Shravan Gupta, MD, Travel Tours Group, has over 13 years of diverse experience in the travel and tourism industry. Shravan brings to the company an in-depth understanding of all aspects of the travel industry, with special focus on business development and travel operations. Responsible for providing the overall strategic direction to the Company, he brings an extensive network of contacts in the travel and tourism space. Holds a MBA in Marketing from Vanderbilt University and is active member of various organisations and committees such as EO and Tourism Committee FKCCI.
Travel Tours Group (TTG) was founded three decades ago - a single office location in the business district of Bangalore. Today, the group has a network of 15 offices across 8 cities and owns 8 brands. The scope of operations of the company encompasses all verticals in the travel domain. Travel Tours boasts of an experienced team who constantly work on amassing every requirement in terms of convenience, comfort and budget before they customize a tour product. It offers customers the widest range of travel options, customized and packaged to suit their needs. Strong relationships with tour handling agents and leading hotels across the globe have enabled TravelTours to deliver a product that ensures its customers experience a hassle-free holiday.
Replying to Anil Mascarenhas of IIFL, Shravan Gupta says, “Travel & Tourism is forecast to contribute some $6.5 trillion to the global economy and generate 260 million jobs – or 1 in 12 of all jobs on the planet.”
Give us a brief overview of the organised and unorganised travel industry. What is your business model?
The travel industry is vast and extremely fragmented. Travel & Tourism industry is set for a milestone year as the industry’s direct contribution to the global economy is expected to pass $2 trillion in GDP and 100 million jobs. According to research by the World Travel & Tourism Council (WTTC), the global Travel & Tourism industry will grow by 2.8% in 2012, marginally faster than the global rate of economic growth, predicted to be 2.5%. This rate of growth means that Travel & Tourism industry is expected to directly contribute $2 trillion to the global economy and sustain some 100.3 million jobs. When the wider economic impacts of the industry are taken into account, Travel & Tourism is forecast to contribute some $6.5 trillion to the global economy and generate 260 million jobs – or 1 in 12 of all jobs on the planet.
The travel industry in India is highly fragmented and has large multi-national players on one end of the spectrum and small mom and pop shops at the other end. The industry is starting to witness some consolidation, as the commission and cost structures change. Travel Tours started by operating group package tours to South East Asian countries. But today, we offer the complete gamut of travel and related services. Each vertical that we operate in follows a different business model.
When we first started Travel Tours back in 1977, our sole agenda was to reach out to local businessmen. Today we have evolved as a 360° travel services providing company.
What are the opportunities and challenges you face at present?
Today holidays are becoming big. People are evolving and have more disposable income. Travel has now become a part of people’s DNA. People want to explore newer destinations and experience luxury. Thus, opportunities are broadening as there are numerous choices that can be offered to people depending on their preference, budget, likes & dislikes etc.
While the industry is growing, people have spending power, there are still a lot of challenges that need be catered to.
Infrastructure is one of the most essentials requirements for the travel industry. Infrastructure needs for the travel industry range from physical infrastructure such as ports of entry to modes of transport, to urban infrastructure such as access roads, electricity, water supply, sewerage and telecommunication. The sectors related to the travel industry include airlines, surface transport, accommodation (hotels), and infrastructure and facilitation systems, among others which are the bare essentials of the travel industry. Occasionally, travel Industry is subjected to several snags. These hindrances cause the economy of a country to become slow, resulting in the GDP or gross domestic productivity being slow and consequently employment opportunities get affected.
The industry also faces a huge shortage of talented people. While we are building awareness of the numerous opportunities, it may be a few years before more youngsters consider entering the tourism industry as their first choice.
Who are the top players in terms of seats and vehicles and how are you placed? Which is the segment you target?
Top travel companies in India would be: Kuoni, Thomas Cook, Cox & Kings, Makemytrip. We are in the top 10 in most verticals that we operate in.
What is your revenue break-up from various segments? How is the pie likely to change in the near future?
Our revenue break up is as follows:
- Outbound Leisure: 35%
- Inbound Leisure: 5%
- Corporate Travel: 45%
- Foreign Exchange Services: 10%
- Allied Services: 5%
- We see both the inbound and outbound leisure verticals growing far more rapidly than the other pieces.
Brief us on your financials.
We will end March 2012 with a gross turnover of Rs. 3.80bn which is a 30% growth over last year.
What is the ownership pattern of the company. Are you looking at selling any stake?
We are a family owned company that is professionally managed. We are open to evaluate opportunities as they arise.
What are your capex plans and how do you plan to fund the same?
On the organic side we are investing in increasing our presence in Western and Eastern India. We are also revamping and upgrading our online portal. There are a few possible acquisitions that we are exploring and should conclude one in the next 3-4 months. All these are funded through internal accruals.
The aviation segment is going through a turmoil. How do you deal with such situations?
