Truly Yours, Yatra Online
Date: Wednesday , March 01, 2006
Life is a yatra (journey) and within this there is need for many a journey. Every journey has by default a destination. As pearls of wisdom proclaim it is not the end but the means to achieve the end that matters. And yes! Yatra Online provides the consumer the means to achieve their journey’s end for either business or personal agendas comfortably.
How did the yatra for Yatra Online begin? Norwest Venture Partners (NVP) who were the investors in GetThere.com, a provider of internet-based corporate travel procurement, G2 SwitchWorks Corp., which provides services to travel agencies and OnVantage, a supplier of marketing technology, were looking to back entrepreneurs within the travel space in India. In the words of Vab Goel, a venture Partner at NVP, “We wanted those who had done it before.” Yatra was an obvious choice. The founders of Yatra are Dhruv Shringi and Manish Amin, who, prior to this venture, worked together to help build and manage one of Europe’s largest online travel business, Ebookers Plc, which was recently acquired by travel giant Cendant Corporation for $410 million.
Yatra Online (www.yatra.in) is the first online and centralized travel services company for the Indian market. Yatra’s investors include NVP–Promod Haque’s venture capital firm, Reliance Capital (a member of the Anil Dhirubhai Ambani Group headed by Anil Ambani) and Television 18 Group (TV18)—a leading Indian news broadcaster (CNBC TV18, CNN IBN and Awaaz) and an Internet player (running moneycontrol.com, commoditiescontrol.com and ibnlive.com) founded by Raghav Bahl.
“The prime driver for setting up Yatra in India was due to the boom in the online business here. Compared to the U.K. getting business done within the travel sphere online in India is quite nascent and hence the opportunities for growth are aplenty,” says Amin. “However the challenge in India is business gets done here depending on who you know. The challenge for us is from the offline travel agent and how do we convert offline travel customers to online.”
According to Goel you can’t replicate the customer acquisition model in the U.S. within India. One can spend $30 million and still be at sea to see the results. Norwest decided to play on having an advantage through strategic partnerships. “The traditional media in India is very powerful. This is the reason of our partnering with TV 18 who with their site moneycontrol.com has a wide depth of consumers and understands the Internet business well.
That’s how they became our co-investor,” reveals Goel. “Reliance with their energy, mobile and funds business would also help to tap the customer base.” Such a combined partnership is unique and has never happened before from Silicon Valley, thus boding well for Yatra which Norwest helped start.
According to sources, the three investors have invested $5 million in the online travel company. This funding is a sign of the increasing flow of capital to the travel industry. The estimated $5 million in funding comes after last year’s $10 million investment in makemytrip.com by Softbank Asia Infrastructure Fund Partners for its expansion in India and the acquisition of a local travel firm. In the last 44 years Norwest that currently manages more than $1.8 billion in venture capital out of its office in Palo Alto, CA has invested in 350 companies ranging from consumer services to enterprise software to services.
“We are excited about our investment in Yatra and the market opportunity the company has targeted. Investing in companies with sound business models that leverage the Internet to reach today’s consumers is a growing trend for our firm,” said managing partner of NVP and board advisor of Yatra, Promod Haque. The company is aware there are many players cropping up to have their share of the monies within this space in India. It is interesting to note that the combined market share of India’s big five travel services companies is under 17 percent today. (Source: World Travel & Tourism Council)
The Yatra service is scheduled to be operational in the first half of 2006. According to Norwest, India’s travel market will be worth about $40 billion in 2006 and will expand to $50 billion by 2009, with revenues from foreign travelers in India quadrupling to $24 billion by 2015.
Goel says Norwest banked on this potential to fund a travel venture within India. “There are more than 20,000 hotels across the country. In 2005, 400 million trips were taken in India.
However the lacuna is that a traveler can’t make a call at even 9 p.m. in the night to book a hotel between cities, as there is no centralized system.” Yatra’s multilingual customer service center will enable business and holiday travelers to make well informed and cost effective bookings 24 hours a day, throughout the year, through its online, call center and mobile support.
“Even though the travel market is flourishing, the needs of today’s Indian travelers are still underserved as the travel industry is extremely fragmented. There are either mom and popstores or high-end players catering to the travel needs of consumers. We want to position ourselves as the service provider to the average traveler but with differentiating low-cost technology,” says Goel. “The middle class now a $400 million opportunity wants to spend all the money whereas earlier they wanted to keep all the money,” muses Goel on the potential for Yatra.