When the largest travel portal in the country, Make My Trip, wanted to sell holiday packages in 2007, it had no option but to resort to the bricks-and-mortar format. There was no way to offer travel visas and foreign exchange online to consumers unlike airline tickets which did not need a consumer interface.
But after setting up 19 physical stores, the portal has now decided to stop investing in expanding its offline presence.
“We are no longer growing the base of our offline retail stores. In 2007 when we launched our travel packages, we needed a physical presence in retail as there were complex requirements when it came to multi-destination travel, visas and arranging basic travel quotas. But today, travellers are more confident of buying packages online and we have reduced our revenues from non-air travel,” says Mohit Gupta, Chief Business & Marketing Officer, Make My Trip.
Its revenues from airline tickets have dropped from 57.7 per cent to 51.7 per cent this quarter, while revenues from hotels and packages grew by 43.5 per cent from $10.99 million to $15.8 million.
Even Musafir.com has reluctantly gone offline recently with three stores planned in Delhi, Ahmedabad and Bangalore.
The relatively new travel portal, which has Sachin Tendulkar as an investor, is not keen to invest behind its bricks and mortar stores in the long run.
“We have decided to set up shops to cater to a different India which is not comfortable going online. But we will not go beyond 8-10 shops as there is a larger cost to having a physical presence which we can pass on to consumers in the form of discounts for the same packages we offer online. We do not see offline sales contributing more than 10-15 per cent of our travel related sales as online travel will get easier, faster and cheaper for travellers,” says Vijay Kesavan, CEO, Musafir.com
Yatra.com, too, had entered the bricks and mortar space since its early days, but is now restricting it to the 13 outlets it already has.
“Travel needed a fair amount of document-handling for holiday packages and we entered the offline space almost the same time as online. But now, we have reached the optimal number of stores and there is going to be no need for further expansion,” says Sharat Dhall, President, Yatra.com
Meanwhile, traditional travel retailer Cox & Kings with 150 franchises, 200 agents and 19 company-owned stores, is also investing in its portal.
“We have a capex of $10 million for the fixed hardware and software requirements on an annual basis for our portal. For Cox & Kings, our online site serves as a point of sale and fulfilment for our offline packages,” said Anil Khandelwal, Chief Financial Officer, Cox & Kings.