Aviation business world wide is facing lot of challenges but is trying to make a healthy recovery after the difficult years following the worldwide economic crisis. But with recent budget (2011-2012) announcement where it proposed that the sector will be allowed to raise capital through external borrowings worth one billion dollars for a year even as it recommended allocating Rs. 40bn to the cash-strapped Air India, it has made the aviation industry look better with hopes of regaining its stance in India.
Fares have gone up but that is because of hike in fuel surcharges, however that hasn’t stopped people from spending on travel. There is a huge surge in the travel industry, but people will spend.
The challenge is for our people to be constantly updated and aware of these changes. We work closely with our customers to ensure that their plans and spends are well managed.
What is the outlook for each of the segment you are present in and any new areas you are looking at?
There are promising opportunities in each of the segments we operate in. We have a dynamic leadership team that is focusing in each of these segments to ensure that we grow and strengthen our position.
You acquired Splendor Holidays to foray into the MICE segment. Tell us more about this market and how has this business done so far?
Acquisition of Splendor Holidays in Goa was one of our strategies of getting into inbound travel. India travel industry is growing day by day. Every year millions of tourists come to India to see its ancient beauty and historical places. Not just historical sights but also lots of places to explore which attracts people around the world to India. We could not ignore our presence in such a fast growing sector and hence acquired Splendor Holidays.
Go Avenues is the MICE division of Splendour Holidays.
Inbound and Outbound MICE, in the current scenario has become one giant group. MICE is steadily growing with a growth percentage of 20% YOY. This trend of MICE started around 10 years ago and today it is gaining great popularity among corporate and the local dealer groups. MICE corporate tours are growing exponentially. Indian companies are willing to invest in their employees by taking them on outbound trips which makes it all a memorable trip and a great time away from work. We are very satisfied with the performance of Splendour Holidays. They have leveraged on our local network to offer a better product to their overseas clients.
How much of your booking comes from corporates? What is the mix?
Booking from Corporate travel makes up to Corporate Travel: 45%
What is the biggest travel package you have handled till date.
A dealer and sales conference for 1500 associates of an FMCG company in Pattaya, Thailand – including all logistics, hospitality, food and travel has been the biggest travel package we have handled thus far.
Is there any entry barrier in this business? Do you see an urgent need for consolidation here?
There were almost no entry barriers in the past. However, this has changed significantly. Today, it is important to have large volumes and presence in multiple verticals in order to provide a seamless experience to the customers.
Consolidation has just started, and I see this picking up steam over the next 2 years.
What is your staff strength? How many are on contract/temporary staff?
Out staff strength across India with our presence in 6 locations is 310 people.
The industry usually suffers from non-availability of talent. Do you see interest among youngsters to join this business?
Today there are ample of options available for youngsters. Today’s generation of young people are more informed, more mobile and more adventurous than ever before. The Power of Youth Travel provides an up-to-date overview of the major characteristics and trends of this exciting market, highlighting its importance to governments and business leaders worldwide. It also draws attention to the issues that need to be addressed to ensure that more and more young people around the world can continue to benefit from the enriching experiences that travel brings, for travellers and the communities they visit.
Young people are invariably at the leading edge of change and innovation and the travel industry is no exception. Young people think outside the box, push boundaries and experiment with the new. In an era of unprecedented challenge for the travel industry, youth travel represents not just an important market segment, but also a vital resource for innovation and change. The travel industry is itself undergoing rapid change. Traditional vertical distribution chains are giving way to a more complex value network involving a wide range of different suppliers from within and beyond the travel sector. Travel is no longer solely dependent on the infrastructure of the old economy – airline seats, hotel beds and travel agents’ shelves. We are entering a new, flexible, networked economy in which local culture and society, education, work and play become part of the travel value chain. In fact, the inter-relationships between travel, other economic sectors and society as a whole have become so integrated that we might conceive of a ‘value web’ rather than the old value chain. While getting talent is not a problem, retaining and sustaining in this business is one of the major issues. This business is highly competitive and requires individuals who are ready to take up challenge and walk with it.
What are the efforts needed in terms of regulations or government intervention to boost this industry?
When markets work well, firms thrive by providing what consumers want better and more cost-effectively than their competitors. Government sets legal and institutional frameworks for markets and companies to operate in. That is, it puts in place rules and regulations that determine appropriate conduct of firms and individuals, and the institutions necessary for enforcing them. Markets thus do not exist independently of Government, which has a legitimate role in intervening in and shaping them. Regulation typically consists of a set of rules administered by the Government to influence the behaviour of businesses and, consequently, economic activity. In this sense the term ‘regulation’ captures a wide range of Government actions, from primary legislation setting market frameworks through to detailed regulations imposed and enforced by specialist thematic and sectoral regulators. A more focused and long term plan is needed from the government which should be executed as well. Wholesome states have been doing a good job, however there needs to be more coordination and uniform activities across India.
What is the vision of your group? How do you hope to get there?
Our vision is to be the most preferred travel company in India. We would want to increase our size to reach Rs. 10bn turnover in the next 3 years.