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Saturday, February 04, 2006

Indian Travel Portals Are Getting Funded & The Changing Online Dynamics

Indian onsite travel agencies are seeing increased levels of attention no-a-days – four horizontal portals - Makemytrip.com, yatra online, cleartrip and travelguru – all have got funded in the last few weeks.KPCB & Shepalo are the key investors this time around Increased VC activities in India( we earlier reported the touring of John Doerr, Ray Lane of KPCB & Ram Shriram of Sherpalo in India) are first touching amongst other things mostly the online travel portals. All these are not for nothing – after all in India, 25% of the travel business get done over the internet. Net ticketing is gaining ground with 25 per cent of the total transactions being conducted online. The data of distribution amongst various travel modes would be more interesting to read. E-tourism is fast gaining foothold in the Indian market with close to 25% of the travel business being conducted through the internet, according to industry estimates. Industry analysts feel e-tourism may contribute 50-60% of the travel business in India in the next five years. Leading travel and tour operators such as Thomas Cook and Stic Travels provide a wide gamut of online services. Right from travel information and flight schedules, hotel room availability to booking tickets, rooms, car rentals and even purchasing travel insurance products as well as foreign exchange can now be done online. There are many other travel sites, however, that act as only information windows of the services and package deals offered by the travel agency, instead of providing real-time reservation services. The recently released UNCTAD report points to an interesting fact that since most information on tourism opportunities in India for foreign inbound tourists is generated, updated and marketed online by major international service providers based in developed countries, these providers end up absorbing as much as 40% of the total profits in the tourism industry. The upside is very high for the fast growing Indian travel market. Budget airlines by embracing e-ticket initially scored over mainstream competitors .The Internet has helped drive down airlines' costs but it has also fuelled price competition, damaged yields, and exposed the weakness in legacy computer systems in supporting pricing and increasingly complex distribution channels. The Internet is also allowing the development of check-in from home, which is expected to emerge in 2006. Passengers are promised "flash bag drops", stress-free travel. Clearly the internet's deflationary effect are beginning to be feli in asian nations as well.

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