Advertisment

Against all Odds

author-image
DQI Bureau
New Update

Vacationing in a secluded getaway in Munnar, Ravi Kumar received an urgent

message–there was an urgent meeting in Delhi shortly and his presence in it

was a must. The closest airport was in Bangalore–a 12-hour drive from where he

was. And there was no telling if he would get tickets to board the flight.

Advertisment

"At any other time, I would have panicked," says Kumar, business

manager with agrotech giant Monsanto. "If it hadn’t been for our on-line

corporate travel agent," he adds, "things might have been very rough

indded." Kumar simply logged on to the website of his corporate travel

agency and booked his ticket. he checked out of the hotel and drove double quick

to the HAL Airport in Bangalore, where his tickets were waiting for him.

Around

the World in 15 Seconds

Flight tracking

through SMS is the most used feature of eTravelIndia, with almost

90% of clients using this facility

Technology like this is available today, developed and provided by

Delhi-based firm EtravelIndia.com, a purely Internet-enabled travel portal.

"There are times when at four in the evening, I get to know that I have to

be in Seattle the next day," says Rajiv Jain, director of Vcustomer. Before

he rushes home to pack, Jain books his tickets online, with eTravelIndia acting

as his agent. He collects his tickets at 11 pm and is on a flight to the US two

hours later. "Life is surely more easy now," he says. Perhaps it is

this convenience attribute that has got eTravelIndia a customer base of 64

corporates and helped it break even within ten months of inception.

Advertisment

Birth during the bust…

September 2000: The dot-com bust has begun, taking many a

bright idea down... Amid the gloom, IIM-C passout Sanjeev Agarwal starts

eTravelIndia, taking some shaky but steady steps. His experience with McKinsey’s

travel practice and an intelligent idea help eTravel receive $2 million in the

first round of funding from Delhi-based VC firm Infinity Ventures. "The

inefficiencies in the market and the realization of the opportunity that can be

reaped by implementing technology-based travel solutions lay at the heart of

this venture," says Agarwal, eTravelIndia’s founder-CEO. The revenue

management practices, multiple layers of information among a large number of

suppliers, including airlines, hotels and credit card companies and a high level

of complexity in travel decision–all these add incompetency to the business.

"It gets worse when you add the dynamism in the travel caused by delays,

cancellations, and rescheduling," says Agarwal. And here was the goose that

could lay the golden eggs. "Our team realized that several of these issues

could be tackled or eliminated by using technology," quips Agarwal, "

It was an opportunity we could just not let go."

And the deal really paid off. With average monthly billings

of Rs 5.75 crore from a client base of 65, the cash registers at eTravel are

ringing. The company broke even in H1 2001, recording revenues of Rs 46 crore.

This is a significant achievement for a company functioning in a segment that

generally has a long break-even period.

Advertisment

Why B2B?

While other investors in India are focusing mainly on the B2C

segment, eTravelIndia centers on B2B corporate travel segment, which has not had

any major players so far. Agarwal and company saw the Internet as a more suited

medium to corporate travel as retail consumers were still wary of anything close

to online business. The company managed to get major clients, including

Monsanto, IDBI Bank, Xansa, Asian Pants, Arthur Andersen and Hoechst.

Take Vcustomer, for instance. For this US-based call center

with an office in India, the travel analysis tool, or TRACCOM tool of

eTravelIndia, helped in cost-optimization of travel requirements. "It

simply helped us find the best travel deals," says Rajiv Jain, director for

administration and facilities. "This resulted in cost savings of 5-15% on

travel expenses." That runs into a lot of money for corporates, whose

travel bills run into lakhs.

Advertisment

On the domestic travel front, the electronic travel booking

allows a large company with presence in various locations to consolidate its

travel purchases across the country, eliminating the need to have their own

local agents. On the international front, the benefit stems from tieups with

international partners. In September, eTravelIndia entered into a partnership

with TQ3 Travel Solutions, one of the leading global travel management companies

having a turnover of $9 billion and a presence in 53 countries. eTravelIndia

clients can now access a larger network of airlines and get attractive

discounts.

eTravelIndia’s products include service-level standards for

corporate travel services, which lay out the minimum expected quality of

service; online reservation facility; eFlightInfo–flight tracking and SMS

alert system and TRACCOM–travel analysis tool for administrative purposes. Of

these, SMS flight alert is the most common tool used by customers.

The eTravelIndia business model derives its revenues from two

sources–management fee and transaction-based fee. Management fee is a fixed

percentage of the total travel budget, while the transaction-based fee is

derived as a percentage of each transaction. Agarwal says there is a shift

toward transaction-based fees now. "It insulates travel firms from price

volatility. It is a better deal for them any day," he adds.

Advertisment

"Bigger, better deal"

The current economic situation, however, does raise some

concerns. The economy, which was already in slowdown mode, has got further

debilitated after the terrorist attacks on World Trade Center in the US on

September 11. Airlines and travel agencies have been among the worst-hit, with

some airlines filing for bankruptcy. Massive layoffs have been announced and

tourist arrivals are showing a sharp drop. And as business travelers are

deciding to scrap overseas travel, the industry is definitely feeling the heat.

"We believe that in the near-term period of three

months, the US situation would have a significant impact on travel," says

Agarwal. "For the overall market, the numbers are likely to decline."

For those travel companies that have a well-balanced mix of clients (such as

eTravelIndia), however, the impact will not really alter the business.

Advertisment

The strategy now is to diversify the client portfolio by

adding companies from verticals other than IT. Industries such as FMCGs,

pharmaceuticals and MNCs are the segments that can offer "bigger and better

deals", says Agarwal.

Despite depreciating revenue per customer and falling price

per transaction, overall revenue growth can only be accentuated by acquiring new

customers. Whatever happens, it is clear that the path to a successful business

model lies not in the glamour of talking about business but actually having a

strong fundamental business model and careful execution of the same.

Amit Sarkar in New Delhi–Dataquest

Advertisment