Tourism Firm TUI Group Aims to Tap India's Booming Online Travel Market

The Indian online travel market has been seeing a growth led by steep discounts and offers from market leaders

London Stock Exchange-listed tourism company TUI, which has an annual turnover of 18.5 billion euros, has set its sight on the fast expanding Indian online travel market. It recently shut its business of distributing holiday packages and launched an online platform in early May for hotel and flight bookings and to compete with players such as MakeMyTrip and Yatra.

TUI has roped in Krishan Singh from Yatra to lead its online travel business in India. “India is a vast market and online travel is growing at 24 per cent, a pace double to the overall travel market. There is a lot of scope for another player to come in and offer better products and a superior customer service that is the hallmark of TUI globally,” Singh, chief executive officer at TUI India, told Business Standard. Singh has an experience of two decades in the domestic travel business with companies such as Cox & Kings, Cleartrip and Yatra.

Singh said TUI was not just an online travel agency (OTA) but something more. “We would like to call ourselves an OTA plus. We own about 350 international hotels, 150 aircrafts and 18 cruise ships. Our customers will have access to these. None of these OTAs operating in India own any assets”. TUI has a strong partnership with 30,000 international hotels, where it enjoys special rates since it brings these hotels 80 per cent of their business. In total, about 150,000 international hotels are listed on TUI.

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The challenge and task ahead, however, will be to create a wide listing of hotels in the Indian market. “We are building the Indian supply on our platform. We want to negotiate the best rates and pass them on to the users,” said Singh. MakeMyTrip along with Goibibo holds a share of 63 per cent in online domestic hotel market as of now. However, only 15 per cent of the domestic hotel bookings take place online and this is projected to double by 2020 as per a BCG-Google forecast.

The Indian online travel market, estimated at $7 billion in 2015, is expected to grow to more than $23 billion by 2021. TUI believes it can create a market share for itself. “The Indian market has international OTAs like Booking.com, Expedia and Agoda. Some of these players really stand out because of the proposition they bring to a customer. They stand out in technology and customisation,” said Singh.

India is a fragmented hotel market and some of the domestic OTAs are primarily into the budget segment of hotels. There are customers who seek a more value-driven experience in three- and four-star hotels, he said. Besides selling hotels and flights, TUI will also focus on growing the flights-plus-hotels segment to short-haul destinations such as Singapore, Dubai and Mauritius. Singh said none of the OTAs have cracked that segment.

“We have a strong presence of 7,000 TUI employees on the ground in various international destinations. This is like a concierge service and if you need any assistance you can reach out to them. The first-time overseas traveller will find a value in such an assurance that none of the OTAs here offer,” he claimed.

TUI Group is tapping into new source markets such as China, Brazil and India. By 2022, TUI Group aims to win additional turnover of one billion and one million additional customers from these future markets. “India is going to bring a significant portion of this revenue,” said Singh.

The Indian online travel market has been seeing a growth led by steep discounts and offers from market leaders such as MakeMyTrip and Yatra as well as some of the new entrants such as Paytm.
Clearly, nobody is making money yet. TUI wants to have a sustainable and profitable India journey.
Singh said the millennial customer may look for discounts while choosing a travel partner. “But families may not be keen to look for the cheapest. They will look for the best. We will consciously stay away from deep discounting game. We will bring value to the customer in terms of price because of our contracting strength. Yatra and MakeMyTrip continue to burn money on marketing and discounting. We are not going to do that,” he said. TUI may look at offering some incentives for a quarter or two but it will not be a feature year after year, Singh added.

Reference - https://www.business-standard.com/article/companies/tourism-firm-tui-group-aims-to-tap-india-s-booming-online-travel-market-118062000297_1.html