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Article: Going Digital for Travel and Tourism

March, 2017

CFO Insights on Technology

Mohit Kabra, Chief Financial Officer, MakeMyTrip believes that leaders in the travel industry will do well if they have the ability to recognize digital trends

Online Travel Industry

The growth outlook for the online travel industry in India has always been robust. The key drivers for this consistent growth have been increasing online penetration through smartphones, significant rebound in the domestic aviation industry basis opening up of FDI and low crude oil prices and focus on infrastructure. These factors have helped drive travel and significant investment by the online travel industry in changing customer habits towards online buying.


The mobile apps have changed the way in which customers interact with brands and vice versa. With smartphone adoption growing at a phenomenal rate, the number of travel-related searches and bookings via mobiles has sky-rocketed in the past year. According to a recent report by Ministry of Tourism, the travel and tourism contributed nearly US$ 295.7 billion or 19.2 per cent to the GDP in 2015-16, while growing at 8.9 per cent year-on-year. Also, the industry is expected to generate 13.45 million jobs across sub-segments such as hotels, travel agents/tour operators and restaurants. At MakeMyTrip, we believe that there’s still enough headway for growth in the future owing to the internet and smartphone penetration. Also, with airlines giving great deals and discounts, the travel industry is set to grow at a faster pace. Another contribution towards the present state of health is by Tier-2 and Tier-3 cities which are now skipping a generation of landlines and personal computers, backed by growing disposable income in these towns. With newer technologies and platforms being introduced rapidly, the competition is going to be strong but it will only push us to innovate and better ourselves.


Emerging Trends

The new-age traveler has become smarter and wants more out of their travel and the onus is on the companies in the market to design their brand-proposition in a manner that will continue to add value to the traveler’s experience. The travelers are more aware of international destinations and India has emerged as one of the world's fastest-growing outbound market and the number of Indians travelling overseas is set to rise.


Online travel is among the first e-commerce categories to scale up in any market as travel tends to lead in driving online behavior or ecommerce. MakeMyTrip has been a pioneer in taking off e-commerce in India since 2000 at a time when there were only a handful of portals, barring a few shut their business. The travel and tourism industry therefore has also been at the forefront of driving the digital development. Be it in the form of digital marketing techniques, digitization of paper tickets, digitization in payments or hitherto offline post sales services. 


The long-term players in the industry will constantly have to be on their toes to design unique ways to offer varied services to their target audience. Data science is an area, where a decade or more of history with customers should lead to better suggestions and customisation. Another key enabler that has given boost to the online travel industry is the ‘Big Data’, as it enables the travel companies to engage better with customers and deliver service efficiently and intelligently. It provides us a great opportunity to positively impact both the business-end and the experience at the customer-end through better decision-making, greater product and service innovation and stronger customer relationships that will be delivered by new approaches to customer management, revenue management and internal operations.


Indian online travel booking space is in the midst of a critical churning. Mobile has become the most secular driver of online travel business. It has helped in geo tagging and providing relevant content to customers who for the longest time have been used to offline buying of travel services in destination. This has also led to significant growth in last minute bookings on the mobile.  The mobile platform is  

only getting better and bigger. From e-commerce, we are heading to m-commerce era at a fast pace thanks to mobile which is now an indispensable companion available on a 24×7 basis. More importantly, the bandwidth has significantly improved. The entire eco-system which we are noticing today has fundamentally evolved because of mobile.


There are three possible disruptors in the space:

  • The mobile internet/app revolution is one of the biggest growth drivers for the industry at large. It has connected many more people in India and expanded the addressable market for companies like ours. The emergence of mobile wallets such as Paytm, PayU and others supplemented this trend by making the payments side of things more democratic. Gone are the days when debit cards were not used for online transactions. Having said that, much more needs to be on the payments side.


  • Intelligent use of Big Data and Business Analytics in all decision making – keyword buying, listing, personalization etc. will be the real differentiator and disruptor in the long term. Data science is an area, where a decade or more of history with customers should lead to better suggestions, personalization and customisation. We at MakeMyTrip are also trying to work out if we can predict flight prices, if we can tell the customer in advance. We are still figuring it out to do it in a way where everybody wins, the airlines, the consumers, and us too. We want to create an ecosystem where no-one is losing out.


  • The accommodation market in India has opened up to beyond branded hotels thanks to digital tools being leveraged to aggregate unbranded hotels or alternative accommodations.


What matters for Foreign Tourists

The government’s e-tourist visa programme continues to gain traction, with a sharp rise in applications in October 2016. Digital Solutions enhancements are the need of the hour as it really does help the flow of travel. Globally, consumers are looking for extra value from their travel spends and in India, travelling is part of people’s ambition. The industry needs to address the evolving travel perceptions and behaviours by offering specialized services for each need. Most OTAs offer packages with custom destination, itinerary, flight and hotel bookings and discounts. We have also enhanced our portfolio, in line with our mobile-first approach, like fare alerts service for flights, progressive web app for hotels, Trip Assistant, hotel check in experience or assist, Personalized hotel search, easy location search for hotels , instant refunds on domestic flights & hotels.


Way Forward

The rapid digitization offers a rare opportunity to disrupt rather than go for incremental changes. For instance, mobile based cab services like Uber and Ola have disrupted the cab hire market, meta-technology will soon be disrupting established agency market, marketplaces could disrupt agencies as well as search platforms. Wallets have disrupted traditional methods of payments and Adhaar or UPI could perhaps disrupt wallets in the near future, hence there cannot be a better time for path breaking disruption and the Indian travel industry is well poised to do so.


We feel that the onus on disrupting existing technology ecosystem is on the existing players. The companies in travel industry must be able to spot the emerging trends and be able to pivot the organisation to become future-ready. Today, everything has moved to the cloud. It's a much smarter way of working since operations are no longer restricted by physicality. The possibilities and scalability of business are faster with cloud. Leaders in the travel industry will do well if they have the ability to recognize trends such as fall in smartphone prices.


Opinions expressed in this article are the author’s own.