We had the opportunity to interview Mr. Gaurav Bhatnagar, Co-Founder of TBO Group and Managing Director of TBO Holidays. He Co-founded TBO in the year 2006 with his partner Mr. Ankush Nijhawan. TBO is one of India’s largest B2B travel industry portal that enables their clients to serve end-users efficiently, with the right inventory and pricing. TBO works with more than 70,000 travel agents and has customers across more than 105 countries worldwide. They are travel industry experts in travel products like Hotels, Flights, Transfers, Sightseeing, Holiday Packages, and Travel Insurance.
Following questions were asked to Gaurav Bhatnagar during the interview where we discussed the current crisis Travel industry is facing, strategies to survive them and more:
1) How did you start your journey in travel, and what has been your experience over the year?
I started my journey in the travel industry in 2006 when I met my partner Ankush. His family had been in the travel business and I had come back to India after working at Microsoft for a couple of years. I was running a software services business at the time, and I was just exploring the OTA opportunity because there was not a huge OTA market back then. I and my partner thought we would start a B2C business. But during the time we were planning; OTA’s like MakeMyTrip, ClearTrip, and Yatra got funded in that year. So we pivoted before we even started and decided to build a B2B business. We thought let’s focus on travel agents rather than focusing on the end customer directly.
That is how we started as an airline consolidator in 2006. It was surely a good year to start our business because Indian domestic airlines grew immensely in that specific year. This was because IndiGo, SpiceJet, GoAir, and other low-cost carriers came into the business. As a result of that, new airports came up which led to better growth.
Back then, there was a concern that all travel bookings will start happening online and travel agents would become redundant. TBO helped in making sure that travel agents were empowered with technology and adapt to survive and thrive.
Later, we added our hotel business into the mix in 2011. We expanded internationally and opened an office in Dubai from where we run our international business in that same year. Now, hotels are fairly a large part of our business. In terms of revenue, it is probably equal to or more than our airline business. It continues to be a large and growing part of our portfolio. And that is how we started. It was supposed to be a different journey. The pivot of B2C to B2B happened during a good time because among all the businesses that started in that era, very few have achieved profitability and thankfully we are one of them.
2) What differentiates TBO from its competitors and what do you consider is your greatest accomplishment?
I would say the one thing that we’ve been very good at is maintaining focus. We started with one focus which was empowering travel agents with technology. When we started the company, we created a mission of empowering travel agents with technology which seemed very counter back in 2007 because it looked like the online players would finish off the travel agents. But we had a lot of conviction that the travel agents will continue to add value which they have. We have had several opportunities to move away from this core focus of serving the travel agents but we have remained focused on helping and enabling travel agents with new products and services.
And I think that has served us very well as it has allowed us to grow in a space that is our strength. It has also allowed us to keep the competition out because when you’re focused on one thing, your chances of success are higher. So B2B space has been our focus and diversifying into the B2B space has been our journey by offering them different products. For somebody who is also doing a B2C business to diversify into the travel agent business is very hard. That has worked well for us and in terms of what we have achieved. Building global scale and multi-national operations sitting out of India is I believe a big achievement for us so far.
3) Since TBO’s operations are global, how are you handling and managing the crisis, keeping location-wise problems in perspective?
We saw this coming a few weeks ahead of time. It was clear that these lockdowns were going to happen even though India had very few cases back then. That is the reason why we created a strong SOP around:
1) What should we do if these lockdowns do happen?
2) Who will work from home?
3) How are they going to work from home?
4) Do they have VPN access?
5) Do they have a laptop at home?
6) Will they need to carry their desktops home? and so on.
We kind of did the mapping to make sure that the business did not get disrupted which paid off well because the first few weeks were very intense. A ton of refunds were coming in along with a lot of uncertainty. The team really stepped up at the time and these initial preparations helped us to make sure that the business was not disrupted at all when the lockdowns eventually happened.
On the international side, we have a team of strong commercial directors who run their own regions and they have the power to do what needs to be done for their respective regions. They are not just close to their team but they are also in that location. They have autonomy and empowerment to decide what needs to happen which is helpful. I think overall the way the organization is structured there is a fair bit of decentralization when it comes to the regions and the regional directors knew what is happening in their markets and they took their call of action accordingly.
4) In the midst of chaos and uncertainity, what according to you could be the measures the travel industry can take to continue operations smoothly and how can someone find an opportunity to do better during this time?
There isn’t an easy answer to that question but I can just tell you how we’re looking at it. First, the immediate focus is on preserving cash. If you don’t have cash then you don’t have a business. Depending on every business’s situation, in the short term, do whatever it takes to preserve cash. Second, we must acknowledge that the size of the travel business will be significantly smaller for the upcoming 12-18 months maybe even more. Many airlines are reducing inventory. They are saying that 20% of the airplanes will be decommissioned. As a result, there are going to be fewer planes flying which means there are going to be fewer people traveling. We must be prepared because the size of our industry is going to be smaller so the pie will be smaller.
