Growth of tourism in India expected to intensify competition amongst travel agencies, says Amadeus

Growth of tourism in India expected to intensify competition amongst travel agencies, says Amadeus

The establishment of strategic partnerships and the use of technology to maintain competitiveness will allow travel businesses to capitalise on a period of unprecedented growth in India’s tourism industry, according to Peter Smith, Vice President of Amadeus Asia Pacific’s Business Solution Group.

Speaking today at an Amadeus Power Breakfast in India, Smith said that India’s travel industry had much to be optimistic about, and outlined the key opportunities and challenges for businesses.

“As the global and local economy recovers, travel agencies will increasingly look for ways to out-perform and out-manoeuvre the competition,” said Smith. “Amadeus is committed to helping travel agencies get the most out of what is shaping up to be a strong year for travel and tourism in India.”

Smith suggested four key areas where travel agencies should focus their attention:

1.  Consolidation

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“Mature markets like Europe and the USA have seen the consolidation of conventional travel agencies, as well as online travel agencies (OLTAs), because companies realise that ‘going it alone’ may not be the right strategy for survival in a highly-competitive market,” said Smith “The Indian market is facing a similar situation, with an overcrowded OLTA space and a very fragmented traditional travel agency sector. The good news is that travel demand is growing at a phenomenal rate – at last count, India’s domestic tourism grew by 15.5% in 2009. But India’s extraordinary growth is no secret, which means we can expect competition to intensify.”

Smith recommends that to survive and to capitalise on India’s growth, travel agencies may need to consolidate or explore strategic partnerships with industry partners. “Remaining entrepreneurial is crucial to survival,” said Smith.

2.  Infrastructure development

“India will need to develop its infrastructure rapidly to keep pace with the growth it expects from international and domestic tourism, and with the Commonwealth Games barely three months away, India’s tourism infrastructure will soon be put to the test,” said Smith. “People often regard infrastructure as the ‘hardware’ that helps an industry to function - such as the airports, roads, seaports and rail lines. But we forget that the ‘software’, the technology, is equally essential.”

Smith said that Amadeus is uniquely poised to offer technologies that create better, smarter systems and processes for the aviation industry, from the rebooking of flights to making airports more robust, cost-effective and efficient.

3.  Importance of operational processes

“If there are two areas that travel agencies in India are constantly monitoring, it is the development of travel payment and human resource solutions for travel agencies,” said Smith.

“Travel payment solutions is an area that is critical, because the advances in this area directly affect the revenue and profitability of travel agencies,” added Smith. “Solutions like Amadeus’ Hotel Store were developed to help travel agents make commission payments up-front, thus improving profitability and cash flow.”

“Attracting, retaining and developing talent has always been a priority for the industry, and for Amadeus, this has never been truer today as our industry is rapidly evolving. From our perspective, in addition to providing technology, we also provide consistent and high quality training and industry forums for our partners. This type of engagement is central to our relationships with our customers, partners and the broader industry.”

4.  Lower yield and revenue

“Travel agencies are experiencing lower yields and decreased revenue, due to a variety of factors, including intensifying competition and a weakened economy in 2009. Travellers are looking for more cost-effective travel options and there is an increasing trend of commission cuts in favour of service fees, which all means less income for travel agencies.

Smith said that Amadeus could help travel agencies open new revenue streams or strengthen existing ones through customised promotions and by empowering travel agents to operate at maximum efficiency.

“The travel agents today need to harness the power of technology to differentiate their businesses from competition and make changes that will improve their bottom line, especially at this crucial juncture of market recovery. Amadeus offers a wide range of technology solutions to help our partner agencies to operate at optimum efficiency and enable them to deliver better services to their clientele and increase their productivity,” said Rakesh Bansal, CEO, Amadeus India.