More exciting than the aviation boom is the hospitality boom. Thatâ€™s reflecting in travel portals and travel agents, who are flying less on air tickets and increasingly booking into hotel rooms.
Reason: the hospitality industry offers margins between 10% and 20% in comparison to airlines that offer no more than 4% to 7%. Further, domestic airlines are considering implementing a zero commission model probably ending the era of middlemen so as to pass on the cost benefits to the consumer.
The hospitality industry, on the other hand, is just beginning to reap the benefits of a well-established network of over 4,000 travel agents and close to a dozen web portals.
A marketing Chief says â€˜going forward, we are looking at having 50% of our volumes coming from hotel reservations and holiday packages and only the remaining from the sale of air tickets. At present 70% of the travel portalâ€™s volumes are from air ticket sales.
Travel guru, a dedicated web portal for hotel bookings has witnessed a phenomenal growth in volumes in the last six months. In April they clocked close to 300 hotel bookings a day, but today they are doing close to a 1,000 hotel rooms.
The company has tied up with over 4,000 hotels across the country having an inventory of 20,000 rooms.
The demand for expertise in hotel stays has evolved to an extent that Travel guru has employed city based â€˜gurusâ€™ to help customers choose the best place of stay depending on their needs and desires.
According to industry observers when the travel portal boom took off, airlines tickets were the easiest to sell over the net as there were only a handful of airlines to deal with.
Now the penetration of travel agents and travel portals has grown so much that even if airlines adopt a zero commission model they will still need to deal with middleman,
Sources in the airline industry say that while low cost carriers may be effective in phasing out commissions, full service carriers (FSC) will formulate ways to compensate the middleman. In the low cost model, the commission charges are passed on directly to the customer, but in a FSC the airlines pays from its own pocket.
On the other hand, there are fears in the travel industry that the hospitality sector may also one day go the airlinesâ€™ way to reduce the role of the middleman. Already hoteliers say that though depend heavily on travel agents and portals for their sales, their direct sales via the web is fast increasing.
A general manger of a leading 5-star hotel says that 25% of their volumes are now coming directly through sales via the internet, which three years ago was nil.
Another Travel Organization would like to go forward and would like to drive sales through their own vehicles which can make a great business model.
Another case is Hotel to Service apartment change for stay. Hotels may cost 4 to 5 times that of Service apartments. Service apartments owned by formal organizations hire through websites and realizing payment through credit cards. They offer excellent comforts, larger space and even the guests can get some snacks and food on order. An example of this is a large 3 bedroom apartment is costing about Rs.5000 per day in a place like Gurgaon closer to Delhi, India. If one hires the same place in a hotel one can imagine the multiple costs with lesser space.