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Industry expresses disappointment over GST slab rates, seeks reconsideration

It is too early to assess the impact of the soon to be rolled-out GST (Goods and Service Tax). However, industry stakeholders have expressed concern over proposed slab rates for hotels, restaurants and travel. They fear that this move could make India ...

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Posted in Tourism Currents | By TF Bureau
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Addressing connectivity piece to make India a competitive wedding destination market, says Suman Billa

Suman Billa, Joint Secretary, Ministry of Tourism was at his candid best. Speaking to industry stakeholders on various facets pertaining to wedding tourism at the first ever FICCI Wedding Tourism Summit held recently at Hotel Lalit in the capital, ...

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Posted in Tourism Currents | By Shashank Shekhar

A heavy-weight panel consisting of who’s who of the outbound industry engaged in a free and frank discussion on the latest trends, changing ways of interaction with consumers and the growing enthusiasm for unexplored destinations. Panelists concurred that new-age travellers with higher purchasing power are changing the way travel is purchased in the market place. We bring you edited excerpts from the session which also saw exchange of ideas among panelists and the audience.

Navin Berry: What is the one single most important trend in your respective businesses as far as Indian outbound is concerned?

Ratna Chadha: I think Indians are getting more adventurous and the aspirations are now converting to desire and action. As Indians, we take a little time getting in to a trend and once something starts trending then what happens is that the world opens up. We have people based in the mini-metros and smaller cities who have aspirations like any of us and I think those guys are really fuelling aspirations. I keep saying that do not put a product or an experience in to a niche. What has happened unfortunately for us is that cruising has been put in to a niche and I think we are just stuck in that outlook. Cruising is not the prerogative of the rich only. The common person has as many aspirations as the affluent and I think we as an industry need to realise that and make sure we provide for that aspiration in an appropriate manner. I think we are coming to that fore. We need to get out of that niche situation because everything is not luxury. There are products as well as brands which are luxurious, if that is something that someone is looking for but like every hotel is not a hotel is not a hotel, every cruise is not a cruise is not a cruise.

Carl Vaz: The way I look at it is the rising purchasing power of the millennial. That is something that we need to accept and that will drive future businesses because millennials are the youngest population on earth today. The future travellers are the millennials and we have to cater to them.

Raja Natesan: The single trend that I can see these days, and it is not a positive one, that there seem to be more followers than leaders. It is more of a herd mentality than somebody who is coming up with a niche. If you look at the Indian outbound travel, if somebody says that I have found a ticket which is cheap in xyz.com, a hundred people will go and buy that ticket. I find there is a lack of new thinking and ideas.

Yeishan Goel: I can say with a fair amount of certainty that the biggest trend that we are seeing is that the Indian consumer is now a significantly bold decision maker. That is largely because travel has now become a part of the urban consumers lifestyle to a certain degree. For us that directly reflects in to frequency of bookings, repeat travellers etc. There is no apprehension in packing your bags and getting out, repeatedly in a year. I think that is the biggest trend of the times and one which will continue to grow. I think the 35-50 years old age segment is really the richest travelling segment, especially for luxury travel. The millennials while are travel hungry, and there is distinctively more purchasing power there than used to be, but are still very careful in their travel buying behaviour.

Nikhil Dhodhapkar: We are finding, especially within our company, that there are more and more travellers coming in to the space. I think today more and more people want to take a break or a vacation. I think this is a very interesting trend. This has resulted in more opportunities and looks positive. The only question is that when you look at outbound, I think you have to look at connectivity in terms of catering to demands at the right prices.

Hanneli Slabber: What we have found out that our travel market is definitely getting younger and that they buy differently. Thirty years ago, when we were selling travel, we were talking airlines and we were talking accommodation and we built around the package. Today, we bring in a learning aid to India in seventeen cities, there is not a single conversation about airlines and accommodations. It is all about the experiences. We are seeing the millennials, specifically of the OTAs and the internet, getting smarter because they are now saying ‘I am not paying for a 5-Star hotel because I do not want thirty different kinds of cereals or four hundred TV channels.’ Clean, neat and safe is all that they are looking for. After that they want that money going in to experiences. We have now customers coming in and telling us the exact amount of money and time that they have to invest in travel. That makes it incredibly difficult for people like me because it is an easy sell for us but where do you make your money? You make your money on accommodations, the airlines and, suddenly, the traveller is saying they are not important any more. The whole way the buying happens is completely different for us and is definitely driven by the millennials.

