Slowing middle class, b2b opportunity in travel, & insecure middle management

While major FMCG and related brands are worried about slowing down and shrinking the middle class, travel is growing with a spear at the tip, with tailwinds from increasing discretionary spending. India is also poised to take the world stage in travel very soon.

For Q2FY25, MMT has 8x their profit yoy & ixigo’s GMV has grown by 40%

This is just the surface. B2B travel is growing faster than consumer travel, and this is true worldwide—including brands like Expedia, Booking, etc. Oyo launched its own B2B corporate offering, and Bloom Hotels is running ads on Instagram to give agents access to its inventory directly.

The first wave of B2B adoption was when GDSs (Amadeus, TravelPort, Sabre) invested in building desktop tools for travel businesses to access inventory. This allowed anyone to become a travel agent. Even India’s largest airline (Indigo) promotors have their humble beginnings on the back of this wave. With the digitisation of flight tickets in the early 2000s came the wave of B2C companies like MMT, Cleartrip, etc. They used flights as a way to get customers in the funnel & hotels became the first cross-sell product for these flight-first OTAs.

Consumer distribution has always been costly. 10-15 years ago, there would have been a handful of brands that had amassed significant consumers. But today, as a B2B company, distribution is widely available across multiple brands which have captured a good market share directly with consumers. Kunal Shah says 10m customers amount to 75% of GMV in e-commerce while Sachin Bansal begs to differ & says that number is 50m. I don’t have an answer to this question but I know that there exist multiple brands today between e-commerce, fintech, super-apps, banks, utilities, etc. who would have the same base as customers. When you have a large distribution, eventually everyone gets greedy about what next. That’s why you have situations like Mint newspaper’s website trying to sell you a loan. It’s like the Harry Potter riddle to find the room of requirements, “If you have to ask, you will never know. If you know, you need only ask”

We can always debate on the contextual nature of cross-selling products, which I feel is an art. However, we can’t deny the fact that users are universal. More and more brands will build additional adjacent use cases & before we know it - they will be a few standard deviations away from their core offering. While the core will define the largest of the outcomes. These deviations will enable them to gain a higher share of wallets from their power users.

Many brands have always tried to do this, failed, & committed that to memory. If you are working in any of these sufficiently large org there would be experiments that you tried which you can vouch for & say that if there was little more capital, tech support, or marketing visibility - it would have worked. If the answer to his is a resounding yes, your experience is pretty much in the majority. Most middle management doesn’t like to risk their promotion by working on something which is 0-10 in an org. They would rather have their contribution amount to 1% towards the core product vs. 100% towards a new one - only for getting noticed positively. When I was in Cleartrip, we tried tours & activities in 2015 onwards and tried to scale it, management became impatient, didn’t provide enough resources, & eventually, it failed after 2-3 years of effort. However, other companies became unicorns in the same sector.

Sorry, I am digressing! Coming back to the main point.

There is an opportunity for B2B travel to do something that they haven’t done before, even more so if you are a b2b player in the travel tech space. Distribution via existing brands is cheaper. One argument for Uber buying Expedia has been that Expedia will be able to save 30% on CAC via selling through Uber due to the high frequency of usage. 35% of Uber’s annual users use it monthly. Which travel brand can come anywhere close to this frequency?

There’s a massive opportunity here for B2B travel tech companies to innovate like the GDSs did by partnering with these new brands. By doing so, they can tap into a vast customer base that’s already primed for cross-selling opportunities. The key is to think beyond traditional distribution channels and leverage the frequency and loyalty inherent in platforms like Uber, which boast monthly active user rates that no travel brand currently matches. Companies willing to venture a few standard deviations away from their core offerings—and invest the necessary resources—stand to gain a larger share of wallets from users and potentially redefine the travel industry’s landscape.

The question is, who will seize this opportunity and take the lead?