Online portal Travelocity shuts India site

Intense competition and thin margins are the reasons

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Online travel portal Travelocity has ceased its India operations in the wake of intense competition and thin margins. Travelocity closed its India booking engine last week and users logging in the site are being directed to its  global site with a message that says "India-specific site is not operational anymore''.

Still, customers in India can book flights between two domestic sectors on the global site but the inventory is limited and the payment option is restricted to US dollars using international credit card. Customers are required to pay an additional fee to banks for foreign currency transaction.

The senior management of Travelocity in India including its managing director Himanshu Singh and its marketing head Rohinton Commissariat have moved to Hotel Commerce and are involved in design and management of hotel websites and reservation systems. Like Travelocity,  Hotel Commerce  is a part of  Sabre Holdings, which runs global distribution systems, portals and offers business solutions to airlines and hotels.

"Operating a consumer facing web site in India no longer fits into our broader strategic focus. However, Travelocity Global continues to operate in India with our Bangalore Development Center where we employ more than 300 people who support product development and technology for our global web sites," said company spokesperson Joel Frey.

Travelocity  began India operations in 2007  Two years later it acquired Travelguru, a  B2B travel and hotel booking site. It also launched a big marketing initiative guaranteeing customers lowest prices for hotels and airline reservations with a promise of  free tickets  in case the customers found cheaper alternative.

However Travelocity was unable to sustain itself in face of intense competition. Last July  it sold Travelguru to rival firm Yatra.com as it was unable to take on competition. Travelocity, however, had termed the sale as a strategic move.

“We created phenomenal value for Travelguru after acquiring it in 2009 and now our promoters are exiting it in line with the strategy to focus on the core business in India that is GDS and solutions for airlines and hospitality,’’  Travelocity's managing director Himanshu Singh told this paper last July.  “Sabre Holdings is committed to India. As a travel commerce company we have the largest footprint in India and we will continue to grow,’’ he had said.

"The online travel space in India is extremly crowded and there is a scope for further consolidation. Margins are wafer thin and portals are dipping into their own pockets to offer discounts and special discounts,'' said an industry expert.

An another travel industry insider said Travelocity has been curtailing its online travel business.  Last December it sold Zuji, its online portal in South East Asia for $25 million to an Australian company called Webjet. Travelocity  is also losing share in the US which is its main market and according to a website 'Tnooz' which tracks popular travel websites based on number of hits.