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Travel firms feel early summertime blues

By Anirban Chowdhury in New Delhi
March 19, 2009 09:57 IST
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The travel industry is feeling the pinch of the slowdown this year, with few takers for the international summer holiday packages on offer.

According to the Travel Agents Federation of India, an apex body of travel agents, only 20 to 30 per cent of the inventory has been sold. In a normal year, more than half the inventory for travel during the peak summer months of April to June is usually sold out by March.

Agents now think they will have to cut package prices further to gain customers. Summer package sales typically account for 60 per cent of a travel company's annual sales.

Poor summer sales have caused the leading travel company of Shree Raj Travels in Mumbai to close 11 of its 60 branches across the country.

The company's chairman, Lalit Sheth, said, "Last year, we sold 175 packages a day; this has come down to only 75 now. The smaller players may still see some marginal growth due to a lower base but the bigger companies will be badly impacted."  

Travel portals are facing a similar slump in demand. "We are getting a lot of enquiries but few of them are being converted. Our conversion rate has dropped from 12 per cent last year to 7 per cent this year," said Ashish Kishore of travel portal, Yatra.

"Fifty to 60 per cent of the summer packages are usually sold by this time of the month. We have managed to sell only around 25 per cent," he added.

"Sales on the international sector are down over last year," admitted Sachin Bhatia, co-founder, Makemytrip.

Many travel companies said customers are waiting and watching. "People are holding on to see if better deals come their way. So although advanced bookings are down, we might see people booking during the summer months themselves," said Richa Goel Sikri, director of Delhi-based STIC Travels.

The big players like SOTC, Cox & Kings and Thomas Cook, however, are putting up a brave front, saying the growth in sales is in line with expectations. But industry experts said the big boys have also seen package booking fall between 30 per cent and 50 per cent.

Madhavan Menon, managing director, Thomas Cook, said there was no runaway growth in sales and their numbers had exceeded last year's. A Cox & Kings spokesperson denied that sales were down. An email sent to SOTC and repeated queries were unanswered.

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Anirban Chowdhury in New Delhi
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