Karan Anand: The one big trend that we have noticed is that there is a huge migration from the disorganised sector of travel to the organised sector as we see consolidation of large companies, in the Indian space, demonetisation, GST, service tax issues and the complexity. There definitely is a trend that we see a lot of small agents who used to be independent, now want to become our franchisees. That is one major trend on the macro level. We at Cox and Kings love complexity, it is where we make our money. Simplicity is where everybody just logs on and buys a cheap flight or hotel and nobody makes money. The more complex it is, the more relevant we are. We have noticed that now there are a lot more last-minute bookings. These are a big challenge for everybody because the one thing that they do not take in to account is the VISA process.

Sulaiman Suip: A trend that I would see in the Indian market at the moment is the growth of the tier II & III cities. This has a huge potential with the infrastructure development being undertaken by the Indian government. I can see more people coming up from these areas going outbound. Although not new, this shift from the metros to the tier II & III cities is the trend I see as of now.

Navin Berry: What is the kind of alignment that you are seeing as a tourism board with the airline sector? Are you looking to improve connectivity by working closely with airlines?

Sulaiman Suip: We are not obliged to work with any airline. We want to work with an airline which can give us benefits and inflows of tourism to Malaysia. In fact, we have signed an MoU with Singapore Airlines to promote long haul markets. We have also signed an agreement with AirAsia to jointly promote Malaysia all over the world. So, we can see that by working not only with one airline but multiple ones, we can provide more choices and benefits to the consumer

Karan Anand: As a large company having a pan-India spread, I believe in the three Cs and not just connectivity. Communication and Counsellor Access are equally important as well. What we have noticed is that there are basically three broad travellers – short, mid and long haul. To us it is very important that when we crystal ball gaze, because we have to be the creators and look ahead, we really see where the alignment is between connectivity, counsellor services and the communication that we jointly participate in.

Hanneli Slabber: We do not have connectivity. We have all of it indirect. We have no alliance with anybody specifically and we will work with anybody that will give us a good fare. Apart from having connectivity and late cycle booking issues that we already have, we also have a major capacity constraint. What we are doing now is that we are looking at our airlift strategy. Our peak travel period out of India, April-July, it is winter in South Africa. Give us direct lift over those four months and we will push 80% of our business out of India in to those four months because have the inventory. It does not help us to have direct flights in November or December when we wake up too late to make use of the land. From an airlift point of view, we are now seriously re-looking how we align it. We are getting massive business out of tier II and III cities and that shift is definitely happening.

Carl Vaz: The delta between connectivity and destinations, or tourism boards is your counsellor services. Having said that, I would also add that in addition to the dilemma of connectivity versus tier II and tier III cities, you have to understand that there are destinations in India, like Italy, that sell without connectivity. Greece sells without any connectivity. So, whilst you do say that the delta between the connectivity and tourism boards is a VISA, there are destinations which are selling without connectivity. That is the dilemma of what we are faced with in the tourism industry. I think that there is a lot of dynamism that goes on in the Indian industry and it cannot be categorised only in to one particular aspect.

Navin Berry: If we look at today in context to about fifteen years back, the entire travel and tourism business has become transparent from end to end. How has that impacted growth?  

Nikhil Dhodhapkar: I think the entire thing about transparency is making our jobs that much more difficult. For example, if you look at the entire outbound travel and how it happens, right from the time when you decide a destination, decide you need a VISA, a customer has started to expect that these things happen overnight. I think the entire complexity in terms of what we believe today is transparency is changing the game.

