“There are only two serious OTAs; the rest are insignificant”

Oct 30 2012, 01:18 IST
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SummaryThe hotels and holidays segment is a low-hanging fruit. We bought travelguru because it had a large hotel inventory. As a business model, selling air tickets alone doesn’t work because margins are just 1-2%.

It’s been an action-packed year for travel portal Yatra.com. The year began with the acquisition of events and deals website Buzzintown. In March it made quite a buzz by signing Bollywood superstar Salman Khan not just as its brand ambassador but a stakeholder in the company as well. This was followed by the acquisition of another on-line travel agent (OTA) Travelguru in June. Yatra’s head of marketing and strategic relations Pratik Mazumder speaks with Brandwagon on reasons behind picking up Khan as ambassador as well as a partner and on the future strategy for acquired brands.

Edited excerpts:

The OTA space is quite cluttered with so many small and big players vying for a share of the pie. How does that impact your job?

I beg to differ. There are only two OTAs in the market—MakeMy Trip and us. The rest are insignificant. When we sit for our brand review meetings there are only two brands to discuss– MakeMyTrip and Yatra. The gap is significant between the top two players and rest of the travel websites. Our topline is about R 3500-4000 crore and MakeMyTrip clocks around Rs 4200 crore annually. Other players have not even touched Rs 1,000 crore. So there is no conversation about those brands who are four times smaller than us. And why are we just talking about the on-line space? OTAs constitute only 10-20% of the total travel space. There are mom-and-pop travel stores that have many customers and they clutter the space. It’s these stores who will have to consolidate and partner with a large OTA like us. Already about 5,000 agents are using the back-end system provided by us and in the front-end they continue to use Aggarwal Travels or a Guptaji Tour Agent as their identity. It’s a matter of time before we see these mom-and-pop stores go for a face-lift and consolidate.

What was the idea behind changing the strategy from selling cheap air tickets to selling more of hotels and holidays?

Yes, we are focusing on hotels and holidays. It’s low lying fruit. In fact, we acquired Travelguru because it had a very large hotel inventory. As a business model, selling only air tickets doesn’t work where margins are between 1% and 2%. Even as an on-line business you need to invest in marketing, people and technology. And that costs.

These expenses can’t be met with paltry air ticket commissions. Only two players realised this three

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