, Cleatrip, Expedia, etc.
 Primarily consists of Transportation products, Accommodation products and Packages.
Rent a Bike, Rent a Car, Book a city tour, Book a flight, Book a package tour,
Book an accommodation, Book a ride share, Book a Bus, Book a Bungee
Jump, Book a Train, etc.
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5. Trends (1/2)
 Online Travel continues to be the largest contributor to e-commerce in India
 India is one of the fastest growing online travel markets in the world
0
5
10
15
20
25
2009 2010 2011 2012 2013 2014 2015
eCommerce & Online Travel (in $ Bn)
Total Ecommerce Online Travel
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Source: eCommerce in India- Accelerating Growth, PWC, 2015
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
United States
Australia
Russia
China
Brazil
S. Korea
India
CAGR Growth Rates (2011-2016)
Source: Web: Statista.com: Forecast of online travel sales CAGR

6. Trends (2/2)
 Historically, online travel has been the largest contributor of ecommerce
sales across most countries. WHY?
 This number comes down as e-tailing catches up in the country
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0%
20%
40%
60%
80%
100%
2012 2013 2014 2015E 2016E 2017E
Travel as %ecommerce
India Spain Italy Brazil US UK China

7. Why Online Travel Leads e-Tailing
 Service v/s Physical Product
 No need for setting up complex sourcing, warehousing & logistics
 Innately Online
 World’s largest supplier of flights have always been on interlinked systems even before being available on OTAs
 Standardized Product
 True more for transportation than accommodation, that the product is fairly standardized in experience and
thus augers well for online purchase.
 Low barrier to entry
 Easy to get off the ground for a new business as integration with a few airline and hotel systems can provide
50-60% of the inventory to get started
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8. The Indian Traveler: 2015
 Travel is a Life Style choice
 More people identify themselves as travelers and enjoy planning & preparing for their trips themselves
 More discretionary income leading to more impulse trips
 Last minute travel, staycations & weekend-road trips are on the rise
 Mobile
 Connected 24*7 via smartphones and using them to search & book travel.
 More Demanding on customer experience & support
 Getting used to high quality, fast speed, robust and personalized experiences and are more impatient with cluttered design & failures
 Price Conscious
 Continue to be price conscious. Wants maximum value and seeks discounts.
 Trusts her peers
 Rates & reviews her experiences. Also uses reviews & ratings from other travelers to plan her own travel.
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9. 5 Stages of Travel Purchase
Dreaming Planning Buying Experiencing Sharing
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Subconscious, unstructured,
inspired
Key Influencer: Friends &
Family
Active, search of destination,
hazy travel dates, hazy
budget, collaborative
Key Influencer: Internet
Almost fixed budget,
alternative evaluation,
bargaining/deal-hunting
Key determinants: Product,
price, convenience
Leisure, Adventure, Art &
History, Purpose-led
Key determinants: Companions
& Destination
Pictures, Videos, Tweets,
Blogs, Albums, “Been There”
Key determinants:
Companions & Destination

10. 10
Jealousy: Making more people fly than airline ads, since 1914

11. Transportation
 Compared to 78Mn Passengers (pax) on Domestic Airlines in 2015
(expected), Indian Rail carried 8500 Mn Passengers.
 The Domestic Flight Market is led by Indigo, followed by Jet & AirIndia
11
1%
99%
Transportation: By Travel Mode
Air Passengers
Rail Passengers
Airline Market Share in India (Oct'15)
Air India Jet Airways Jet Lite Spice Jet Go Air
Indigo Air Costa Air Asia Vistara Air Pegasus

12. Flights | Key Constituents 12
 Domestic flight booking has high internet penetration- Almost 50% of the bookings are done
online (etail is <2% of retail for comparison)
 Each airline faces the following challenges:
 Ensure all seats are sold on a flight. Currently average load factor is 80%. DISCUSS.
 Charge a consumer surplus to the business traveler while incentivize the leisure traveler to travel more
 Besides Price, Customers are looking for the following while buying flights:
 Departure Time
 Airline
 Flight Duration
 On-Board services
 Post Sales Service

