Domestic travel will muscle up OTAs; will boost alternate stay options, says Sharat Dhall

In a no-holds-barred exclusive interview, Sharat Dhall, President, opened up on several issues ranging from the company’s way forward, to how new-breed of aggregators were changing the rules of the game. Excerpts of the interview:

121212How are the first movers in the online space coping up with the barrage of online players? Some international aggregators have also stepped in. How do you go forward from here on?
The travel space has always been very competitive. Let me first discuss the foreign OTAs and companies coming into India part. There have been around for some time now. Expedia has been in business here for the past 8-9 years. Fortunately, home grown OTAs have been able to keep these foreign players at bay; they have not been able to make a mark, at least domestically. But, it is a very competitive space and there are a lot of new players keep coming in, therefore the market dynamics keeps changing. As a company, our culture and ethos is to think like a startup. We have to make sure that we are nimble and fast enough to act. There have been a number of instances where we have had to quickly adapt to the market, and we responded.

Can you take us through some instances?
Sure. Look at what happened in the budget hotel aggregator segment. We realized that it was a part of the market we should have entered earlier. We reworked our strategy and came up with TG rooms and stays, addressing budget as well as alternate accommodation segment of the market. It was a move that definitely enabled us to stave off some of the emerging competitors in the segment. So, if we see that a new technology or space helps us connect with audiences better, we are quick to adapt to that change. I guess the advantage of having a large brand with a substantial consumer franchise and loyalists is that we can quickly scale up when we come up with an offering, unlike some others who may struggle. It is an advantage of being in the market for a long time and having built out the brand over a period of time. But, new companies do keep us on our toes.

But some key elements like hygiene and security are yet to fully addressed by some of the best performing hotel aggregators. How do you manage these issues?
There is a certain standard operating procedure. We make sure that each of these home-stays is visited by the team on the ground. Only if the quality of the photograph, field report, data analysis and written content matches our standards, the concerned management gives it a go-ahead. There is a responsibility of honoring the traveller’s trust on us and on our brand.

As a platform that sells a variety of products, and given that Yatra’s per consumer transaction is significantly more than a hotel aggregator, how do you operate in the scale business?
Every consumer is valuable to us. Irrespective of the segment of service our consumers use, we try and make sure that we have the processes in place to handle consumer needs, and the quality of offerings delivered is up to the standard of what people expect from But, we will not get into the space with half-baked products. We remain vigilant about how we scale up.
For instance, in case of TG rooms and stays, we are currently partnering with one thousand home-stays. Therefore, we believe that instead of scaling, the focus should be on creating the right quality of content and experience. We are simply not in the game of going out and raising money every six months. We have been there for almost a decade and do not want to get a bad name by launching a half-baked product.

How do you see the online market? How is it shaping up?
Be it the airline ticket market or the hotel booking market, there is huge headroom for growth. As per DGCA figures, there has been a twenty-five percent growth in passenger numbers in the first quarter which is a phenomenal indicator. Our own domestic flight numbers are growing at around thirty-five percent. So, there are large pockets of opportunity that exist. The holiday package business is a hugely fragmented business. The market shares of organised players is very limited.

So, what is the percentage of organized players?
Even if you put together all the organized players, it would come in the ten to fifteen percent range. Therefore, the opportunity for growth is tremendous.

You operate in three or four verticals. Which one of them is most profitable for you?
Flight business is definitely the largest segment for us. It generates the most revenue for us. But, there is great opportunity in holiday package and hotels segment as well. We are pursuing them aggressively through investments. All the data suggests that these markets are going to grow in the coming decade. We are not worried about market segmentation, because India is a huge market. We are more worried about how we properly execute on these opportunities. Also, from a technological perspective, building and automating processes and scaling up without having to add those many number of people will remain a critical challenge.
Essentially, it all boils down to providing excellent consumer interface, no matter what the platform is. Fundamentally, when a customer comes back to us is when all those numbers and pie-chats start looking good. The cost of acquisition is high, so you need to provide a good experience so that he comes back to you.

How much can a company focus on consumer interface? Most of these OTA websites are well-designed and functional. How do you keep innovating?
Improvements are continuously happening in different segments of OTA space which keeps us adapting and improving the interface. For example, we have a beta-feature on the flights product which is used, still, by a very few people – though it is a part of our website’s homepage. It is a feature using which – rather than typing all the mundane details like from and to – you can just key in keywords like: an early morning flight from Mumbai to Delhi for next Tuesday. It delivers you search results. It is a pretty new feature. But as operators, we have to be thinking about these things. Facebook recently announced that it will allow companies to use chatbots in their messenger service. Now that is something we will immediately have to start looking at, because the kind of scale it can provide, it is important that we get in there quickly.

Recent reports from reputed firms like HVS and STR peg the next cycle of growth coming from domestic travel segment. How are you working on tapping it?
We are very clearly focused on the Indian traveller, irrespective of whether he is travelling domestically or internationally. It has been the ethos of our brand. We are extremely strong in terms of our presence, not only in top markets but also, in secondary and tertiary markets. I completely agree that domestic segment will continue to be tourism’s backbone for the foreseeable future. There are two core components to how we look at it – holiday packages and hotel bookings signed up on our platform. By having over fifty-five thousand hotels on our platform, we are by far the largest number that OTA in India has which comes from over 1,300 countries. So, we have a hotel in, virtually, every corner of India. We are building up inventory in the alternate accommodation space by roping in bungalows, farm-houses and others. We really want to go after the accommodation space.

Is not it venturing into the space of online aggregators like AirBnB?
Understanding the Indian market better than foreign players, we are confident that we will be able to do a better job for Indians. We realize that by adding a few features we would provide Indian travellers and home-owners the opportunity and confidence to go out, and not only open up their homes for visitors but, to travel to people’s homes. There are a few features which we want to introduce to fully unlock this market.

There is a discount war happening in the online space. How do you see the trend? How far can companies stretch it? Are some companies really disruptors?
Yes, we do see aggressive discounting in the hotel space in the past months. I think some of it has become completely irrational. But, on the flip-side, it has also expedited the penetration of hotels in the online space. The number of hotels operating in the online space have gone skyrocketing. Maybe, it has accelerated what was going to happen over a period of time. I do not expect this level of discounting to continue for long. Having said that, discounting is a part of market development, and some players are doing it which is very good for the ecosystem. We are hoping to ride that as well.

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