It's Boom Time for Travel Services in India

Have money, will travel. That’s what is catching the fancy of Indians today. And therefore it comes as no surprise that market research analysts predict that the travel services market in India will grow steadily at a CAGR of more than 18% by 2021. The report identifies the growing tourist footfall as one of the primary growth factors for this market. And the growing number of international tourists enables travel service providers to improve their products and service offerings and expands the customer base.

Meanwhile, the penetration of the internet has improved accessibility and connectivity between the customers and service providers. Service providers are therefore increasingly offering attractive budget-effective packages that encourage an increasing number of people to travel both inland and overseas.

The primary market drivers include the increasing spending power of the people, internet accessibility, credit card penetration, government initiatives to spread tourism, the emergence of new online segments, and the much-anticipated growth in the civil aviation market. The major short-term restraints in the upcoming trends are the low operating margins and the non-reliability of offline partners. Other factors that require attention are the limited penetration of service to cater to the the urban areas, payment processing issues, cultural barriers, and lack of customer willingness, poor industry practices as well as insufficient technology infrastructure.

Omni-Channel Marketing through Franchising

The travel service market in India is intensely competitive and fragmented. Key players offer similar products at varying prices. The vendors attempt to expand their market share by introducing innovative and promotional services and also follow strategic marketing and promotional activities to improve awareness among customers in order to gain a unique identity for their brand.

In that effect, many travel services have started expanding their offline presence through franchising outlets for the benefit of the large part of the Indian population above the age of 40 years that does not entirely trust online transactions for their travel plans. The offline presence of travel agencies also aids in building a loyal customer base that can, in turn, be subjected to limited time offers and discounts. These agencies are also heavily targeting Tier II and III city customers as primary beneficiaries to offline travel services.

Requirements of an Offline Travel Service Franchise

The initial investment required for a travel service franchise would amount to Rs 10 lakhs, out of which the franchise fee would range from Rs 2-5 lakhs depending on the geographical location. The area required would be 400-600 sq. feet for Tier I, II and III cities whereas for rural areas the space required would be 250-400 sq. feet. The projected cost of interiors ranges from Rs 2.5-4 lakhs for an average travel service outlet of which the one-time store launch cost would be Rs 70,000 to Rs 1 lakh.

Every travel service franchise has a requirement of two sales staff as well as one receptionist, the average salaries working out to Rs 60,000. The payback period lasts up to 15-20 months and the franchise period of a travel service franchise such as Make My Trip would be five years. The earnings would be through 12% on domestic holidays and 15% on international packages, which would be split in a 60:40 ratio between the franchiser and the franchisee respectively.