13. Flights: Competitive Landscape 13
Competition with industry
players is HIGH with multiple
OTA like MMT, Cleartrip,
GoIbibo all active in this
region
The buyer power is MEDIUM
as the users have a few
options to book from
including others OTAs & the
airline sites
The supplier power is HIGH
since the supply is
concentrated with a few
airlines
Threat of new entrants is
MEDIUM as airline
integration and contracting is
tough
Threat of close substitutes is
LOW as the product is
standardized and
differentiated business
models are tough
Overall it appears to be a highly competitive industry

14. Flights: Key Ecosystem 14
Airline
Global
Distribution
System
Other Supplier
Side Platforms
Online Travel
Agencies
Full Service Carriers
(FSC) like Air India, Jet
Airways
Low Cost Carriers
(LCC) like Indigo,
Spicejet, etc.
Airline Site &
Apps (like
goindigo.in)
OTA Site & Apps
(like
makemytrip.com)
Customer
Consolidation

15. Hotels| Key Constituents 15
 Hotel booking has low internet penetration- Less than 10% of the overall hotels bookings are
done online. A big part of this booking is on-call or walk-ins
 The Hotel supply is highly segmented. Hotels face the following challenges
 Ensure all room are sold on a night. Currently occupancy levels vary between 60-80%
 How to price their hotels to make reasonable margins and yet fill all rooms
 Attract enough queries & walk-ins
 Unlike flights, hotels is a high involvement purchase. The decision metrics for buying a hotel
involve
 Review & Ratings
 Location & distance from key areas
 Room type & meal plan
 Room & hotel pictures
 Post Sales Service

16. Hotels: Competitive Landscape 16
Competition with industry
players is HIGH with multiple
OTA like MMT, Cleartrip,
GoIbibo all active in this
region
The buyer power is HIGH as
the users have several
options to book from
including smaller OTAs &
offline travel agents
The supplier power is LOW
since the supply is
fragmented with a long tail
of hotels
Threat of new entrants is
MEDIUM as even though
technology is a barrier to
entry it is not high enough
Threat of close substitutes is
HIGH as any of the suppliers,
metas & offline agents can
take up demand
Overall it appears that with the traditional contracting based reselling model you
would be playing in highly competitive environment

17. Hotels: Key ecosystem 17
Hotel
1,2…N Hotel GDS1
Hotel GDS 2 Online Travel
Agencies
Hotel Site & Apps
(like
vivantabytaj.com)
OTA Site & Apps
(like
makemytrip.com)
Customer
Hotel
N+1, M
Hotel
M+1, P
Individually Contracted
Fragmented Supply,
Multiple GDSes

18. Most of the things you buy on Flipkart will only get used when you travel with MakeMytrip

19. Industry Players 19
Travel Search Engines
OTAs
P2P Market (Accomodation)
Hotel Aggregators
Global Distribution Systems (GDS)Itinerary Planning
Rail Booking
Meta Search Engines
Multi-Modal
Car Rental/Sharing
Intercity Bus Booking

20. New Kids on the Block
Some interesting start-ups in the travel domain:
 Trippy
 Building a community of travelers and local experts helping each other out.
 Hopper
 Hopper aggregates & analyzes billions of flight data points and tries to find the answer to the age old question- “when
should I book my flight?”
 Off Track Planet
 A croud-sourced travel guide created by aggregating knowledge shared by a global community of experts
 Options Away
 An innovative product that allows the customer to lock his fare for day or even weeks at an additional amount.
 Dealbase
 Analyzes hotel deals and real savings are presented in a consistent way for “apples” to “apples” comparison
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21. Exercise
 Pick up any product from the above & analyze:
1. Which of the 5 customer lifecycle stages does it primarily fall.
2. What’s the Customer Problem it is trying to solve.
3. What’s the biggest opportunity and threat for its business.
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22. Future of Travel
 More Peer to Peer
 Rise in peer to peer offerings- homestays, ride-sharing, car-renting, travel-guides, audio-tours
 Personalized & Mobile
 Smarter apps powered by data providing services like a personal assistant with accurate
recommendations.
 Personalized service delivery and friction-free experience across transfers through airports, in-
flight cab & accommodation
 Cash & Cardless
 Pre-Agreed modes of payments and wallets
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Sneak Peek into the future:
https://www.youtube.com/watc
h?v=NNypFfPYWWs

23. Questions, please.
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24. Travel More. Thank You.