To address this, we are preparing new lines of businesses that are adjacent to our core business. We are going to launch these as soon as the lockdown is over. This allows us to re-deploy our people into new products and businesses. This also allows us to tap into new sources of revenues which we did not address in the past.
Since we service travel agents these new businesses also create opportunities for them to start new lines of their own business. We are close to our customers so we know what they’re looking for and these tools address a gap in the market today.
There is a Corporate Travel solution that TBO is launching called Paxes. The objective with that is if you are a TMC and you realize that a corporate had a $10M travel budget and now has a $3M travel budget, you really can’t service that corporate in the same way you used to. You will have to do some digital transformation, bring more automation, more process which does not require human intervention. On the other hand, if you are a Leisure travel agent and you know Leisure is going to be weak where you are located, then you will have to probably look at dipping into the corporate side of things as well. That is the reason why we are launching Paxes now so that travel agents can start leveraging technology quickly. Paxes will help them to reduce costs in the existing corporate business or to start a brand new corporate travel business.
We are also launching our Umrah booking portal once Umrah resumes. It is a big opportunity in markets that we operate like India, Middle East, Southeast Asia, and Africa which have a large Muslim population that travels for Umrah. So that’s another opportunity for travel agents to service their customers and bring new products to them. I think you have to be pragmatic and just accept that you have to work with lower costs for the foreseeable future. The size of the pie is going to be smaller so you either get a bigger share of that pie or you will have to do new businesses and new lines of revenue which are adjacent to what you were doing before.
5) What do you think would be the role of travel agents and travel advisors after the pandemic?
It depends on how long this crisis will last because, ultimately travel agents are small to medium size businesses and nobody has the capacity to survive without revenue for 6-12 months. Looking at things it doesn’t look like that the crisis will last that long. That is still a key factor and it does not just apply for travel agents but the entire travel industry. We will see far more businesses dying if this crisis was to last much longer.
Then there’s adaptability where travel agents have an edge. Travel agents are essentially entrepreneur-driven small/medium size businesses which often consists of a small team that is tightly knit. They have the tenacity and the perseverance to go through a tough time, their cost structures are relatively lower, usually, they don’t have a debt, and they work in an agency model so they have the capacity to survive this crisis. There’s another thing I’ve noticed is we have been running all these travel agency webinars and the participation is by thousands. Sometimes 2500+ travel agents register for one destination webinar which is an indication that people are geared up to change and learn. This gives me hope that when things come back, travel agents will adapt fast and they will bring new products that are required in the market. Another thing that travel agents have done well is managing their customers well during these crisis and in terms of issuing refunds, sharing information, helping them negotiate with the airlines, and much more which is commendable.
OTAs have a difficult problem at hand because they handle millions of customers against a travel agent with a few dozen of key customers. People have kind of realized that if you work with a travel agent they are more on your side because you can directly talk to them rather than getting connected via a call center or complaining on social media. Travel agents will play a key role in the revival of the travel industry, bringing new destinations to customers, and adopting new knowledge and technology into their own businesses.
6) Since TBO is in consolidation space, where do you see hotel suppliers post COVID-19?
Intermediaries are required at this time because when revival begins, hotels will need to work through as many channels as possible to get to the customers. I believe that there is space for intermediaries to kind of play an important role. The challenge is going to be around credit. Because of this crisis, getting credit insurance has become difficult. Every supplier will be reluctant. This reluctancy applies to hotels, consolidators, travel agents, or OTAs to extend credit. That will be one big challenge that we will have to overcome. Companies who have the liquidity to put bank deposits or bank guarantees with the suppliers will have an edge. If the crisis persists for a longer period, financially, many suppliers and consolidators will be in a weaker position. What will remain in question would be, how they service their customers and effectively manage their supply. My hope is that once the recovery begins it should be a quick recovery. When that happens most consolidators will survive and play a key role in bringing back the business.
7) Any comeback strategy or advice for the travel industry?
This is a rare event and this break creates a lot of opportunities to rethink how we do business and learn about new products, and services. It is a great opportunity to invest in digital transformation of your business. My advice is that while we wait for recovery to happen, we must make sure that we don’t fritter away the downtime being idle. This lockdown period has been instrumental in us taking up long-pending tasks and projects which should have happened earlier. Also, make cautious approach once the recovery starts because the business will come back quickly but if you go by what experts are saying there’s a real chance of the second wave of this pandemic coming later in the year. Be very careful in making new investments based on short-term recovery. So, if you see business coming back for two months and suddenly business is at least 60 to 70% of where it used to be I would still be very conservative and just prepare for the worst. Nobody has seen these times before and nobody knows how it will play out over the course of this year. I think between now and the end of this year will be a crucial time. Preserving cash is extremely important along with the diversification of your business. Adapting to technology and making sure that your business is leaner, easier, and cheaper to operate is extremely critical.
Find out more about Gaurav Bhatnagar and TBO Group here: www.tbo-group.com
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