A new breed of OTAs bet on social, can they fly?

3 Sep, 2012

The OTA (online travel agency) space is one of the first few e-commerce segments in India that has witnessed successful traction-building by a 'paid' consumer Internet business (surely there are job portals, entertainment and e-mail service providers, but then, they didn't build their business models on getting consumers to pay online). It is also one of the more mature segments of online business in the country with a handful of large players, such as NASDAQ-listed MakeMyTrip, as well as VC/PE-backed firms like Yatra, Cleartrip and Via. Logic would, therefore, say that it is a no-go for startups as they can't possibly hope to innovate from the scratch what the established players have been doing for years (some of the global OTAs have also realised it after making a late entry here).

But a slew of new-age entrepreneurs have germinated their startups with a tweaked business model, trying to tackle the pain points unmet by the incumbents.

Of course, the market opportunity is a no-brainer. According to a comScore report of 2011, visits to online travel sites have increased 32 per cent from 2010-2011. And there is still a huge chunk of market to be covered by the OTA network while there are niche areas like customised offerings. On the other hand, the bigger OTAs, who were largely ticket-booking platforms, are all looking towards integrating newer options like hotel bookings and vacation planning.

According to Rajesh Magow, co-founder and CFO of MakeMyTrip, "Convergence is being driven by common behavioural mega-trends such as mobile and social platforms, and consumers becoming time-poor and money-rich. Interestingly, these trends cut across demographics since the young people drive the adoption of these behaviours across socio-economic strata. Therefore, it is only natural for service providers to provide a mobile touch-point for their consumers."

It is not easy to compete with established players who have the means and the consumer traffic to outsmart the new-age players. But that hasn't deterred the startups from launching their services. The one common theme running across all new OTAs is the level of customised offering that these players bring to the table – right from crowdsourcing information to building platforms for vendors to bid for niche travel & tour demands and more.

Here's a look at some of these new-age OTAs and their USPs.

TravelTriangle: Time to customise travel package

Set up in July 2010, it is a travel marketplace where one can search for and customise destination-specific packages. The platform connects a user with select travel operators active in or around that specific destination to help customise the travel package as per requirements. What follows is a round of customisations and negotiations in which the customer can change every aspect of the journey as per his/her needs while tour operators try to bid against each other to give the traveller the best deal possible.

For instance, if you are going to Kerala, you can add 'night at a tree house', 'visit to spice markets' or 'participate in local dances' as part of your customised tour. The company also provides 'money safe' guarantee for all the bookings you make on this platform. While travellers get the services for free, travel agents have to pay the company customer acquisition fees.

TravelTriangle was founded by Sanchit Garg, Sankalp Agarwal and Prabhat Gupta (alumnus of IIT-Bombay, IIT-Kharagpur and IIT-Guwahati, respectively). Garg had earlier worked with Yahoo; Agarwal had a stint with Adobe Systems, while Gupta had worked with Oracle.

"Right now, travel agents provide hefty commissions to B2B agents who bring them customers. We are trying to structure this process and eliminate the middlemen by connecting travellers directly to tour operators," said Sanchit Garg, while explaining the rationale and revenue model behind the business. The online travel platform currently generates revenues of Rs 30 lakh a month and is targeting close to Rs 3.8 crore for FY13.

Travelmob: Vacation rentals make online foray

Set up in July 2012, this is a social marketplace aiming to link travellers (called guests) with people (called hosts) who offer vacation rentals for short stay. Travelmob's objective is to become a one-stop shop for global travellers who want to experience local living as opposed to luxurious hotels. The focus is essentially Asia-Pacific and listing at Travelmob is free for hosts while guests can book those places online and share their experience on the portal after their trips. To enable online booking, the company has introduced payment in 13 global currencies. It has also integrated Facebook, Twitter and Pinterest with the site, and one can use Travelmob services via his/her Facebook account.

Travelmob was started by Prashant Kirtane and Turochas Fuad – both avid travellers keen to stay at offbeat places. A BBA from the University of Texas at Austin, Fuad had previously worked as the managing director of Skype Asia, heading its business expansion and partnerships across the Asia-Pacific region. He had also worked with American Management Systems, Sun Microsystem, Contivo Inc. and Yahoo. Kirtane had served as the senior director (engineering) at Yahoo's video division globally and also worked with Tata Infotech.

