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Monday, 13 January, 2020, 11 : 54 AM [IST]

‘Our focus is on offerings that win the hearts and minds of Indian and Chinese companies’

With mobile bookings in India gaining traction, CWT is laying extensive focus to offer rich content on its mobile app as well as bringing a consolidated negotiated hotel inventory on its platform by deploying advance technology capabilities. Kurt Ekert, President and CEO, CWT and Vishal Sinha, CEO, India, CWT spoke to Disha Shah Ghosh & Prasenjit Chakraborty about M&As, CWT's India focus and the current global business environment.

Q How has CWT evolved in its offering to cater to the growing demand for corporate travel in India?
Business travel is a very large and strong growth sector. It's nearly a 1.7 trillion-dollar sector globally, growing at about 4%-5%. Obviously, India is growing leaps and bounds. Within India, it is a subset of a market that is growing very healthily. What's interesting about corporate travel is that traditionally, it has been a very service-intensive industry. And it's really changed in a couple of ways.

First of all, user experience has usurped service – whether you have a mobile, browser or offline transaction, you would expect to have a consumer grade experience as a traveler. The travellers that work for the companies we serve have that expectation. That's really changed the orientation of what a travel management company is and does – to be a tech-enabled business.

With that, there's a whole lot of business logic that you put behind that point-of-sale interface. For example, you need to have a very sophisticated rules engine to give a relevant search result with lots of content. You have to be very intelligent about the use of data – you have to use things like artificial intelligence and robotics.

And so, we looked at the way we were operating – we have a big global scale, with a USD 25billion turnover – we're growing very well, but we saw a need a couple of years ago to radically transform our tech stack. We used to have bespoke point solution-oriented set of technologies that were somewhat disparate by market and client type.

We've since undertaken a massive effort to consolidate all our technologies and go to simple global standards. Some examples of why this is important: you may have heard of this concept in the airline sector called the "new distribution capability". We're now nearly complete with a full GDS consolidation upgrade program where we're going to be on the latest versions of the GDS GUI interface, so when there's any of the NDC content becomes available in the market, we'll immediately be able to turn it on and consume it. Many TMCs operating in a cryptic or green-screen environment won't be able to do that.

Another example is we've developed and carved out hotel distribution as a single operating division for the business. I think we're the first TMC in the world to do this – we have a business called RoomIt, which is simply hotel content, display and distribution – we do all three. We've gone from three years ago, from a hundred thousand to over a million hotel properties, and we have massive amounts of differential rates at each property. So we can play the game of rate arbitrage on behalf of our clients.

Q Is India as a market matured for managed corporate travel?
If I project forward five years from now and I define what our business is going to be, it will be a digitally enabled user experience business. And we'll be the leading hotel distribution provider in corporate travel globally.

I think the definition of a travel management company is changing. In a world where the traveler is a millennial, where the engagement is digitally led, where we have so much more sophistication in terms of the software capabilities behind the scenes, I think India is absolutely ready for the next generation of travel management company.

Q In terms of global pecking order, where does India rank for CWT?
I can tell you that strategically it's a critical market. It's within our top five in terms of the potential of market. In five to 10 years this will be a top five market for us globally. The growth and consolidation in this market speaks to tremendous opportunity.

Q Enlist some of the noticeable trends that have been observed in India?
The growth in the Indian business travel space is phenomenal. We are looking at a CAGR of 12-14%. The total business travel spend in India sits at $43 billion right now and it is expected to be the sixth largest business travel market by the end of 2020. By 2030, we're going to be sitting at $90 billion. If you look at the opportunities and potential here in the market, only 10% of business travel spend in India is truly managed corporate travel. More and more corporates are looking at the ability to manage corporate travel. They're not just looking at saving costs, but at duty of care and what is important for their employees.

Most corporates are looking at a single platform where their employees can search for and access all the content they need. They're looking for online booking tool and mobile app that consolidates everything in one place. That's what we're working to deliver - a platform that has rich content and is easy to use, so travelers can make their own air and hotel bookings and complete a transaction in three minutes.

Q What kind of importance has been accorded to the MSMEs & SMEs segments?
For SMEs, we have an online tool called CWT For You, which gives them the choice of hotels, airlines and discounted fares. What we offer on the platform are free meals, date change and fully refundable tickets. So that is something which really works for most SMEs. And at this point of time, we see sign ups on a regular basis, and we have close to 2000 SMEs which have enrolled, and we're seeing a big growth there.

Q Are you considering any M&As in India considering the industry has witnessed consolidation across verticals?
Globally we're in a mature sector with margin pressure and the need for scale. We're sort of getting into an arms race in terms of technology investment. We are thinking very strategically about both scale as well as accelerating speed to market with technology. It's really about augmenting and building the value proposition. I wouldn't speculate on anything specific that we're looking at, but I would simply say to accelerate our digital capabilities, we're going to be very opportunistic as we see attractive assets.

Q The Indian economy is witnessing a slowdown; corporate travel may take a hit with the subdued business activity. Your views?
Globally, the industry has seen a significant slowdown. Over the past 18 months, the corporate travel market has seen air volumes index sequentially decline for six quarters in a row. Asian markets are still growing, but at a slower rate than they were one or two years ago.

Our expectation for next year is growth globally but tepid growth. Is this a precursor to or a harbinger of a potential recession? I'm not smart enough to know. But what we are seeing is T&E is somewhat of a discretionary item, at least a component of it is in many companies.

We're outperforming the market in terms of our growth, but I think we're certainly going to be in a slower growth environment for the next 18 months than we have been for the last six to eight years.

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