ARE THE OTAS REALLY THE NEMESIS OF THE BOUTIQUE TR

The advent of the OTAs (Online Travel Agents) did bring about a paradigm shift in the travel agency business in India in the last decade. While it is true that they were responsible in the drop of offline airline ticketing sales, the real question here is that did turn out to be a bad thing for the boutique travel agencies? Not really, especially when one considers the successive drop in the commission levels and the clever separation of the fuel surcharges to the base fares by airlines? When one considers this in retrospect, was it really a great idea for the smaller travel agent to focus his business model largely on the sale of airline tickets? The relentless undercutting which has become prevalent in the market has further made this complete reliance on airline ticketing unviable for the smaller travel agents. The boutique travel agencies have the OTAs to thank for forcing them to think beyond ticketing and innovate to pursue higher margin products in the holiday space. Admittedly, the internet has thrown up excellent low-cost yet effective distribution opportunities for various products and services including travel. But it has yet to show success in promoting high-end travel products. OTAs in India have shown tremendous success in selling commoditised products such as airline tickets, bargain deals on hotels low-cost domestic and international packages and even charter flights to destinations. But how successful have they been in selling the larger brands that do not indulge in heavy discounting is very debatable. Traditionally their success is largely restricted to deal-hunters or customers seeking to book airline tickets and hotels after being to able to compare all their options quickly and seamlessly. In spite of their extensive networks across India, OTAs are also unable to cater to the needs of the customers who require very high service levels, a familiarity of their tastes and flexible payment options with even credit terms in many cases. Here in lies the opportunity for the boutique travel agent. Unfortunately the average boutique travel agent continues to view the OTA as a nemesis which may eventually shut down many a travel shop in the country. This has encouraged many boutique travel agents to launch their own websites, some even integrated with payment gateways. Building an ecommerce website is the easy part. The challenge is constantly drive relevant traffic to it and also to update it with new products. This not only needs a huge marketing budget, but also a team that is able to understand both the technology as well as the changing needs of the Indian traveler. Rather than invesing in the website, it would be more prudent to invest in a CRM software that helps the Travel Agent know his customers better. It would be more beneficial if one is able to capture their past experiences, their tastes, their affinities to certain hospitality and airline brands allowing them to build a strong bond with their customers. The boutique travel agents should focus on other interactive tools such as blogs and social media networking. These will allow their customers to share unbiased reviews of their holiday experiences and enhance the credibility of the travel agent’s ability to make the right recommendations of their holidays. Online marketing including Search Engine marketing and social media advertising have emerged as very cost-effective customer acquisition tools. Why would one want to even attempt to compete with OTAs that spend crores in marketing budgets have thousands of employees, rent lakhs of square feet of office space and spend millions to induce customer loyalty among the bargain hunters while working with such thin margins? Wouldn’t it be more prudent to chase higher yield by focusing on high-value customers that appreciate personalised service levels? Personally too much attention is paid by the boutique travel agents on the OTAs. Even in-expensive distribution through the Internet, better negotiated volume discounts and clever marketing have their limitations. Perhaps its best that the boutique travel agent continues to focus on his strengths and make attempts to increase the revenue per customer by providing ancillary services such as insurance, foreign exchange and visa processing and also by up-selling their customers to better destinations and experiences. The author, Amish Mody is Sales and Marketing Manager, Club Med India (The opinions above are solely those of the author)