AlooTechie.com | IAMAI Travel Conference > Challenges = in Bringing Hotel Bookings Online; Understanding Consumer 2.0

From: Subject: AlooTechie.com | IAMAI Travel Conference > Challenges in Bringing Hotel Bookings Online; Understanding Consumer 2.0 Date: Wed, 23 May 2007 12:59:28 +0530 MIME-Version: 1.0 Content-Type: multipart/related; boundary="----=_NextPart_000_0000_01C79D3A.329E7D20"; type="text/html" X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2600.0000 This is a multi-part message in MIME format. ------=_NextPart_000_0000_01C79D3A.329E7D20 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.alootechie.com/News/2438.asp AlooTechie.com | IAMAI Travel Conference > Challenges = in Bringing Hotel Bookings Online; Understanding Consumer 2.0


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IAMAI Travel Conference = >=20 Challenges in Bringing Hotel Bookings Online; = Understanding=20 Consumer 2.0

When: = 5/22/2007=20 3:51:51 PM
By = Rajesh Barnwal

Knowing that online booking of = airlines ticket=20 is a low-margin business and that the online = booking of=20 hotels has just started picking up, from where = will the=20 profits for online travel portals come? = Responding to=20 that question, Deep Kalra, founder and CEO,=20 MakeMyTrip.com said, =93This is a question we = tend to=20 think ten times a day.=94 Obviously, there is = not an easy=20 answer! Still, Kalra said the focus has to be on = selling=20 non-air products such as accommodation and = package=20 deals. According to him, MakeMyTrip has already = tied up=20 with 1500 hotels and plans to further increase = its hotel=20 inventory to give a thrust on selling non-air = products.=20 Deep Kalra was addressing a conference on online = travel=20 organised by Internet & Mobile = Association of=20 India in New Delhi on 18th May = 2007.

Ashwin=20 Damera, CEO, Travelguru.com, said online travel = really=20 started in India with IRCTC (which enables = online=20 booking of railway tickets), and in case of air = tickets,=20 it took off from Air Deccan. According to him, = the basic=20 foundation in the case of e-booking of air = tickets was=20 built by suppliers (airlines). But who will = build the=20 basic foundation in the hotel segment, he = wondered! Will=20 it be suppliers (hotels), OTAs (online travel = agents) or=20 customers?

=93Hotel business is both high = tech and=20 high touch. In this business, customers = are=20 looking for both low cost and a handshake = with a=20 = manager.=94

While=20 talking about the challenges in bringing hotel = business=20 online, Ashwin Damera said, selling hotels is = not a=20 commodity business. Unlike air tickets where = price is=20 often the deciding factor, in hotels it=92s just = one of=20 the criteria. According to him, the major = challenges in=20 bringing hotel business online are 1) how to = convince=20 hotels to go online when the demand for hotel = rooms=20 outstrips supplies; 2) how to get all hotels on = a common=20 platform; 3) how to help customers select a = hotel where=20 price is not the only criteria, other related=20 information such as staff curtsey, hygiene = factors and=20 distance from airport, and waiting time at the = hotel=20 reception often play a vital role; and 4) how to = connect=20 hotels to enable instant online booking, = especially when=20 many hotels don=92t even have internet = connection. In some=20 cases, a customer books a hotel and when he = lands at the=20 hotel, there is no room.

No wonder, = hotels form a=20 small percentage of the online travel business! = But=20 there is a silver lining though. =93In spite of = all these=20 challenges, our business for hotels is = growing,=94 CEO of=20 Travelguru.com said.

In=20 India, unlike in China, the hotel segment = is a=20 long tail product. =93In China you will = find one=20 hotel with 600 rooms but in India there = will be 60=20 hotels with 10 rooms=20 = each.=94

According=20 to Ashwin Damera, the market size of total = accommodation=20 business in India is $8 million out of which the = hotel=20 business constitutes $4 million and is growing = by 2.5=20 times a year. According to Himanshu Singh, = managing=20 director, Travelocity India, the total travel=20 accommodation market in the country for the year = 2007 is=20 estimated at $6 billion out of which the total = hotel=20 business constitutes $1.8 billion. The online=20 accommodation business for the year 2007 has = been pegged=20 at $100 million. According to Singh, today = hotels are=20 getting 1.5 per cent of their total business = from their=20 own websites and 2.5 per cent of their business = from=20 other websites including travel portals. = Clearly, there=20 is a great opportunity for bringing online = travel=20 business online! But what=92s stopping the stake = holders=20 from tapping this great opportunity? =

John=20 Kuruvilla, executive vice president, marketing, = Oberoi=20 Hotels & Resorts, said, =93It=92s not about = consumers=20 looking for deals online, but information like = hygiene=20 and water.=94 One challenge is how to provide = such=20 information? Another challenge is how to reach = customers=20 when they are seeking a holiday. He said, =93We = are making=20 a mistake by using the Web as a media; we should = use it=20 to dig information online.=94 Today, customers = are=20 dictating the market through blogs and community = sites.=20 And so, brands have to chase their customers and = be=20 loyal to them and not the vice versa, Kuruvilla=20 said.

