Can AI Fix the Broken Travel Industry? | Ritesh ft. Aloke Bajpai, Deep Kalra & Hari Ganapathy

Today we are lucky to be joined by three generations of the travel industry.

Well, the profitability is slightly different in both the businesses.

Most of the things we did at Ixigo actually were never about selling tickets, but actually about solving consumer problems.

Not coming from travel, I think we learned the hard way that travel supply is not very easy to work with.

But how much influence do influencers actually have?

With influencers, you're not going to blindly follow what the influencer did. So it would be used as a moment of inspiration that leads you to do more research.

The fact that you have to hop multiple websites to put together an itinerary is a pain, right? If you were to start a new travel company today, what idea would it be?

Hello and welcome to our session on AI in travel. Today we are lucky to be joined by three generations of founders in the travel industry. We have MakeMyTrip founder Deep Kalra, Ixigo founder Alok Baji, and Pick Your Trail founder Har Ganapati with us today. Welcome everyone.

I would love to start with your stories of founding and would love to hear the core insight that you had on the travel industry when you founded your respective companies. Would love to start with you.

Amazing. Well, the profitability is slightly different in both the businesses. Alok, when you started Ixigo in 2007, MakeMyTrip had been around for a while. There were a few other OTAs already around, Yatra was around. What gap did you see in the market that led you to start Ixigo?

Yeah. So I think MakeMyTrip had moved back to India just a couple of years prior, and there were a few other OTAs that had raised their first round. But going back, Rajnish and I both worked for Amadeus in travel tech and had seen the evolution from green screen to browser. India was an exciting market because low-cost carriers were coming in, OTAs were getting started. At the time we were moving back, there was this new thing in travel called meta search, which meant you didn't have to open multiple browser windows and do the same search over and over on multiple travel sites to find the best deals, but you could do it all at once in one place. That was the model we launched with back in 2007. Most of the things we did at Ixigo were never about selling tickets, but about solving consumer problems. At that time, we were trying to solve the consumer problem of finding where the best deal in flights actually were. To Deep's point, I remember we launched Ixigo on a 512 kbps internet connection on which the server was hosted. We had not even used any hosting. Those were the early days of the internet. There were probably 15-20 million internet users back then in the country.

Amazing. Amazing. And Har, you started about a decade after Alok started his business. How had the travel industry changed by then and what were the problems that you had started to see emerging in the mid-2010s?

So I think Deep spoke about his first card into Asia rooms. For us it was a first Airbnb booking. We were all doing a Euro trip way back 2011-12, and Airbnb was still not very known then. When we were on the holiday, we met a lot of people who were amazed at the fact that there were three trips within that one trip. I'd been to Europe multiple times. My parents want to go to Switzerland, me and my wife want to go somewhere else, and my co-founder Shinat wanted to do a bike riding experience. So we managed to do three itineraries within that one trip, and the flexibility we built in that trip sparked us to ask if there was a way to replicate this kind of holiday planning to more people. At that point, holidays were about package tours, being coached from one place to another. We asked if there was a way to build a product or solution that would do what we did through multiple websites, taking away the operational hassle of putting a holiday together while giving a platform where you could get your holiday the way you wanted. That was the insight we started with. Not coming from travel, we learned the hard way that travel supply is not very easy to work with, but we believed that a holiday is a very personal experience. To look at it as an SKU which can be bought off the shelf didn't do justice in our mind.

Excellent, excellent. So from bringing the product online to making it easier to compare products and deals to personalizing travel over the course of roughly 15 years, it's been quite a journey. Deep, I would love to know, you have seen multiple cycles in the industry. In your experience, how have consumer preferences changed and how has consumer behavior changed since the time you first started till the traveler of today, and if we can think of the Indian traveler in particular.

Actually, so many threads to pick on there. I'll maybe pick on one of them and then we'll come back to corporate travel, come back to some of these trends. But Har, given you are the youngest of the four of us. In fact, one of the things I was reflecting on recently was how different generations of Indians travel. If I think of people who are now over the age of 60, they have been used to group travel, package tours, and they value the comfort and security that comes from being in a group. Then millennials rebelled against the package tour industry and said we are going to be independent travelers, they value independence. But it seems that we have gone a full circle and I find a lot of Gen Z travelers seeking the company of communities of strangers with the same interests, often led by influencers. So would love to hear your perspective on how different generations of Indians within the same socioeconomic class are now traveling and whether you find any merit to a millennial preferring to travel differently from a Gen Z and differently from their parents.

