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.
"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.
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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.
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.
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.
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.
"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.
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