Booming Indian travel firms ride on cyberspace

MUMBAI, INDIA: Booming demand from Indian tourists as well as rising tour costs are forcing travel firms to increase their services on the internet to remain competitive, top company officials and analysts said.

Indians traveling overseas rose 16 per cent to 8.3 million in 2006, according to the government's tourism department, while domestic travel rose about 18 per cent to 462 million, challenging the

industry's ability to match the demand.

"If the 20th century was about sorting out supply, the 21st century is about sorting out demand," said Ram Badrinathan, senior analyst with PhoCusWright Inc, a travel research firm.

The quest to match the demand has not only forced newer entrants

such as Yatra Online and MakeMyTrip to widen their communication channels, but traditional travel firms such as Cox and Kings (India) Ltd. and Thomas Cook (India) Ltd have also boosted their presence on the world wide web.

"Traditional players are embracing online today," said Emmanuel Phillips, senior consultant with Cox & Kings India, which has recently introduced online ticketing and booking of holiday packages on the web.

Rival Thomas Cook also started online ticketing recently.

The Indian online travel sector was estimated at $2 billion in revenues in 2007 and is forecast to grow to $6 billion in 2010, according to travel research group EyeforTravel.

Online services also help travel companies reduce costs as it means fewer support staff, need for less office space and the ability to give customers a wider choice.

"We cannot change suppliers cost so we have to contain our costs by reducing human interface and dynamic packaging facilities," said Makemytrip CEO, Deep Kalra.

Customer acquisition is a huge cost component and travel firms are now resorting to the growing popularity of blog sites and social networking sites to widen their reach.

But, challenges remain.

Given the low Internet penetration in India, it is imperative for travel firms to offer a combination of online and traditional services to remain competitive.

Getting buyers to book higher-priced packages online is still a challenge, which will keep brick and mortar travel services up, Cox & Kings' Phillips said.

"Travel portals have to reduce incidence of in-house fraud," said ANMSoft Technologies' CEO Manu Agarwal. For those, not willing to part with credit details online, travel firms can facilitate an interactive voice response system, he said.

Integrating online with traditional services also helps customers and travel firms keep track of bookings and avoid duplications. Overseas travel from India also requires direct interaction because of rules for foreign exchange, documentation.

Still, more and more Indians are opting for online services for their travel needs. Home-grown Raj Travels sees about a third of its bus bookings done online.

"Websites bring in a lot of traffic, nothing can beat the comfort and convenience of booking online," said Lalit Sheth, chairman of the Mumbai-based travel company.