MM2: ASSIGNMENT -3

E-BUSINESS: TRAVELAND TICKETS

Authors Ashish Mittal 2011071 Gaurav Kumar Dani 2011078 Nishant Aggarwal 2011093 Mandar Pramod Bhanage 2011085 Abhishek Kumar Srivastava 2011064

E-business stands for electronic business and pertains to trading in goods and services through the electronic medium. India has shown tremendous growth in the E-business sector. The low cost of the PC and the growing use of the Internet is one of reasons for that. There is a growing awareness among the business community in India about the opportunities offered by eBusiness. There are following basic E-business models Business- to-Business (B2B), Business- to-Consumer (B2C), Consumer- to-Business (C2B), Consumer- to-Consumer (C2C).

Evolution of the online travel industry Online travel industry has grown from INR 6,250 crores in year 2007 to INR 37,890 in the year 2009. The restrained growth in 2009 was due to the overall slowdown in the industry. Due to conveniences of paying online as well as the facilitation from the regulators the growth is expected to grow at a much higher rate in the next few years.

E- Travel Business In sharp contrast to the traditional marketing channels, an e-travel business functions as a smart facilitator to a channel which exists between a Transport provider and the traveller.
Typical Marketing Channel Manufacturer Manufacturer E-Travel Marketing Channel

Wholesaler
E-Travel Biz.

Retailer
Consumer

Consumer

These businesses ride the e-commerce bandwagon to generate revenues. Factors such as better prices, better security for credit cards, ability to return merchandise easily, easier to compare prices , ability to answer from merchants are some of the reasons which drive consumers towards and online purchase. It is these aspects that the e-travel businesses target. They differentiate by providing comparative schedules, alternate travel arrangements, providing comparative quotes across various passenger carriers.

PEST ANALYSIS OF E TRAVEL AND TOURISM INDUSTRY Political Factors

Political arena has a huge influence upon the regulation of businesses .It includes government regulations and legal issues under which businesses should operate. Some political factors that influence the e-travel and tourism industry: Security and Terrorism in India, it is a very big threat for the tourism industry. As an example, what had happened in Mumbai has really hampered the tourism in the country. Subsidies of Internet service providers. Legal framework for online advertisement or official endorsement for online marketing. Economic Factors

Economic factors affect the purchasing power of potential customers and also affect the individual companys offerings. Some economic factors can be listed below: Economic instability, like during Recession, adversely affect the business. Amount of tourists could fall off considerably. As India and the rest of the world were suffering from recession, the tourism as well as e-tourism industry was affected.

Decreasing prices, due to increased competition among a huge number of market players. Healthy integration of various sectors like transport, lodge etc.

Social Factors A few social factors are: A trend of getting internet access at home and buying online developing all over the world. Peoples Willingness to book their trips Online. Many people still feel booking tickets online has many hassles and prefer booking through other channels such as an agent. How much could these portals be trusted? Comparability options provided by sites like Cleartrip.com and Ixigo.com, where customers can contrast all the options available. Forecast shopping further facilitates the growth of e travel and tourism. Customer can book tickets from three months before based on forecasted holidays/major events etc. Affiliate advertising: A mutual contract between, say 2 web portals, which bound them to advertise each other on their respective portals. Technological Factors Rapid development of technology is affecting the businesses all over the world. Changes in the technology have changed the way businesses operate i.e. Internet booking for tickets and holidays. Faster changing development in technology creates a need to react quickly for different businesses in order they want to maintain the competitive environment by providing the same innovative services, which their competitors are offering. A few technological factors could be listed below: Quality of Internet Speed with which Transaction can be done Safety of the transaction Assurance that the trip is being rightly booked Mobile applications that make the procedure more hassle-free

The Distributuion Network

The Traditional Travel Agencies model The British company Cox & Kings is sometimes said to be the oldest travel agency in the world, but this rests upon the services that the original bank, established in 1758, supplied to its wealthy clients. The modern travel agency first appeared in the second half of the 19th century. Thomas Cook, in addition to developing the package tour, established a chain of agencies in the last quarter of the 19th century, in association with the Midland Railway. A travel agency's main function is to act as an agent, that is to say, selling travel products and services on behalf of a supplier. Consequently, unlike other retail businesses, they do not keep a stock in hand. A package holiday or a ticket is not purchased from a supplier unless a customer requests that purchase. The holiday or ticket is supplied to them at a discount. The profit is therefore the difference between the advertised price which the customer pays and the discounted price at which it is supplied to the agent. This is known as the commission.

