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Friday, 22 September, 2017, 12 : 32 PM [IST]

Evolution & Growth of Travel Startups in India

Anurag Tiwari
AS the world swiftly moves through the 21st century, tech-savvy is the term that can be used to define lifestyles more appropriately. From the day-to-day professionalism to the leisure lifestyle, digitalisation has left no page unturned. Each and every industry across the world has evolved using technology. Traditional ways have been overtaken by Gen X style of working. This has led to the birth of the ‘startup industry’ around the globe. According to AngelList, currently there are 3.2 million startups across the world. The travel industry has grown substantially in the last two decades with credit to digitalisation. According to the AngelList website, the travel industry has over 6,000 startups around the world with average valuation of USD 4.1 million. Since travel has become an indispensable part of the human lifestyle, businesses across this vertical have increased extensively. One may recall that there were a handful of travel startups in India like MakeMyTrip and goibibo a decade ago. The basics these startups catered to in their infant stage was air and rail tickets and later diversifying to holiday tours and packages and hotel stays. Today, there are startups not heard of quite often, but spotted only on social media platforms and various search engines. These latest startups take care of curating travellists, making travel arrangements, offering foreign exchange, handling the back-operations of travel and other related offbeat needs.

Funding of Startups
As the startup industry is evolving so is its backbone i.e. funding. From self and angel funding, startups across the world have now attracted big investors. According to Skift, an intelligence platform providing media and marketing insights of travel industry, there were at least 50 separate investments made in travel booking startups in 2015 with India’s Tuija and OYO Rooms receiving some of the largest single investments at USD 300 million and USD 100 million, respectively. Ground transportation startups were next, receiving a collective USD 444 million, and these included peer-to-peer on-demand ride and car-pooling apps.

Elaborating on the investment scenario in the Indian digital travel startups market space Chetan Kapoor, Research Analyst – Asia Pacific, Phocuswright, commented, “We’ve tracked the global travel startup ecosystem since 2005, and India remains one of the most funded — and vibrant — travel startup nations with over 100 companies operating in the digital travel space. Over time, India has climbed up the ranks and is now the third-most funded market for travel startups, behind the U.S. and China. Excluding funding to taxi-hailing juggernaut Ola, Indian travel startup funding exceeded USD 1 billion from 2005 to 2017.”



Despite attracting huge funding, the success stories of the startups in Indian travel market space are very less in numbers. In this ever changing era, sustainability and evolving is a serious job and takes a doing to stay in the limelight. Capital investments turning to profits is what every organisation aims for but there are only few who take care of their main business objective i.e. serving and sustaining the customer. This is one of the biggest reasons there are hundreds of startups entering the market and after making a lot of noise, are slowly muted.

Evaluation
According to Jimmy Shaw, MD, Shaw Man Software Pvt Ltd, “It is true with every wave of trend in technology, each wave brings with it complete destruction of the previous tech and a virtual rewrite of rules of engagement with the next one, and which will also decide how we as an industry accept, adapt and adopt the same or then wait for the change to consume and destroy us.So what OTAs did to GDS driven-hotels and travel agencies, Airbnb and similar models using second homes is doing to OTAs and hotels. Thus it should not be unthinkable that there will be a next wave that will make even Airbnb look jaded and irrelevant and we need to be ready to remain relevant.”

From what Shaw said, it is quite evident that no one startup business is completely secure. The wants change with the change in the technology trend. Continuous evaluation and adapting to change is the key to success for stay in the long run.

Commenting on the focus of startups in travel space in India, Kapoor said, “With more Indians now familiar with booking transportation – rail and flights - online, startups should now eye emerging and underserved opportunities. Lodging, in-destination activities, broader ground transportation, corporate and, the B2B space within each of these categories are in dire need of digital innovation and disruption.”

Cashing-in on the potential
Professionals believe despite the continuous emergence of travel startups, the Indian digital travel startup scene is still in its early stages. Kapoor believes that there are plenty of opportunities yet to be realised. At a broader e-commerce level, investors are clearly siding with the winners of the long run giving the sign of consolidation more than the bubble bursting. “Ultimately, India’s demographic dividend, vast middle class, rising telecom access and digital payments landscape, are assets for digital travel companies, and these companies will only go deeper to create value for the customers and their investors alike,” he elaborated.

It is a known fact that a business idea attracts investors only if the strategy has the potential to get maximum clients onboard, thereby sustaining them till the momentum is high. According to StartupIndia, a Government of India initiative, there were 761 startup recognitions in July, 2017, and every month these numbers are increasing. But out of these hundreds of startups only few make their mark in the industry. It is certainly easy to form a startup business but is it easy to sustain it?



Unmesh Vaidya, Founder, Foxtrot Interactive Pvt. Ltd., said, “If we take example of 100 startups across India, only 5 are able to do business properly thereby attracting large investments. Business is all about serving and sustaining the clients. You can come up with various latest technologies and services but if you are unable to build a fixed client base you are not going to last long in the market. Investors in the end see your balance sheet more than your services on offer. Small smartups need proper education and guidance to grow big. Government of India has provided various initiatives for the growth of startup industry in the country. Startup India is one such initiative where new entrants in the market can certainly get educated about the various models and get inspired from the success stories of big players and can implement those in there style of working.”

The travel startup ecosystem of Indian market is certainly getting diverse each day. From the traditional ticketing services to present day offbeat service offerings, startup businesses are evolving. Although, capital is the core game one dwells into business for but to be amongst the top players, the key is services, sustainability and evolution surpassing the money agenda. Once the clients or consumers start flowing in, money automatically follows suit. Every mountain top is within reach if one keeps climbing, focusing on each step at a time. Emerging startups in the travel space have to learn from the success stories of the big players present in the market and need proper guidance and education with long-term client servicing vision as opposed to short term money making vision as the digital travel market space in India carries immense potential to be exploited in the right way and emerge victorious.

anurag.tiwari@saffronsynergies.in
 
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