Amsterdam-headquartered Booking is looking at India to be one of its top five markets.
“India is a super important market but it also is a super tough market,” said Pepijn Rivers, Senior Vice President and Chief Marketing Officer, Booking, while addressing a group of journalists at the company’s headquarters in Amsterdam.
The Booking office, located at the heart of the city’s centre, stands out with its towering presence. Owned and operated by the US-based Bookings Holdings since 2005, the online travel aggregator (OTA) was founded in 1996, and merged with Bookings Online in 2000.
In the last fiscal, the company reported a 38 percent operating profit, and now has its sights set on India. According to CEO Gillian Tans, India is one of the top five growth markets for the OTA giant.
“India is a fast-growing market with a consumer base, which is active online and using smartphones. It is an open market where people like to travel,” says Gillian.
“We do not, generally, launch products and services, just because we have to grow. We like to test our offerings, try different use cases and come up with a model that works best for our consumers. At the end of the day, consumer experience matters and makes all the difference to the growth and sustainability of an organisation.”
While the team refused to reveal what kind of investments it is making in India, it intends to make an entry in the hotels and homes sector.
“We have moved away just from hotel bookings into different categories, by understanding the customer needs to look at different options. The idea is to bring the right consumer to the right partner,” says Gillian.
The focus towards India makes sense as a report - Demystifying the Indian Online Traveller - by Google and Boston Consulting Group (BCG) states that the Indian passenger travel market is set to grow at 11 to 11.5 percent touching close to $48 billion by 2020. On the other hand, hotel revenues are expected to touch $13 billion.
But, as earlier players have realised to their frustration, India is not an easy market to crack.
Pepijn explains that it is a market known to use discounting as a model to attract customers. He says,
“Discounting doesn’t exist in our culture. But our competition in India is doing it, and rightly so. Indian consumers are unlike any other across the world. They spend a lot of time online looking for different websites and then zeroing in on the best choice. And that choice isn’t just based on price. It is based on offerings at a certain price.”
The past few years of their operations in India, the team believes, has seen challenges in the market because of the model.
Pepijn adds they are used to showcasing the rate as given by the hotel or the property manager, and not a discounted rate.
Even with discounting, the Booking team finds that the average price difference falls between seven and eight percent, and that eats into the margins.
“While discounting gets quick and phenomenal growth, it hurts the business in the long run. Also, we don’t know if it brings customer loyalty and value,” says Pepijn.
According to a report by the Press Trust of India, Booking has over 47,750 properties in India and has seen a growth of 68 percent in the last year, and close to 30 percent of these are in the homes sector.
However, Booking’s faces aggressive competition in the Indian market. MakeMyTrip, in its earnings presentation for FY18, revealed it had sold 24 million flight tickets and 28.6 million bus tickets in the first nine months of the financial year alone.
Train tickets sold on the portal during the period under review was not available. The gross value of these bookings stood at $3.4 billion, according to the company.
MakeMyTrip has also reported that its cumulative app downloads had exceeded 115 million as of December-end across all three brands. In March, MMT partnered with Flipkart helping the latter make its foray in the field of online travel services. MMT also said it had logged more than 94 million monthly shopping visits and had over 70 million monthly active users in the latest quarter.
In the last fiscal, the company also merged with Ibibo Group’s Go Ibibo and redBus, making it one large conglomerate.
Apart from this, the Delhi-NCR based unicorn Paytm too has entered the travel aggregation space. The company claims to have sold over 38 million tickets, which included flight, train, and bus tickets in FY18. Paytm Travel is looking to double the growth in ticketing volumes this financial year, and aims to consolidate its position as market leader.
Booking hopes to cash in on the inbound demand from the international market that could give it an edge in the Indian market.
“For us, it does not amount to just adding new destinations, but also about what they can offer to our consumers. We want to provide a holistic approach to what they want to do during a holiday,” says Pepijn.