See, I think a couple of pointers there. One, like Deep said, the entire evolution of the internet has made information accessible. Now thanks to Instagram, there's an insane amount of information being disseminated, fueling desires to travel. When we started, the average age of honeymoon was about 24, now on our platform it's about 28, which means people have 4-5 years of disposable income but don't have company to travel with. That's where you see this entire 'travel meets Tinder' phenomenon. You want to meet people but don't have enough company, driving the need to feel part of a group while exploring a place. Travel is the lowest friction way to meet new people because if you don't like the company, you can still enjoy the place. If you hit it off, you make friends and do multiple trips together. Friends are the new family, that's the other trend emerging in the millennial/Gen Z phase. However, the unfortunate part of being Gen Z is that they are largely impatient. Quick commerce, short-form content, five-minute content series. Their ability to gel along with people is not straightforward. That's the challenge of putting together a community trip. If the community is not good, the entire group disintegrates and the holiday experience goes for a toss, which was not the case with package tours because the drivers were different. The anchor is sporadic, so entropy is high. Doing it at scale and finding like-minded people is difficult. For example, wildlife, adventure road trips, golf trips are easy to do community, but when just talking about Gen Z given their general low inclination towards patience, putting everybody together is a challenge.

Actually, it's very interesting that you now not only have to curate the experiences, you have to curate the group as well. So the community is as important, if not more important, than the experiences. Interestingly, one new segment that's coming is mid-30s, mostly the first marriage worked out and now they're in a rage to travel and they want to meet people. This is my personal philosophy. I think we like to look at slightly older audiences because in travel so many things go wrong, and if you haven't had those things go wrong, you are forever impatient and your NPS goes for a toss for no reason of yours. We are very fanatical about our NPS. That segment is really interesting because it's almost like Gen Z in their motivations, but they have disposable income and life experiences where there is gratitude, and they are able to look at travel more as an experience than as an Instagram post. I think that's very interesting. I guess we are doing micro segmentation now. 35 year old divorced people as a segment. Amazing. Alok, one thing we often hear about and of course all of us see on social media is the rise of travel influencers. In your experience, how much influence do influencers actually have in where you travel, how you travel, and do you see Indian travelers being more independent or in a way earlier they were following Bollywood stars, now they're following influencers as far as their choice of location and activity is concerned?

Right. So I think just to add upon what Deep said, the two big changes that we've seen and it's been evident in our journey is as mobile internet came in and then smartphones, Jio, UPI, the holy trinity, you started seeing a different segment of the population come online. When we started, it really looked like everybody who was on the internet could afford to fly or could afford to book a 3-4-5 star hotel, but as this new demographic started to come online, all the assumptions we lived with changed a lot. Back in 2012-13 when we started to look at that segment, we said what do they do and how should we get them on board? Trains became very important in our story to start building something utilitarian for them, and then being able to live through that trust building till the time they can actually mature into becoming flight bookers, hotel bookers. That's something we've seen over the last one decade play out. The other big disruption was COVID. What we've seen across the board after COVID is people don't want to spend on things anymore. Even if they have discretionary or disposable income, they want to spend on experiences. And when we talk about experiences, it's important to see and visualize them. That's where the role of influencers becomes very important because if you're seeing a video of somebody who went to Phuket and did a few cool activities there, you get inspired by seeing that. If it happens to be somebody in your extended network or an influencer you trust and follow, you may have the inspiration to go and start looking that trip up and buying it. So indeed, influencers have started playing some role in that research planning inspiration process, top of the funnel process. What we are seeing though is that it's still a very broken experience in some senses because you're seeing all the experiences on one platform, then you go to sometimes either a Google or an AI tool to do certain other research, then you come to folks like us OTAs to look at the fares, look at the availability, look at the options. So people still want some degree of control in figuring out what the booking experience looks like because even with influencers, you're not going to blindly follow what the influencer did. So it will be used just as a moment of inspiration that leads you to do more research and then you may or may not book that moment, but it stays in your mind that someday I'm going to put it on my bucket list and this is a place I really want to go. So it definitely plays a role.

Amazing. I would love to talk a little bit about the business of travel as well. One of the things that has confounded me is how quickly travel came online in the first few years and how that pace of online penetration has stagnated pretty much. We were looking at some data from hotels and we went from 0 to 20% penetration very quickly. These were I assume all the organized hotels, the 3-4-5 star hotels. And then it grew from 20 to 33 took 15 years to go from 20% to 33% penetration in India. Any theories for all three of you? Any theories as to why online penetration, particularly in hotels but outside of flights pretty much everything, has grown slower than what we would have assumed 15 years ago?

