India Embarks on e-Travel
Red Herring - February 17, 2006

The 1,000-year-old friezes adorning the Hindu temple in Belur are among the finest in southern India. Still, the small town in the Hassan district about 150 miles from the tech hub of Bangalore is not on many tourist itineraries, and online information about eating and lodging in Belur is scarce.

For the most part, Indian travel web sites have catered to bringing the South Asian Diaspora home. The sites did little to rescue travelers from long lines for tickets inside India's thronged train stations and airports. Nor did they provide much information about towns off the tourist circuit.

But with new low-cost airlines competing for travelers, and a rising, increasingly Internet-savvy middle class eager to explore the homeland, there is room for a new type of travel site. That's why Promod Haque, managing partner at Norwest Venture Partners joined Indian media company TV 18 and Reliance Capital to invest in Yatra (see Norwest Bets on India Web Site). With an expected launch date of May 2006, Yatra, which means journey in several Indian languages, will tap into the burgeoning domestic Indian travel market. The Indian travel industry is expected to reach $32 billion by 2008.

Yatra will allow wayfarers to book travel through call centers servicing 18 languages, via SMS, and over the Internet. To anyone who has waited in the ticket line at Mumbai Central station, such services are long overdue.

The need is so great, that Yatra is not alone. WestBridge Capital Partners, India's largest and most active venture capital fund, in January invested an undisclosed sum in Travelguru, which is targeting India's online travel market. Customers will be able to book their travel across 300 airlines and 55,000 hotels in India and abroad.

Started as a Harvard Business School project in 2004, the company has taken a year to develop cutting-edge, proprietary travel technology and establishing close partnerships with travel suppliers in India.

KPCB also announced investing $2.7 million to $3 million in yet-to-be launched Cleartrip.com, an online travel portal for India, in the first round.

The numbers support the flurry of investment. The Internet user base in India grew 54 percent during the last year: there were 38.5 million users expected between 2005 and 2006. That's up from 25 million in the year before.

According to the Internet & Mobile Association of India, the total e-commerce market in India will touch $262 million in 2005 and 2006, growing more than 100 percent by 2007 to $500 million.

Falling broadband prices-as low as $5 per month-coupled with the availability of $200 PCs, content in regional Indian languages, and a jump in VoIP are factors contributing to the growing Internet user base.

Government Support
The government is promising to help. India's IT minister Dayanidhi Maran said recently: "We are continuously evaluating policies which will help increase competition and bring down prices as well as increase access speeds. Our aim is to achieve critical mass across the country with a special impetus in the rural and remote areas."

Preeti Desai, president of the Internet & Mobile Association of India, says that online shopping for services such as airline and railway tickets, and product categories like electronic gadgets and home appliances, will spur further usage of the Internet.

"In India the IT infrastructure is improving, mobile phone penetration is growing, purchasing power of the middle class is rising, and there are more people traveling every day," said Vab Goel, a partner at Norwest.

Now is the time to visit Belur and the Chennakeshava temple. Before the tourists discover it.