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India is travelling like never before. And the segment that is obviously leading the path is corporate. India offers a key strategic market for the international and domestic travel management companies (TMCs), who are opting for franchise route to expand
THE Indian corporate travel market is pegged at about USD 20 billion, growing at 12 per cent annually. Owing to country's robust economy and dynamic business scenario, it is bound to rise. Business-related travel is critical to the success of every organisation, be it SME, a large company or an international corporation. And there are gamut of services being offered by the travel enterprises.
Some exclusively operate in the B2B space while others have corporate travel products as part of their diverse service portfolio. The corporate travel solutions include services like flight reservations and ticket purchases, hotel reservations, ground transportation, visa services, travel insurance and excursions. As the Indian consumer is value-conscious, the companies may offer a comprehensive corporate travel packages to optimise the expenditure management of corporates' total travel budget. In addition to the core ticketing and travel-related services, the corporate travel plan can be aligned with MICE (meetings, incentives, conferences and events) to minimise costs.
Extending reach through franchising
Most of the travel franchises have a modest start-up fee. The business can be run from a home office (with low overhead) or commercial premises. It can also be pursued as a part-time business. Also, the TMCs are connected with suppliers in airline, hotel, car, cruise, tour, and insurance sectors, thus benefitting all.
Top brands' journey so far
The prospective investors seeking travel franchises can take off with these connoisseurs of the travel business, who have stood out with their quality services and excellent customer service.
With origin in the UK, Thomas Cook has been offering world-class services in India for 130 years. Thomas Cook (India) Ltd (TCIL) is an accepted brand worldwide with presence in Mauritius and Sri Lanka. It operates in multiple segments, including leisure, MICE, corporate travel management and foreign exchange and began franchising in 2009. J P Singh, AVP, Franchisee & Channel Development (FCD), TCIL, said, “Since 2009, we have grown over 144 per cent in B2B markets with a total of 107 gold circle partners and 180 preferred sales agents.” Speaking on the challenges in the B2B segment, Singh said, “Our franchises are facilitated with consumer-centric products, large price-band and skilled professionals to offer everything under one roof. To promote our franchise outlets, we provide employee training programmes, conduct workshop for technical and soft skills, advertising campaigns and events to increase the footfall at the outlets.”
Canada-based UNIGLOBE came into being in 1980. Its travel management companies and global partners serve small-to-mid-size corporate accounts and vacation travellers in over 50 countries, with annual system-wide sales of approximately USD 4 billion. The brand's master franchise for South Asia, including India, Sri Lanka, Bangladesh, Nepal and Bhutan, has been given to Ritika Modi of the V K Modi group in 2001. Presently, the master network has grown to 45 locations across India, Sri Lanka and Bangladesh with a turnover of Rs 1,200 crore.
Ritika Modi, Regional President, UNIGLOBE Travel South Asia, shared, “When you are in travel, the world is your inventory, not mufflers or hamburgers.” The member agency or the franchise owner caters to personal and local services, which are both online and offline to the travelling public, including the corporate and leisure customers. The business opportunity can be highly lucrative for member agencies, as says Modi, “We have agencies in the system who have grown their revenue by over 43 per cent year on year.”
Cox & Kings
Cox & Kings founded 252 years ago is the oldest travel brand in the world. To enhance its growth, the company decided to open franchise stores across India in 2008. Today, the brand has over 120 franchise locations in 70 cities across 20 states in India. Corporate travel forms a dominant share of its overall travel business. Karan Anand, Head, Relationships and Supplier Management (RSM), Cox & Kings Ltd, said, “While we primarily address the B2C market through our franchise network, we believe that the B2B market is equally important. Indians still prefer buying from the tour operator or travel agent. We have positioned ourselves as a company that provides products that confirm to the highest standards both in terms of value and price.” The franchisees service the corporate clients who are generally the walk-in clients. The company helps them identify corporate and the franchisees also do their bit.
Founded in 2006, Via today has a vast network across 2,400 cities with over 20,000 stores. It has a unique B2B model, which enables the smallest shop owner to book tickets on travel and holiday for the customer by cash or credit/debit cards. Vinay Gupta, Founder/CEO, Via, says, “The company has played a significant role in bringing world-class travel products at affordable prices, next door to the Indian consumers. The key to our success is that we were able to aggregate all the travel sectors under one umbrella.” How the company handles competition from other travel brands, Gupta says, “We used a different market entry strategy based on consumer and market needs without blindly copying a model that existed in other countries. This model is now being replicated across markets in Asia.”
Make My Trip
Founded by Deep Kalra in the US, Make My Trip's (MMT) India business was launched in 2005 with base in Gurgaon. Primarily an online venture, the brand catering to the rapidly developing global travel market is established across India and the world. MMT also offers corporate travel and MICE products in addition to leisure travel products. It has simultaneously nurtured the growth of its offline businesses like franchises and affiliates to further the brand's retail presence. At present, the brand has 21 company-owned and 27 franchise stores in India. Anand Kandadai, Senior VP, Sales & Distribution, Make My Trip, shared, “Franchising gave us more opportunities to partner with entrepreneurs who not only can manage businesses but also give us access to key markets in the Indian geography.” Make My Trip offers a diverse set of products to customers. Commenting on market competition, Kandadai quipped, “We have not yet encountered any strong competition and have a strong stamp in the market where our quality of services is largely recognised.”
With its direct franchisee model, Thomas Cook will continue expansion in tier II and III cities. Its potential partner needs capital between Rs 10 and 15 lakh and area between 500 and 600 sq.ft. UNIGLOBE Travel offers franchise to existing travel agency owners. No initial capital is required to set up the business but there are monthly participation costs for using the brand’s franchise system. Applicants pay a one-time initial fee of Rs 2.5 lakh for the programme and initial training, including a management programme in Vancouver, Canada. Monthly royalty is payable to access the consulting support. The brand has plans to grow its network to 100 locations in the next 5 to 7 years.
Cox & Kings aims to have at least 200 franchise outlets in the near future. The initial franchisee capital required in tier I cities is Rs 10 to 15 lakh, excluding the set-up costs. The space requirement can be 250 to 500 sq.ft or 500 to 1,000 sq.ft (depending on the location). Other than the franchise fee, the investment for Via franchise is marginal that can be as low as Rs 50,000 for the individuals having equipped office space near corporate/residential areas. MMT's franchisee needs capital between Rs 10 and 15 lakh and area of about 400 to 600 sq.ft (carpet area) in a prime commercial space. The company plans to have 100 stores in India by the end of next calendar year.
With Indian travel GDP projected to be 14%in India for coming years, the business travel will also increase. In spite of automation and online facilities, the brick and mortar franchisees are here to stay, which means the global travel brands will continue to expand their network to cater to the demand of professional travel services with a personal touch.