Growth of Tourism in India to Intensify Competition Amongst Travel Agencies

The establishment of strategic partnerships and the use of technology to maintain competitiveness will allow travel businesses to capitalise on a period of unprecedented growth in India’s tourism industry, according to Peter Smith, Vice President of Amadeus Asia Pacific’s Business Solution Group.

Speaking today at an Amadeus Power Breakfast in India, Smith said that India’s travel industry had much to be optimistic about, and outlined the key opportunities and challenges for businesses.

“As the global and local economy recovers, travel agencies will increasingly look for ways to out-perform and out-manoeuvre the competition,” said Smith. “Amadeus is committed to helping travel agencies get the most out of what is shaping up to be a strong year for travel and tourism in India.”

Smith suggested four key areas where travel agencies should focus their attention:

Consolidation: “Mature markets like Europe and the USA have seen the consolidation of conventional travel agencies, as well as online travel agencies (OLTAs), because companies realise that ‘going it alone’ may not be the right strategy for survival in a highly-competitive market,” said Smith “The Indian market is facing a similar situation, with an overcrowded OLTA space and a very fragmented traditional travel agency sector. The good news is that travel demand is growing at a phenomenal rate – at last count, India’s domestic tourism grew by 15.5% in 2009. But India’s extraordinary growth is no secret, which means we can expect competition to intensify.”

Smith recommends that to survive and to capitalise on India’s growth, travel agencies may need to consolidate or explore strategic partnerships with industry partners. “Remaining entrepreneurial is crucial to survival,” said Smith.

Infrastructure Development: “India will need to develop its infrastructure rapidly to keep pace with the growth it expects from international and domestic tourism, and with the Commonwealth Games barely three months away, India’s tourism infrastructure will soon be put to the test,” said Smith. “People often regard infrastructure as the 'hardware' that helps an industry to function - such as the airports, roads, seaports and rail lines. But we forget that the ‘software’, the technology, is equally essential.”

 Importance of Operational Processes: “If there are two areas that travel agencies in India are constantly monitoring, it is the development of travel payment and human resource solutions for travel agencies,” said Smith. “Travel payment solutions is an area that is critical, because the advances in this area directly affect the revenue and profitability of travel agencies.”

Lower Yield and Revenue: “Travel agencies are experiencing lower yields and decreased revenue, due to a variety of factors, including intensifying competition and a weakened economy in 2009. Travellers are looking for more cost-effective travel options and there is an increasing trend of commission cuts in favour of service fees, which all means less income for travel agencies.

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