Karan Anand: Transparency to us is value. If I tell you that I will send you to a European tour for a 1000 dollars, you are going to say but that is my ticket price. So, what we have done is we have created scale. Scale gives us the ability to handle large number of passenger during off-seasons. The ability to go to our airline partners and say we want to buy these tickets upfront, go to tourism boards to propose joint campaigns and the VISA side says ok, I would rather work with a listed company that understands compliances, and says I will give you an advantage in terms of block bookings for VISA. When you talk about transparency, the irony is that as technology became transparent on many of our products, the package market on holidays has shrunk in terms of companies. Transparency in a way, to me, is more scale and value and has worked against the whole industry except for the big boys.

Raja Natesan: I just want to take this in two aspects. One is transparency as it should be and the other is transparency as it is perceived. For some reason in India, and I can say this in absolute confidence at least looking at numbers and statistics, that the people who are wanting to go outbound or even those looking to buy an airline ticket assume that there is transparency on an online travel agent space. This is one of the biggest fallacies and because of herd mentality it is presumed as transparent. It really is not and when you go to corporates and say if you want transparency why not go directly to the airlines’ platforms, nine out of times they do not want to. Somewhere from the top decision maker to the person who is actually booking the ticket, there is someone who does not want transparency. We might say that we are moving towards transparency but that is just the surface.

Ratna Chadha: Transparency has been really helpful for us. It has helped our travel partners and there is complete transparency for them as well as our clients. In our business, which is really dynamic, what happens is that we are dealing with varying types of pricing because there are different regions with their own compulsions. In order for us to make sure that our Indian passengers have transparency and get the value and also there is no flight of business out of our country, which then impacts our travel partners, we have come to a place where even to the last dollar spent, there are comparisons available and we tell you exactly what is available vis-à-vis any other region, if there is a doubt. So, a client cannot turn around and tell our travel partners that we do not know what we are paying for. We give everything to our customers in black and white and this has really fuelled our business.

Hanneli Slabber: Just from a tourism point of view, what we are going to see now is that the packaging is going to change. When a client wants transparency, they do not want it across the whole chain. It is the big-ticket items that people want to see transparency in. The moment you have mystery, you have margin. For us as a tourism board, transparency is great because you are now going to package better, you are going to put things together that are too impossible to break and have transparency on every single item. The customer is going to look at the basket and feel that the value is there.

Carl Vaz: From eight or nine destinations in Europe, South East Asia and Middle East that I have worked with, the one typical question that I get asked by the heads of various tourism related organisations is ‘where can I get reliable numbers as to the number of Indian travellers coming in to my country?’ The problem is that the airlines do not have it, our immigration services do not have it and of course the travel fraternity. We are all to blame in this as we hype up our figures. There are only a few listed companies that have a balance sheet which can be scrutinised. The rest are all privately held. So, you tend to rely on word of mouth and there is no association because we are really fragmented in India as associations. Unlike certain countries where you have only one or two, here we have more than fifteen different types of associations. So, even the associations cannot give you any relevant data. To me, when you are working for tourism boards, you have to also understand that from an international perspective, transparency is a question mark in India.

Navin: There have been discussions on how airlines have not been effected by GST. Any reflections on the GST roll out for the package tour business and tourism as a whole?

Hanneli Slabber: Actually, most of the airlines have left the route. I am seriously unhappy. This is a chain and they need us as much as we need them. For them to sit on a dais and say that when we look at GST, we are all right because it is service charge and is the same level, what are the people sitting on the seats going to do when they get on the other side? Where are they going to stay? What is the role of the ground handler there? Big picture argument, if we do not have the airlines backing us up and saying that this does our partners, who fill the seats, a disfavour and the chain needs feeding, they are really doing in the partners on this one. I think it is irresponsible to say that if this works for one section of the chain, then we are stepping out of the fight. It does not work like that.

Karan Anand: The whole GST picture is evolving. My fear is more towards compliance. Airlines are a very critical component as about all of India, be it inbound or outbound, is travelling by air. I just hope and pray that a holistic view to the whole industry is taken with pragmatism and seen as the low hanging fruit that it is. My take is that GST is going to affect us all and I do not know at the moment how positive or challenging it is going to be. There will be challenges going forward in any new change in process and I only hope that better sense prevails. 

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