With general public access to the Internet, many airlines and other travel companies began to sell directly to passengers. As a consequence, airlines no longer needed to pay the commissions to travel agents on each ticket sold. The Online travel Agencies Over the year the Online travel booking industry has diversified and has become complex, with the range of services they provide. MakeMyTrip Indias major player in online travelling, now operates on a hybrid business model, with online as well as offline presence it provides a product portfolio that ranges as

International and Domestic Air Tickets, Holiday Packages and Hotels Domestic Bus and Rail Tickets Private Car and Taxi Rentals MICE (Meetings, Incentives, Conferences & Exhibitions) B2B and Affiliate Services They provide fully bonded (full financial protection) travel at prices equal to or lower than a member of the public can book online. As such, the agencies' financial assets are protected in addition to professional travel agency advice. The travel management companies While internet booking engines have become the first destination for around 60% of leisure travellers, business travellers, especially with the need for itineraries that may include more than one destination, have still found that a knowledgeable travel agent may be their best resource for better ticket pricing, less hassle and better air and land travel planning. For larger business travel accounts these travel agents take on a travel management role, and are referred to as Travel Management Companies (TMCs), providing services such as consultancy, traveller tracking, data and negotiation assistance and policy advice. TMCs, such as American Express, BCD Travel, Carlson Wagonlit and HRG maintain a stronghold over the corporate market in various countries globally and continue to remain a dominant force in business travel Internet distribution system Internet Distribution Systems are made up of a group of on-line travel sites where individuals or travel companies may make travel related reservations such as hotel bookings. A hotel would generally have a merchant contract setup with specific travel sites and have their inventory available through their GDS/IDS service. The Global Distribution systems Travel agencies use the services of the major computer reservations systems companies, also known as Global Distribution Systems (GDS), including: SABRE, Amadeus CRS, and Galileo CRS, allowing them to book and sell airline tickets, hotels, car rentals and other travel related services. Some

online travel websites allow visitors to compare hotel and flight rates with multiple companies for free. They often allow visitors to sort the travel packages by amenities, price, and proximity to a city or landmark. A Global Distribution Service Provider will provide access to these systems and have a contract with the Hotel, either directly or through a property management system vendor. Some Property Management Systems vendors provide a 2 way interface that will send up room inventory and rate information to the GDS channels and receive reservations seamlessly from the GDS booking channels. These reservations will transfer directly into the Property Management System. A recent survey about advertising activity by Nielson revealed that advertising spend in ad impressions like the one shown below is about $482 Million the world over clearly indicating their main mode of advertising. These add impressions drive traffic on their sites no only adding to their prospective list of consumers but also driving up their own advertising revenues.

As per a survey conducted in the US travel agents expect next-generation travellers to get more socialin fact, social networking (47.5 percent) tops the list of what travel agents feel will have the greatest impact on how tomorrows travellers research and book travel. Both travel agents and travel companies exist as in the social networking space either as pages or as apps.

Proprietary Direct connect platform Direct Connect is a direct link into the host reservation system for the facilitation of availability, shopping and pricing, booking, ticketing, and post-ticketing servicing transactions. The AA Direct Connect utilises modern technology links and XML messaging, which can handle more robust and flexible transactions. The Direct Connect is designed to support future merchandising and ancillary services. The Direct Connect provides the technical flexibility to provide enhanced offerings and customised services. For example : American Airlines plans to deal directly with corporate travel managers and is attempting to cut out the middleman by putting up pay wall for Global Distribution Systems, Online Travel Agents and Travel Management Companies (TMCs) to access the content on AA.com. In order to illustrate the workings of the industry we will use the example of Makemytrip.com which is one of the largest players in the Indian market Revenue model of Makemytrip Makemytrip records highest gross bookings among online travel operators. Makemytrip website receives on an average 1.7m visitors/month. It has a dominant market share of 48% of online travel bookings through OTAs in India, large network of 4,000 hotels and 2,000 travel agents in 250 cities across India.

Sources of revenue: 1. a) b) c) d) 2. Commission on Sell of air, rail, bus tickets Hotel bookings Rental cabs Holiday packages Sell of advertisement space on the website a. Affiliate programs : mutual contracts among companies in interconnected businesses to advertise each others products, e.g. hotel bookings not done through makemytrip

Profit and loss statement for makemytrip

Revenue break up for the year 2010 :

Chart Title
Online air ticket bookings for domestic, outbound, and inbound segments Hotel bookings and packaged tours Rail and car bookings 20% 3%

77%

Lets assume that I want to go to Goa for holidays. The flowchart below shows how I can use e-travel bookings site (like makemytrip) to make arrangements for my holidays.

Challenges faced by E-Travel Business 1. Privately owned online travel agents, hotels, airlines, and bus and tour operators are competing fiercely as demand booms for hotel stays, airline flights and other travel. 2. India still suffers from poor Internet penetration, slow data speeds and low consumer use of mobile travel services despite the country's huge number of cell phone users. E.g. Only 7 % penetration in India is dismal as compared to 74% in US however this is being cured by the government efforts. 3. Low Credit Card Penetration / Debit Card Penetration: The bottom pyramid of our population still suffers from low debit or credit card penetrations or computer penetration for that matter. They still depend on agents for their travel needs depriving them from the discounts that these portals offer. 4. Smart Business Models: The Business models thrive on the amount of traffic an e-commerce portal is able to generate. Even the numbers of the consumers who visit these portals and not execute trades are astronomical. a. Meta - Search Models - http://www.ixigo.com/: The meta search models are models which show comparative prices even from the big five operators namely Make My Trip (MMT), Yatra, Cleartrip, Travelguru and iXiGo. Their additional level of comparison allows the consumer to make an even more informed choice about his transaction. This may end drying up the internet traffic at the original portals depriving them of vital revenue opportunities. b. Play with Price - http://www.atyourprice.in/yourprice/ : Sites such as these allow the consumer to bid for the price at which he/she would like to use the services of a

passenger carrier .However the consumer doesnt know until the time the transaction is made whos the carrier.