Take a stab at it. Because this is a topic close to our heart because as we've just gotten into hotels, we're discovering some of these detractors of why people don't go online. And by the way, the number is far lower than 30%. Actually, my new thesis is it's not even at 20% yet. Max 15%. I actually think it's between 10 and 15%. So that's the number. Two things building on what Deep earlier said and I alluded to: India is many markets and many segments. If you look at it broadly as two segments, the more evolved India that works in fancy office buildings and can afford the luxuries of life, and the India which is getting into that and maybe will take 10 more years to get there. If you look at the middle class today and what their travel looks like, predominantly it's a train or a bus that's getting them to their destination. Predominantly, it's a zero to three star hotel that they're staying in or could even be a dharamshala or a non-hotel accommodation. Our stats say 25 to 30% primary motivation is spiritual tourism. For that kind of an audience, most of the online players have not done much about particularly that. The reason was 10 years ago the numbers were not big, the size of revenue pools were not that huge, and it wasn't very obvious as to what these people would want to spend on beyond just the transport and the hotels. But if you look at the stats now and you start seeing even Varanasi, Ayodhya, or many of the temple towns in the south, the number of footfalls there indicate that most of the industry reports have ignored the size of the market that actually exists. Even if you take a number of 2 to 2.5 million rooms on something called a hotel, all OTAs put together would be sub 250,000. So it's that 12-13% number whichever way you look at it. The primary reason I have found is that there is a trust deficit. Over the years, various companies have taken a stab at the budget hotel market, but even there there was some amount of trust deficit that still existed despite all those efforts because what you see was never what you get. There was no price parity at times, the rooms don't look like what the photos say. People still believe that they can just land there. If you talk to people coming out of the New Delhi railway station, people who are booking hotels in Paharganj, half of them are still just walking in because those hotels still have inventory. They're not like sold out five stars. So that behavior change hasn't happened yet, which is an opportunity for all of us. But it's also very interesting that that behavior change people tried to influence it through discounts and all of that back in the days, but that didn't really make the needle move. So it's more about how do we build the trust on both sides with the supply as well as with the customer in order to make this happen.

Yeah. No, I couldn't agree more. Absolutely. And I'm glad you mentioned the last point, which is the walk-in market is staggering. Not just Paharganj and places near railway stations. Goa, I remember doing customer labs long back and talking to parents who have taken a flight to Goa from Delhi. They had one kid and they said we checked out like we were trying to break like understand why don't you book online.

Actually, let's talk about that supply side a little bit. The propensity of particularly hotel owners to not only put their supply online but manage their supply through some kind of software. I mean I remember in fact I was reflecting on this just a couple of days ago. More than a decade ago, I saw one company in Chennai that was claiming to aggregate lower-end hotel rooms and I was impressed at their inventory management system. When I went there, I saw there was no inventory management system. There were 200 callers who'd call each hotel three times a day to find out if there is room availability or not. And interestingly, life seems to have come a full circle because now I'm getting pitched companies that are doing this through voice AI who are calling hotels. The voice AI is calling hotels three times a day to get room availability. But that raises the question as to why the hotel owners are unwilling to use software to manage inventory for themselves if not for putting online. So any views on what has held back a lot of these 2.5 million room owners from actually managing their inventory using software.

I think it's a stage of evolution of the market like Deep rightly pointed out. If you ask this question 10 years ago, people had teams of people running around because hotels used to use registers to sign up guests that were checking in and they didn't have any system at all. Then of course many companies have changed that with not just inventory management software but channel managers and then extranets. Those have come in over the last I would say 11-12 years. So I think that's changing in terms of adoption and ability of hotel owners to see value, though I don't think they still want to pay a lot for that value because software has always been hard to make Indian small business owners pay for any software, so that's consistent across travel. But I think where there could be a very interesting use case now is that even running their hotel, if you look at a budget hotel owner, running their hotel involves some use of tech in terms of not just managing the room inventory but also managing requests from their guests or check-in processes. I think if companies or startups are actually building something that's more intuitive to use because some of these software when I look at them they still look so clunky and so hard to use, built in the '90s.

Excellent. I'd love to know what is still broken in travel. What are the personas that might not have been catered to so well? What are the experiences that are broken? What is the supply that's not yet unlocked? What infrastructure opportunities are there? And maybe we'll start with you, Har. If you had to pick one part of the travel industry that you think is still broken and should be fixed, what would that be?

Now is when more and more people would potentially value if somebody can put everything together. Could it be AI, could it be an agent, could it be but the fact that you have to hop multiple websites to put together an itinerary is a pain, right? And if you can add that Instagrammable hotel, if you can add the entire what you want to do in itinerary, you book in multiple places, still somebody who can put everything because we all know the amount of mental overload we have. You still look around, people still print stuff up. Travel is in some sense very overwhelming because especially holidays is multiple additions you make at different points in time and you at least have 45 to 60 days before you actually depart. So there's a mad scramble 45 days before saying is everything in place. I think that entire experience of planning a holiday and experiencing the holiday, if it can be done in a way which is personalized and at the same time is not very expensive, I think there is a massive opportunity.

When you're traveling, especially with ladies, there's the whole thing about a loo break.