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    3 Major Challenges That Travel Tech Start-ups in India Face

    Published on July 31, 2019

    By Vishal Kejariwal (Co-founder, CEO – Taxidio Travel India)

    Over the years, India has often been termed as a start-up hub. And when you look at the statistics, it‘s hard to dispute the facts. A report from KPMG states that start-ups have seen a 7-fold growth over the past decade. To put it plainly, the number has gone up from 7000 start-ups in 2008 to 50000 in 2018.

    Travel tech start-ups are an integral part of the overall landscape. They’ve benefited greatly from the said boom. A Google India-BCG report published in 2017 foretold that the travel and tourism sector in India would become a $48 billion industry by 2020. This accounts for both domestic and for international travel.

    However, as promising as the future sounds, start-ups, especially in the travel tech space may encounter a variety of unfortunate problems that may inhibit them from reaching their fullest potential.  As Forbes stated in a report in 2015, nine out of ten start-ups shut down, and Indian travel tech companies also run the risk of the same.

    And these are the three main challenges that start-ups may face on a consistent basis:

    1.)    Pricing competition from established OTAs: Not only does a new entrant have to build up a customer base from the very ground up, every such-start-up faces a unique problem while competing with the larger, well established players. And this is in regards to pricing because the bigger players can offer discounts that a brand-new company may not be able to compete with.

     

    There are loyalty schemes, discount vouchers and seasonal schemes from the larger players that provide customers with a much better value-for-money proposition, thereby undercutting travel tech start-ups. In a price conscious market like India, this proves to be a very real problem.

    2.)    Window shopping: Window shopping in the online realm is not dissimilar to the more commonly used offline activity, where customers browse without making purchases. How does this work in the online space? An example may best illustrate how this phenomenon happens.

    To help customers plan trips in the best manner possible, so that it best suits their interests and their budget, innovative travel tech start-ups now offer services such as online itinerary planners.

    While a customer may avail this service and use it to plan his/her dream trip, the actual monetary transaction may happen on a more established OTA (Online Travel Agency). This is a worrying trend that has emerged in recent times, where smaller players become reference websites only.

    3.)    No support from the government: Even though ‘travel and tourism’ is a huge buzzword and much is made of the fact that policies will be implemented to help start-ups in this space, nothing much has come from the promises that were made. And because of the same reason, travel tech start-ups struggle to set up their businesses and thrive in the marketplace. Startup India and MUDRA schemes are good on paper. What we need is an ecosystem that encourages startups to innovate, grow, and flourish.

     

    One hopes that the scenario will change in the coming years. But for now, because of the lack of aid from the government, it is a difficult proposition for a new entrant to really prosper as a start-up.

     

    But the good news is that despite these challenges, more and more travel tech start-ups are entering this space, sensing the benefits and the opportunities that the travel and tourism industry has to offer in coming years.

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