HighOnTravel: Offbeat vacations, local experts

Set up in 2010 by Rakesh Verma and Chirag Bhandari (both alumni of IIT Bombay), this travel platform offers offbeat vacations to discerning travellers. And the experience is facilitated by local experts and owners of boutique hotels, at a fixed price. These experts and owners also share a part of the booking revenue with HoT.

"Partners share their margins with HighOnTravel as they gain access to new markets through us," said Bhandari. "We cater to a niche market of discerning travellers (from India and abroad) and such unique experiences offered on a single platform make HighOnTravel a preferred source for holiday concepts. Our experts' consultation on holiday planning makes our customers stick to us," he added.

The company, which is targeting Rs 1.75 crore in gross sales in FY13, is witnessing 15 per cent growth month on month.

Touristlink: Focus on small & local travel biz

A social network that provides first-hand knowledge regarding local tour operators, travel agents and small hotel owners. Travellers can post their queries before their trips and can also check out the reviews by other travellers who have opted for those services. TripAdvisor already does this for hotels but Touristlink is doing it for travel services providers.

Contact information of travel service providers are up there on the site and users can directly send their enquiries. But no fee is charged for this service, either from users or from businesses, as the goal is to connect small travel businesses with tourists in a social space. Since its launch in Oct 2011, the company has signed up over 5,000 local travel service providers.

"We highlight some of the best packages or you can browse the trips offered by locals. Each trip/package on offer is linked to the provider's social profile. If a traveller doesn't see what he wants, he can post a request for a specific trip or service, which will be then forwarded to relevant service providers in the network and they start posting offers right away," explained Touristlink co-founder David Urmann, a Ph.D. from Ohio State University.

The other co-founder is Jayesh Bagde and together, the duo had set up other companies Salt Lake SMS and GoTrip India.

However, Touristlink is earning revenues by selling its own deals and marketing those of others. In May this year, it has started selling its own deals targeting tier II destinations to locals in India. The company also work with travel providers to market their deals.

"We are working with travel providers on individual basis to present their deals in the best manner (many do a poor job with this) and then working hand in hand with them to develop a marketing strategy to drive traffic and sales (we collect a commission on sales). Most tour companies are not internet travel marketing companies – so I think this role as a marketing/consulting business is well suited to us and the Touristlink platform is both a great lead generator for us as well as a distribution platform. We already have success with travel agents in Albania, Peru, Cambodia and Tanzania," added Urmann added.

Touristlink is targeting revenues of $5 million in a year starting June and is currently registering a growth of about 30 per cent month over month.

Mygola: Offers personal travel planner

Bangalore-based online trip-planner Mygola ensures that each registered user gets a personal travel planner who does all the necessary research and makes bookings for trip/s. The company claims it has more than 50,000 registered travel enthusiasts till date.

Mygola was founded in 2009 by ex-IITians Anshuman Bapna and Prateek Sharma. Bapna is also an MBA from Stanford Graduate School of Business and earlier worked with Stratify, Deloitte and Google.

The company generates revenue through subscriptions as users tip or pay to ask questions (for each trip or on a yearly basis). Plus, it earns commissions from booking and other additional services. The travel portal may soon explore advertising opportunities and that will be an added source of revenue.

Oravel: Affordable rentals on the web

New Delhi-based Oravel connects people who have rentable space with those who are looking for it. Although not a typical OTA, this aggregator of bed & breakfast establishments, private rooms and serviced apartments focus on short and mid-term rental and vacationers can definitely opt for the same.

Set up in April 2012 by Ritesh Agarwal, Oravel aims to provide easy discovery and booking of comfortable and affordable rooms across the country. It already has 150 destinations listed across Delhi-NCR.

Agarwal had earlier worked with Bharti Airtel and also set up Worth Growth Partners, a startup based in India and Singapore, which helped foreign companies set up Indian operations and also enables Indian firms to expand overseas.

Inspired by AirBNB, the company has executives who verify every space that is rented out via Oravel. It also helps the hosts (read house owners) with bookings, online and offline. The startup earns revenues from a fixed service fee of 20 per cent on every booking, paid by the host. Right now a team of 10, the company is looking to foray into other cities soon.

(Edited by Sanghamitra Mandal)