Rahul Pandit, vice president, = operations=20 & people, The Lemon Tree Hotel Company, = said,=20 =93Consumers are cash rich and time poor.=94 The = challenge=20 before hoteliers is how to personalise = customers=92=20 experience. Pandit talked about the need for = hoteliers=20 to recognise that customer is king; accept that = the word=20 of mouse is word of mouth; respond to critical = feedback;=20 and market consumers=92 comment posted=20 online.

Suresh Kumar, president, Fortune = Park=20 Hotels India, asked, =93Are hoteliers so = stubborn that=20 they do not understand the benefit of = internet?=94 Not at=20 all, Kumar responded to his own rhetoric. = According to=20 Kumar, hotel business is both high tech and high = touch.=20 In this business, customers are looking for both = low=20 cost and a handshake with a manager. This is = very unlike=20 airlines business where cost is often the only = deciding=20 factor to choose a flight.

=93As=20 long as India remains a complex = destination where=20 hotels remain unorganised and scattered we = (SITA=20 Travels) are going to=20 = stay.=94

Highlighting=20 the fundamental difference between airlines = business and=20 hotel business, Suresh Kumar said, =93See the = reaction of=20 human beings checking in at an airport and a = hotel=20 reception when they are told that it will take 5 = minutes=20 for them to get their rooms ready versus a = 4-hour delay=20 in boarding their flight.=94 And this is when = the price=20 for an air ticket is considerably higher than = the price=20 paid to book a hotel room.

As if the = hotelier,=20 with 30 years of experience, still needed = reinforcement=20 to drive his message across, Kumar said, =93In = the hotel=20 business we charge for what you say in the = evening and=20 not for the bed.=94 =93Hotels are considered a = luxury, where=20 you are looking for comfort. This is very unlike = a=20 commodity market. We are not slow, we are very = personal.=20 We are high tech and high touch.=94 Ashwin = Damera agreed,=20 the commitment to go online is there but there = is a long=20 way to go. But it seems the long way is going to = be very=20 long indeed!

Jaideep Khanna, vice = president,=20 sales, SITA Travels, said, =93As long as India = remains a=20 complex destination where hotels remain = unorganised and=20 scattered we (offline travel players) are going = to=20 stay.=94 Khanna said, =93Customers do enjoy = researching=20 online, but when it comes to selling bundled = travel=20 service, wonder how much of that gets generated = online.=94=20 He said the human interface, people selling to = people,=20 is going to stay.

Oh, the Human = Interface! Suresh=20 Kumar rightly said, =93In western countries, you = have to=20 drive 10 km to look for a man. But in India you = have to=20 drive 100 km and say when can I look away from a = man?=94=20 Wonder, if the comment somewhat explains why = internet is=20 still at a nascent stage in the country! After = all, when=20 you can easily talk with another man and get to = know=20 about the desired information or even ask the = person=20 (who might be very well a travel agent) to book = a hotel=20 room for you, why would you go online? Don=92t = say to get=20 cheap price, because we are talking about hotels = here,=20 not a standard air ticket!

=93In=20 western countries, you have to drive 10 km = to look=20 for a man. But in India you have to drive = 100 km=20 and say when can I look away from a=20 = man?=94

Ram=20 Badrinathan, senior analyst, PhoCusWright, said, = =93In=20 India, unlike in China, the hotel segment is a = long tail=20 product. =93In China you will find one hotel = with 600=20 rooms but in India there will be 60 hotels with = 10 rooms=20 each.=94 That explains why it=92s a real = challenge to=20 automate online booking of hotels in = India.

While=20 talking about the technological aspect of online = travel=20 business and if an online travel player should = go for=20 build, buy or partner options, Amit Taneja, CEO, = and=20 co-founder, Desiya Online, said, =93It=92s not = as simple as=20 build, buy or partner; it=92s more of a = balance.=94 Gaurav=20 Chiripal, chief executive officer, Quadlabs, = said, =93It=92s=20 a mix of all the three. Buy a tech, customise it = according to your need and get into a = partnership to get=20 support.=94 Syiem Banshanbor, travel industry = manager,=20 Akamai Technologies, showed through a graph how = building=20 a technology in-house is relatively costlier, = more risky=20 and has a longer gestation period than to buy a=20 technology. According to Banshanbor, getting = into a=20 partnership makes most sense from both cost and = risk=20 point of view and the best thing is that this = also=20 enables an online travel company to quickly = enter the=20 market.

While talking about the need for = securing=20 online payments and transactions Vivek Nayak, = chief=20 operating officer, Avenues India, said the life = blood of=20 any business is money and the success of the = business=20 depends on how this money flows safely and=20 securely.

