Travelocity Acquires TravelGuru - Will it Change Anything in India?

2006 marked Travelocity's launch in India. Over the past three years, Travelocity's efforts in India have been low key, while the domestic OTAs (Makemytrip, Yatra, Cleartrip, Travelguru and Ezeego) have blazed through the market building their brand and business. For both the global giants, Expedia and Travelocity, Indian forays have not been backed by teams, resources and focus. And why should they? North American and European operations are a much larger business.

Market size does not really matter to these Indian companies that have instead focused on building their teams, technologies and (at time perhaps over-invested) marketing. The domestic players have focused on local issues such as low-cost air carrier (LCC) and rail connectivity, alternative payment (direct bank debit, virtual cash), hybrid store models, local hotel aggregation (two-three star properties), and diversified products (pilgrimages, group tours).
TravelGuru's acquisition by Travelocity displays a serious intent by one global OTA to target what Phocuswright forecasts as a US$5.6 billion Indian online market opportunity through 2011. Already the major OTAs are the largest travel retailers in the country.

The key factor of any global acquisition of a local online travel company is the balance between the global and the local. The supply side of the travel industry - unlike that for other products like PC or mobile - is fragmented. Hotels, airlines and rail companies in India are different from those in other markets even if the front end appears identical. Local focus, aggregation and execution is vital in India.

Will Travelocity do the following?

1. Define leadership roles and decision making clearly between Travelocity India, Travelguru, Travelocity APAC and Travelocity Global
2. Back TravelGuru and Travelocity with at least a $2.5 million annual marketing budget (to build the brand and business)
3. Support the entrepreneurial energy of TravelGuru - or will it become another job for senior management in India
4. Invest in a diversified hybrid model business in India (leveraging online and offline channels)
5. Allow rapid, independent decision making based on real time market needs

Travelocity APAC has new leadership. Roshan Mendis is heading the business and is looking to get cracking on India and China since Zuji missed the boat with Australia and Wotif. The TravelGuru deal has been doing the rounds for quite some time and in the current context, Travelocity has gained the most from the acquisition of TravelGuru.

Let's see if the global strength meets the local imperative in India. Discuss this on Phocuswright Connect.