It all begins with picking a destination followed by selecting dates and booking travel and accommodation. Then comes the fun part: You get to choose activities, sightseeing spots and restaurants from a long list of well-detailed recommendations. The process is very much like adding ingredients to a customised meal order. You can simply drag and drop your travel activities and watch the empty spots on your virtual itinerary fill up. Within a matter of minutes and without any bargaining with a travel agent, you can book yourself a nice vacation.
This is exactly what TripHobo allows you to do. When founders Praveen Kumar, Saket Newaskar and Karthik Ramachandra had planned a holiday back in 2010, they weren’t met with the same convenience. That experience inspired the three IIT graduates to set up TripHobo in 2012. A do-it-yourself (DIY) online holiday planner, it helps customers discover relevant details for a destination. “Most people love planning the trip themselves. So we are trying to help users do it in a better manner by providing relevant inputs,” says Kumar. TripHobo boasts of 770,000 user-generated itineraries for over 90,000 locations and has clocked 850,000 trips so far.
“The company has the largest repository of user-generated travel itineraries, which is a strong competitive advantage. The platform becomes more intelligent every day with new data points,” explains Sumit Jain, partner at Kalaari Capital. The Bengaluru-based VC fund along with Mayfield participated in TripHobo’s series-B round of $3 million. The 65-member strong team with offices in Pune and the US that earns a neat commission on every booking, expects to clock $1 million in gross sales this year and is eyeing $2-3 million in the next couple of years. On how the startup can compete with established players in this space, Jain says,“The bigger players do not have structured itinerary content which can be used by potential travellers. Most of these players are potential partners for TripHobo.”
Delhi-based Tripoto is another startup that has realised the potential for customised trips. Founded in 2013 by Indian School of Business alumni Anirudh Gupta and Michael Lyngdoh, this portal has developed an active community of travellers who create profiles similar to ones on social media for their trips, complete with reviews, videos, photos, recommendations, itineraries, etc. “We didn’t have any capital when starting out. But we soon realised that building a community with great content would get travellers to plan with us,” says Gupta.
Tripoto attracts 2.5 million users every month and hopes to increase that number to seven million by the end of 2017. It has an interesting customer acquisition method wherein a user who posts content about a particular trip shares it on his social media profiles, which in turn brings in 60-70 users to the website. And Gupta claims that one of those 70 website visitors end up booking a trip via Tripoto. Currently, the website has partnered with a few hotels and is looking to tie up with more holiday planners in the near future.
Users are encouraged through contests to share content and the founders are counting on more voluntary contributions to keep the network buzzing. “Customers choose Tripoto over others primarily because of the authenticity and the quality of its content. We are also the only platform in India that provides information on overseas destinations from the perspective of an Indian traveller,” he adds. Tripoto makes 60% of its money from media sales like advertisements and sponsored content; and the rest from hotel affiliates and holiday leads. Its media sales clients include tourism boards of Germany, Jordan, Kenya, Taiwan, New Zealand and brands such as Canon, Airbnb, Lufthansa, Tinder, Amex, Maruti, etc.
Tripoto is backed by Outbox Ventures, IDG Ventures, 500 startups and the Advantage Fund. Karan Mohla, ED and head of consumer, media and technology at IDG Ventures compares the startup to Chinese travel social networks like Mafengwo and Qyer. “Tripoto disrupts the way travel solutions have been offered to and used by consumers. While online travel agencies (OTAs) and other booking platforms cover the transactional part of the consumer problem, owning the customer over the travel cycle from discovery to engagement and right down to fulfillment has not been addressed.”
Shiju Radhakrishnan also discovered the potential of this segment in 2011, which is when he launched iTraveller. However, Radhakrishnan relies on both technology and human assistance to ensure that a travel booking experience is a flawless one on his website. “If you are a customer who reaches out to Thomas Cook, Yatra or MakeMyTrip (MMT), you will have to talk to the agent and a lot of back and forth happens. What we are trying to create is a platform that allows you to do all of this online, hassle-free,” he says. Once you have lined up your trip and booked it online, iTraveller ensures you experience all the activities and services you paid for by partnering with what they call destination management companies (DMCs). It has signed up with 225 such agencies across the world. iTraveller pockets a 20% fee for each booking while the rest is split among suppliers including flight booking agencies, activity providers, DMCs, visa-insurance agents and multiple other vendors.
The startup raised $1 million in 2015 from ah! Ventures. Harshad Lahoti of ah! Ventures feels the startup is uniquely positioned with a mature product. “Globally (and most recently in India as well), there is a growing interest among the incumbents to strategically associate with startups than reinvent the wheel. In the case of iTraveller, we’ve noticed a similar phenomenon with a couple of in-bound acquisition offers and strategic association proposals,” he says.
While startups in the travel space are luring travellers with the offer of customised holidays, Sanchit Garg of TravelTriangle believes a company requires a mix of pre-set packages and personalised trips. This realisation struck when Garg and his two co-founders, Sankalp Agarwal and Prabhat Gupta went on a trip to Leh-Ladakh. On comparing their trip with a few others, they discovered that they had ended up paying a higher price for fewer activities and services. “We felt there could be a lot of potential for a solution that connected the right travel agent with the right traveller,” Garg recalls.
And that’s when the computer engineers set up the online travel marketplace in 2011, which received a $10-million funding in February this year from SAIF Partners, Bessemer Ventures and Singapore-based RB Investments. The portal, refusing to be tagged as another OTA, believes that its efforts to ensure efficient on the ground execution makes it stand out from the rest. Making a case for including travel agents and selling set holiday packages, Garg says, “In many cases, the customer might know of a few things, but he might need help with booking a few others. Also, as a traveller, he/she might have preferences for certain hotels and activities.” This is where the power of its algorithms come into play.