Talking about the sensitive = issue of=20 credit card frauds, Sanjay Aggarwal, general = manager=20 (operations), IRCTC, appealed to the Press to = present=20 the right picture to the public. He said, = =93It=92s not the=20 customers but the merchants who have suffered = the credit=20 card frauds.=94 He further said that most of the = credit=20 card numbers are stolen not online but offline. = He said=20 banks should invest in technologies to minimise = credit=20 card frauds. He also advised merchants to = introduce 3D=20 security. Aggarwal also mentioned how in his = personal=20 experience with an OTA, he got refund after 30 = days. He=20 said that kind of thing is not going to help the = online=20 travel business!

Consumer 2.0: A new group of = internet=20 users who are not looking for low-price = deals but=20 want more value with the same=20 = price.

Belson=20 Coutinho, head, eCommerce & Distribution, = Jet=20 Airways, advised stake holders to formulate bank = charge=20 back policies, introduce fraud management tools = and=20 advanced payment gateway options, devise = standard=20 policies to report credit card frauds, make it = mandatory=20 to implement VBV (Verified By Visa) and MSC = (MasterCard=20 Secure Code), share non-competitive data = (negative=20 listing), educate credit card users, and alert = card=20 holder through SMS after every transaction. He = felt all=20 the stakeholders should be held accountable in a = case of=20 credit card fraud and not just the=20 merchant.

Anupama Salvi, director, new = business=20 development, Avenues India, said, online travel = portals,=20 the poster boys of e-commerce, are the worst = culprits=20 for whom customer service takes precedence over = customer=20 verification. According to her, there is no = adherence to=20 card data security standards, no adequate risk=20 management team or policies in place, no unity = among=20 stake holders and also there is no action plan = for=20 prosecution. Salvi also highlighted the need for = promoting safer payment options like netbanking. = Shekher=20 Srivastava, vice president, marketing, ITZ Cash = Card,=20 talked about yet another online payment option = in the=20 form of pre-paid cash cards that could be used = to make=20 safe online transaction.

V Ramani, CEO,=20 Connecturf, said the company, during a study of = online=20 travel portals, found that close to 30 per cent = of the=20 total people who had transacted online during = the study=20 went to the offline model because they felt that = their=20 needs were better understood there. Wonder, if = travel=20 portals are not already in communication with = Ramani to=20 get hold of a copy of the report!

=93The=20 life blood of any business is money and = the=20 success of the business depends on how = this money=20 flows safely and=20 = securely.=94

Nikhil=20 Rungta, head, marketing, Yatra.com, talked about = Consumer 2.0, a new group of internet users who = are not=20 looking for low-price deals but want more value = with the=20 same price. They are willing to pay money for = saving=20 time. For them the new currency is Time. These = new age=20 internet users are willing to experiment with = new=20 things. They have money but are short of time = and=20 attention. They are suspicious of everything, = especially=20 the Net. Rungta said, =93We need to provide more = and more=20 values to these consumers and show less number = of ads to=20 them.=94 Nikhil Rungta advised online travel = players to=20 create unique value proposition for these = consumers and=20 engage them in an interactive way. Ashwin Damera = of=20 Travelguru.com would agree, after all his = question =93Do=20 online travel portals add much value to = hotels?=94 could=20 not be just for effect!

Harish Bahl, = chief=20 executive officer, Zoomtra.com (a travel search = engine),=20 said customers want free and neutral information = and=20 best deals. According to Bahl, 73 per cent of = online=20 travel purchase is initiated by search, and over = 3=20 million travel leads are generated in US by = travel=20 search engines. The more and more he talked = about his=20 vertical search engine, the more and more it = became=20 apparent that travel portals would have to = seriously=20 look beyond selling cheap air tickets.

=93Online travel portals, the = poster boys=20 of e-commerce, are the worst culprits for = whom=20 customer service takes precedence over = customer=20 = verification.=94

On=20 being asked how an online travel portal will = respond if=20 Zoomtra captures 80 per cent of ticket bookings, = Nikhil=20 Rungta of Yatra.com said, =93We will cross the = bridge when=20 it comes.=94 When asked why there is no = perceptual=20 difference between various travel portals, = unlike in the=20 airlines business where there is a clear = positioning of=20 Air Deccan and Kingfisher, Rungta said it=92s = because the=20 industry is nascent and that with time the = online travel=20 players would be able to differentiate their=20 offerings.

The one thing that became = quite=20 obvious during the IAMAI conference on online = travel was=20 that it would be very difficult for OTAs (online = travel=20 agents) to survive if they continue to focus on = domestic=20 air tickets. But how to address touch point, = while=20 dealing with online hotel business? How to = answer=20 questions like =93Does the carpet smell?=94 = Obviously, the=20 answer lies in leveraging user generated content = and=20 encouraging travellers to share their = experiences=20 through blogs and community = sites.

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