Why is Expedia choosing organic route to enter India?
Published: 26 Nov 2007
Speaking to EyeforTravel.com's Ritesh Gupta, Sharat Dhall, Managing Director, Expedia India recently shared that the company is currently evaluating its route to entry into India and hope to be able to launch its own product in the not too distant future.
In an interview, he shared plans and his viewpoint on the current environment for the business. Excerpts:
Why is Expedia going for organic route in India when there are options for strategic alliances and OTAs clearly stating that they would be breaking even in the years to come?
We have chosen the organic route in almost every market we have entered. We believe that we have a strong product that can add value to the Indian traveler and supplier community and establish Expedia as a serious player in the Indian market.
When Expedia Japan was launched, its ex-president APAC Barney Harford told me: As Japanese consumers become more comfortable with traveling internationally, they are looking for the flexibility that comes from being able to travel independently. That is where the Expedia offering will be able to help them. What do you think is going to be the strength of Expedia in India considering its legacy and international hotel offering?
We will offer the full range of travel products in India and our marketing strategy will leverage strengths emanating out of that.
When Travelocity entered, they clearly stated that there business model would absolutely be built around online bookings and payment, and it was the first and only online travel company in India to offer real-time global hotel bookings for over 72,000 hotels. What trends have you noticed in these two regards, especially when some say online players are really offline and costs are bloated and hotel bookings, which currently accounts for a miniscule share of online travel business?
We think there is space for a number of different models in the Indian market and different players will choose what works best for them. We are strongly focused on online bookings and payments and that will be our approach to the market.
The Indian online travel market is still relatively nascent and while the initial trends were towards air bookings online, we believe that the Indian traveler is getting more comfortable with buying different travel products online and that is a trend that will only continue. You would have noticed a shift of marketing spends by the OTAs towards products such as hotels and holidays, and that is a reflection of this trend.
OTAs in India which have predominantly focused on domestic air bookings. How do you see the battle going forward as traditional offline consolidators particularly air consolidators enter the online space?
I think the OTAs and the online consolidators are addressing different target audiences. The OTAs offer a full range of travel products and services, while the online consolidators are focused exclusively on air. We are at an early stage in the evolution of this market and there is enough space for players with different business models. The market can only grow through these initiatives.
Of late, airlines in India have been focusing on ancillary revenues and tying up with OTAs. How is your company geared up to exploit this arena?
We have a white label hotels programme and are well positioned to do support the airlines with this.
With the expansion of disposable income - as compared to the historical trend of "One Big Vacation" a year; people are now taking two-three breaks a year. Is it only restricted to certain demographics or cities?
This is a trend that is driven by a number of factors in addition to growth in disposable income - cheap air travel, transparency in pricing, easier access to hotels – all of which have been driven by online travel. It is a phenomenon that is more clearly visible in the top tier towns in the country because that is where the largest explosion in disposable income has taken place, and also this is the chunk of population with the most access to the Internet.
Having said that, it is trend that will only grow faster as the 'trickle down' effect of an economy that is growing at 8-9 percent for the past few years, kicks in, along with easier and better (broadband) access to the Internet.
There's a huge asset to being an online agency because loads of data can be compiled – shopping, purchase, etc. – which can be converted into sales leads. How do you think OTAs or Expedia specifically intends to capitalise on the same?
Naturally we gather consumer data which local laws and consumers allow us to collect. All in the aim of improving the booking experience. We have extensive knowledge internationally in how to use this data, and intend to replicate best practices over time in India.