Russian ё-travel.ruBringing Russia’s travel industry online By: Andrei Barashenko and Max Tikhonov Andrei.firstname.lastname@example.org +7 909 685 77 33
Executive Summary At the moment, in Russia, presence of travel industry online is at its infancy. Only 1-‐2% of packaged holidays are sold online. The market is wide open and there is no efficient service that allows the consumer to find, compare and buy a desired holiday online. The process of booking a packaged holiday is fairly painful in its present form. To begin with the consumer has to try very hard to find correct and well-‐presented information online and even if such information is available the process of booking is not entirely automated. One will have still have to visit travel agent’s office to make the purchase. The usual procedure is the following. Customer browses the net where he/she is presented with approximate prices, travel option and out-‐dated information. Then one has to call the travel agency to confirm that the desired holiday package is, in fact, available. Next, the customer will need to go to travel agent’s office to make a final confirmation and payment for the trip. The payment is done in cash or at best of times via a bankcard (not online but rather at the office). Moreover, when dealing with travel agents the consumer is usually presented with limited information since most of the time agents have special agreements with certain suppliers an thus tend to push only limited products. Therefore the choice of consumers is very often limited. In our opinion this market inefficiency presents a huge opportunity for a company that can provide proper online tourist agency services such as Expedia or Priceline. Our solution to the problem is to build a service for the Russian market that would allow consumers to choose from a great variety of travel products supplied by Russian as well as international service providers. A place where the consumer will be able to get the most up-‐to-‐date information about available products, compare them, if needed compile their own trips and ultimately book and pay online. The business model is simple and we are not going to reinvent the wheel. The idea is to charge a commission on the travel products sold. In case of packaged holidays supplied bylocal tour operators, in Russia this commission is usually paid by the service supplier (tour operator) and varies from 8 – 15 % (depending on volume of business generated) The unique selling points are based around all the advantages that a true online tour agency offers: 24/7 service, good value for money, great variety of customizable options, swift and efficient access to all the information required to make a decision. Further, the main proposition to the customer is comfort and competitive pricing that we will be able to offer due to efficiencies and scale of operating online. It is important to emphasise the “best value for money” proposition since recent research emphasis increasing price consciousness of the consumers when selecting a packaged holidays. E-‐travel will make life much easier for the customer by splitting and presenting travel products thematically. For example, skiing holidays, weekend getaways, last-‐minute deals, surfing/sun holidays etc. Travel products will be sorted by a fine-‐tuned filtering engine. We are also planning to introduce unique products to the Russian in such segment such as skiing and surfing, which are gaining in popularity. This will be possible due to cooperation with a number of key partners in EU. Sales and marketing will be done via combination of online and offline methods. Due to the fact that any inquiry into travel opportunities most consumers in Russia begin with an online search, sufficient efforts will be put into online marketing tools.
Competition is currently week. In total there are only one agency and two tour operators that are offering complete online services. However, in case of the tour operators, online services are a small addition to their brick and mortar retail outlets. Their interfaces are not very function and user friendly and resemble Craig’s list era. Most importantly they are focused only on selling their own products, thus lacking comparison and customisation offered by online tour agency. The third competitor, is more direct in nature, is a start-‐up that was launched a few years ago (Travelmenu.ru). It provides full automated online sales of travel products, however they are at a very early stage of development and have not gained much pace and market share. Additionally big part of their efforts goes to servicing business-‐to business-‐sector. Travelmenu position themselves as more of an online booking system for other travel agents. We regard them as main competitor, but since they have begun operating not so long ago there is still plenty of room in the market to service the consumer segment. And we are certain that the consumer is ready to be accustomed to the new way of purchasing travel products. With regards to the market, it is quite sizable. Russia ranks 8th biggest spender on outbound travel globally. It is important to notice that our primary target is the outbound packaged holiday segment, which has been growing at 14-‐20% for the past 5 years and now amounts to 11 million packaged holidays sold every year and accounts for 60% of outbound tourism in Russia. Only 1-‐2% of these packaged holidays are now sold online. In a matter of 3-‐5 years that figure will be much higher. Russian Internet audience is now the biggest in Europe at 68 million users. Penetration of payment methods has experience phenomenal growth in the past few years; the same could be said about ecommerce, more an more people are buying products and services online, thanks to a few online retailers who are working hard to drive consumer confidence in internet purchasing. Therefore we believe that the demand is there and the market is ready. We are a team of different but complementing backgrounds. Leader behind the idea is an experienced business development manager who has managed an internationally diverse team. Our technology wiz has previously worked for Intel Corporation in the United Kingdom. He has also co-‐founded a software development company in Russia that has successfully developed state of the art IT infrastructures for Addison Lee Taxi services in London. Our marketing guru has been involved in online and offline marketing for 14 years; he led the launch of an international web based insurance company, on the Russian market. As for the current state of things; at present we have formed a well-‐balanced founding team with complementary skills and experience that can successfully launch and grow the company. Portion of the funds to get started we have raised from personal savings and we are currently seeking co-‐investors. We have also formed an agreement of cooperation with key technology partners, who provide access to real time database of all travel products supplied by biggest Russian tour operators. And, which allows direct and immediate booking. We are also in process of signing agreements with key product suppliers. To sum up, we are convinced that now there is huge gap/opportunity in the market. And it is all up for grabs with the right model and the right team. The key point is that it is only a matter of time that holiday purchasing in Russia migrates online. Much like the airline ticket booking online, which is now growing at double-‐digit rates. Now is the time to enable Russian consumers to buy their holidays online!