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How Tour Package startups are disrupting Travel industry

Indians over the last few years have shown affinity toward travelling, due to various factors like well-educated and tech savvy young population, rising income levels, rising number of corporate employees. More and more people are opting for a complete tour package. Let's understand the market.
BY Shrishti Rai
Feature Writer, BusinessEx
Sep 18,2017

The affinity towards travelling has turned Indians into travel junkies, courtesy rising disposable income level and better lifestyle. Picking the favourite travel spot though is nothing less than a headache for many given the number of travel websites and offline travel agents is overwhelming. All these travel websites and agents offer holiday booking but picking which one offer best package is no cakewalk unless you really have time and patience to scroll through every website and call every agent.

Tour packaging companies fill this gap as it aggregates and compares various offers for you to pick the best package and lowest cost possible. TravelTriangle is one such company that does the job for you. One can choose from different travel packages across domestic and international destinations and book the best as per their choice and need.

And the market numbers validate the opportunity the sector has for investors. For instance, approximately 80 percent of consumers looking for travel options online visit approximately 15 different websites before even thinking of making a decision. The gap hence remains of lack of a medium that can show curated packages based on filtering criteria, cutting through the tedious task. And the figure for such travellers in mindboggling around 50 million travellers or so in India who scratch through online and offline mediums before making the choice. Thats a billion dollar market.

From the top, a quick snapshot of the market will give a good enough perspective of why the sector makes for a great investment destination. Picture this its contribution to Indias gross domestic product ranks seventh highest vis--vis other countries respective contribution to their economies as per the World Travel and Tourism Council (WTTC). Moreover, it is also among the top 10 markets to attract maximum Foreign Direct Investment (FDI). In fact, domestic tourist visits to the states and union territories have grown at the annual rate of 15.5 percent to reach 1.65 billion approximately, in the year 2016, as per an India Brand Equity Foundation report. Also, 50% of Indias travellers are expected to be booking their holiday online by the year 2020.

Handshakes

While the sector has seen consolidation over last many years and there have deals of multiple sizes but the few that were in the spotlight include, Thomas Cooks acquisition of Kuonis global Destination Management Specialist network for an undisclosed sum. Then there was MakeMyTrips buyout of Ibibo Groups Indian operation for a whopping $720 million that valued the combined entity at $1.8 billion, as per Morgan Stanley estimates. The group also acquired Indian companies HolidayIQ, Mygola and US-based Inspirock in 2015.

Putting Money Where Mouth Is

Recently, MakeMyTrip raised US$ 330 million from Ctrip.com International Ltd, Naspers Ltd and few other investors, names of them are undisclosed to scale the business.

Goomo provides completely customizable tour package option for individuals, families and groups has raised $50 million (Rs. 321.6 crores) from Mauritius-based private equity firm Emerging India.

TravelTriangleanonline travel agent marketplace that serves as a networking platform for worldwide travellers with multiple travel agents who can be locals or other experienced travel guides. In February 2017, the company raised $10 million in a Series B round from

RB Investments, along with the existing investors namely SAIF Partners and Bessemer Venture Partners.

Tripoto yet another online travel community platform raised its second round of funding in 2015, which was led by IDG Ventures India, and existing investors Outbox Ventures had also participated in the round. Although the amount invested in the funding round remained undisclosed.

Japanese travel majorHIS CoandMakeMyTrip led the second round of equity financing, where GoFro an online holiday marketplace owned and operated by Bona Vita Technologies raised $10million.

Way to Go

Government too has been proactive in ensuring increased investments into this space such as visa on arrival which started in 2014 boosted the industry. The Ministry of Environment, Forest and Climate Change has been working on a plan to review India's coastal regulation norms aimed at opening up the 7,500 km long coastline for tourism and other developmental purposes. There has also been an increase in the number of travellers moving back and forth India.About 8.89million foreign travellers visited in India in 2016 compared to 80.27 lakh (8.027million) in 2015, recording a growth of 10.7%.Almost 44 percent of tourists from India increased their travel spends in 2016.

Looking at these numbers it can be looked at as a huge investment opportunity. The Travel-tech is to stay an attractive area for investment as the internet reaches more and more people in the country. Technology upgrades in terms better features, product offering and a full responsive medium, be it a mobile application or a website.

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