Affordable smartphones and cheap Internet have penetrated our societies and changed the way we communicate, work, and trade. Platforms and services developed on Internet technologies have brought us closer than ever. Closer, in terms of communication that is.
Every product and service has been turned into a commodity which can be traded on the Internet within seconds. Just take booking hotels for example. In the olden days, there were only a handful number of good hotels to choose from, and we had to visit or ring up our local travel agent to book a room. This is without knowing how the room looked. But still, we would learn about the amenities and services available flicking through a brochure - if we can get our hands on one.
The combination of cheap Internet and cloud computing have changed the hospitality industry today. Now that millions of consumers have made mobile phones a part of daily lifestyle, businesses have cropped up to build distribution platforms taking homestays, hotels, and villas to the masses via the web.
Today, a person can search, compare and book a hotel in a matter of minutes - from anywhere with a decent Internet connection. Hotels (even in the remotest of villages) are now closer to consumers than ever before in history.
Disposable income and the value of experience
The generations of the 60s and 80s valued tangible commodities - like building a house, buying a family car, or making large savings. The present generation - the Generation X'ers and Millennials - are different. They value experiences. They are grown in an India which is more exposed to western cultures through pop culture-infused movies, books, TV shows, etc.
With a dynamic, growing economy, today's young generation seeks more independence and experiences. They have disposable income too. Compare this: people use to buy two-wheelers (a bread and butter winner in India) for about INR 45,000. Today, we wouldn't flinch to pay the same for a smartphone. And do so every two or three years. Why? Because who wants to be stuck with an old One Plus 5 when the new One Plus 7 Pro is out?
As a result, there is a growing number of people who are taking more weekend trips, more yearly trips and are more than happy to discover hidden gems in India, before they set foot on a chic foreign journey. Travelling is fun. And young India is more willing to explore than ever.
Network effect is rampant
Success in any industry is derived from the power of its network. This holds true, especially with the hospitality industry. The ubiquitous number of online travel agents has given a platform to hotels and homestays from all over India - to take their inventories to millions of people.
The more hotels an OTA has, the more web traffic it generates, the more traffic it generates, more hotels would want to be a part of the network. Platforms such as OTAs understood that service providers needed a platform to reach out to millions of Internet users. And Internet users needed a platform where they can compare tons of hotel options and choose the best. Add to it the motivation for discounts and offers. This deadly concoction was enough to mobilize and change the hospitality industry.
Growing demand meets innovative accommodation
India's travel market is projected to grow at an annual rate of 11.5 per cent and will be worth USD 48 billion by the year 2020. This means that our country needs more than 2.5 million rooms to meet this gargantuan demand. This is where innovative accommodations such as homestays are contributing and taking home a slice of the growing demand. Add to it the ease of establishing sales of homestays and rooms via popular online channels, homestays and other micro property owners are going toe to toe with big hotels. In a price-sensitive market such as India, homestays are winning.
Governments make a move, at last
India was ranked 7th among 184 countries in terms of travel & tourism’s total contribution to GDP in 2017. Travel and tourism is the third-largest foreign exchange earner for India. As a result, central and state governments too have opened up to boost tourism revenue via big investments. The central government has allowed 100 per cent FDI in the hotel and tourism sectors. A five-year tax holiday has been offered for 2, 3 and 4-star category hotels located around UNESCO World Heritage sites (except Delhi and Mumbai). Even at state level we see a lot of emphasis and movement towards tourism development. In March 2019, the state of Uttar Pradesh set aside INR 720 Crores to boost tourism infrastructure in the state.
People love mobile applications. Just look at these numbers
The consumer side of adoption to platforms driven by telecommunication technologies are growing rapidly too. I believe that app (mobile applications) installs are a perfect indicator to assess how consumers have taken to travel and tourism services via their mobile smartphones. Online channels such as Goibibo, Cleartrip, MakeMyTrip, Oyo, Yatra, etc all have more than 10 million installs each. And this is just on the Android platform. International channels such as Booking.com has a whopping 100 million-plus active users and Airbnb has over 50 million-plus users. This just goes to show that a large number of users have driven more hotels and properties to distribute their rooms and villas over these online channels.
What will 5G bring?
With the next wave of telecommunication technology, the 5th generation coming in the next 5 years, what can we expect? With better internet speeds, we can expect more data created for people to consume. Can Augmented Reality and Virtual Reality play its part with virtual worlds created of a hotel room or a pristine homestay in the midst of a tea estate, allowing users with affordable AR or VR headsets to get a real glimpse of a property before booking it online.
Or how about AR allowing guests at hotel properties interact with their environment via gestures to ask for services such as ordering food or a massage at the Spa? Brutally fast internet is about to widen our capacity to deliver existing services in more interactive ways than any other time in history. I reckon we have just scratched the technological surface.
- Mr. Anil Kumar Prasanna, CEO, AxisRooms
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