Once these details are filled in by the traveller, the portal suggest agents accordingly. These agents then provide packages that could be customised as well. “India is still predominantly a package-buying traveller market and those people would still want TravelTriangle,” Garg reasons. With 650+ travel agents, the travel portal has catered to around one million travellers so far and recorded a gross merchandise value (GMV) of Rs.200 crore in June 2016. The average ticket size of an international trip on this website is $2,000, which is significantly higher than that on other OTAs. “They [OTAs] are a very different business model and so have very different value proposition. They are transactional platforms that won’t help you discover, plan or offer help during your trip,” says Garg.
Raghav Bahl of Bessemer Venture Partners believes that a growing Indian market bodes well for startups like TravelTriangle. “The outbound market alone is in the $6-8 billion range, if not more, and is growing at a fast clip. The domestic market is 2-3x the outbound market. The in-bound market is small but continues to grow steadily,” he says. He proudly asserts that the company has grown 2x over the past year despite a brutal discount-led environment.
Speaking of discounts, the well-established OTA players unfurled a marketing blitzkrieg last year. Before merging as one entity, Goibibo and MMT spent more than $250 million and $180 million respectively on offers. Moreover, these players are tweaking their offerings to include personalised trips and tours. “Young Indians are looking for experiential holidays and not the usual cookie-cutter packages that have been around for a long time. Today, a holiday is more about what can be done and experienced in a destination rather than just staying back and enjoying the luxuries of a hotel room,” says Karan Anand, head, relationships, Cox & Kings.
What he means are adventure expeditions such as diving with sharks in the blue waters of the Maldives or cycling along the mountains in the Northeast. Such breathtaking activities in exotic international and remote domestic locales are part of a 200 itinerary rich offering under Cox & Kings’ new vertical, Trip 360 Degree.
California-based Airbnb too has launched another vertical, Trips that is modelled along the company’s desire to design personalised trips for its customers. Apart from hosting and experiencing unique homestays, one can now do the same with local activities. “Airbnb Trips will offer locals and visitors alike the chance to immerse themselves in the people, places, and experiences that make a city unique,” co-founder and CEO Brian Chesky was quoted saying during the launch in March this year.
According to the India Brand Equity Foundation report for 2016, the total addressable travel market in India will be $40 billion by 2020. While a majority of that comprises tour, ticket and hotel bookings through OTAs, over the recent years there has been a gradual tilt in the number of travellers who seek experiences over packages. This explains why MMT, which claims a 40% market share in the hotels and packages segment, has launched over 1,000 theme-based packages in October 2016. Mohit Gupta, COO, hotels and holidays, MMT, says, “We realise that the growth in this segment lies in a customer-driven approach with an enhanced focus on personalisation. We have revamped our product offering to provide a variety of packages that are flexible to accommodate customers’ requirements.”
In June 2015, MMT picked up a 28% stake in HolidayIQ — a travel planning and recommendation engine. With over 12 million visitors per month, HolidayIQ saw its user curated reviews soaring from 5,000 to 200,000 during 2014-2016.
Competing with the big boys
With the bigger travel aggregators now gaining momentum in the personalised travel segment, do startups like TripHobo and Tripoto stand a chance? Industry experts are confident that the market holds great potential for growth. The leisure travel industry across the world has been growing, thanks to rising disposable incomes. Reports suggest that around 30% to 40% of the population in Europe and US make time for leisure trips every year. In China, this number is around 8% but in India, it is a dismal 1% as of now. While the number of Chinese travellers is estimated to be around a whopping 500 million, India accounts for only 8-10 million outbound travellers. That said the industry has been consistently growing at a rate of 12-13% per annum, which explains the optimism among travel aggregators and budding startups.
According to Tripoto’s Gupta, 75% of the 10 million outbound Indian travellers now opt for packages while the rest prefer penning down their own plan. And he is positive that the number of travellers who prefer to draw up their own plan is only set to go higher. Anand from Cox & Kings believes that that will be partly driven by the sector becoming more organised. He explains, “Currently, the organised players control about 30% of the overall travel business. It is the unorganised sector that is huge. This is changing because of the intense competition. Many of them are either shutting down or becoming franchisee partners of big travel companies.”
Gupta from MMT believes the outbound travel market is a fairly large segment with enough and more headroom for all players. “We are an established brand and already have a headstart over the new players. We have continued our efforts in driving higher productivity from our offline sales force and have gained by standardising much of the operations,” he adds.
While a growing market means good news for all travel planners, there are a few roadblocks they must overcome first. “One of the key challenges is to manage demand. We still have a shortage in airline capacity from India to many foreign destinations,” says Anand. He points out the lack of quality hotels in tourist destinations. “We have to make do with what’s available. This, despite the huge demand.”
According to Jain from Kalaari Capital, getting discovered by global travellers would be one of the challenges for startups such as TripHobo amidst widespread marketing campaigns by the bigger players. The startups are cognisant of this but are concurrently cautious about senseless cash burn. “We don’t believe in heavy discounting. Every penny is well spent. While providing the customer with the right experience, it’s important to understand the profitability part,” says Garg.
At iTraveller too, there is an ongoing effort to minimise expenses. “When we sensed the market was going in the wrong direction, we cut down our monthly expenses by 80-90%,” confesses Radhakrishan. iTraveller clocked revenues of Rs.12 crore in FY16. For TravelTriangle, operations largely rely on the efficiency of associated travel agents. “My main challenge is training them [travel agents] well once they are on board,” says Garg.
That said the challenges are outweighed by the tremendous opportunity at hand. By constant and responsible disruption of the eco-system the industry could grow by leaps and bounds. In an aspiration-driven market, the possibilities could be limitless after all.