How are booking platforms changing the global tourism industry and the tourism value chain? Who are the big winners in the platformization of the Indian tourism industry and who is missing out? Does the integration of local tourism businesses into digital booking platforms democratise and balance economic power structures by allowing for a more direct interaction between guests and hosts, or do booking platforms act as the new gatekeepers? IT for Change's Deepti Bharthur spoke to Berlin-based geographer and journalist Lea Thin on the impact of booking platforms on the Indian tourism industry. The interview was based on research undertaken for Tourism Watch.
Here are some highlights:
Platforms are dominating the tourism market in India. Who is the big winner of this development and who is missing out?
Deepti: The biggest winners are the platforms themselves. They have capitalised on a great market and they have been able to create a competitive advantage that is going to be quite hard to beat. Especially big platforms have venture capital funding available to offset discounts, so they are able to offer very attractive rates to customers. Mid-range budget hotels and small businesses, however, have taken a hit on account of platform practices. Caught in a deep discount system, their revenue margins have come down. Small local tour companies, especially those offering adventure tourism, have also really lost. These businesses tend to operate in remote locations like in the mountains with limited digital infrastructure. The lower online visibility and slower responsiveness of these companies in comparison to larger platforms, combined with their discounting strategies means that customers tend to favour the latter.
Can you still be successful as a tourism provider in India today without a platform?
Deepti: It depends. When we look at the domestic travel market, Indian travellers tend to be quite price-conscious. Therefore, the competitive discounts platforms offer are definitely hard to compete with. Still, there is room for an alternative business model. Tourism in India is such a huge market, so different kinds of players can have a piece of the cake. We have noticed this especially for older businesses, which have been part of the game for many years. They have been able to build a loyal consumer base long before the platforms appeared. New players offering niche services, who engage with social media and build a brand identity, are also seeing success. Most actors though, want the best online presence they can get which usually still includes platform integration.
We have talked about the negative impact of platforms, especially for small businesses. Can platforms also strengthen Micro, Small & Medium Enterprises (MSME) in value chains and thus contribute to sustainable development?
Deepti: In our study, we are proposing some measures like featuring locally owned businesses prominently on platforms and giving them online presence, showcasing local impact and also sharing data with local tourism agencies. Especially in the Global South, private platforms have enormous amounts of data of all kinds starting from tourist traffic patterns to ecological footprints. This data needs to be proactively shared with local public agencies and small businesses, so they can include this knowledge into their decision-making as well. Data trusts operated and managed at local level can help strengthen MSMEs and enhance their ability to compete in the age of digitally mediated tourism.
Platforms should also be working towards helping tourists to make better decisions that complement rather than deplete the local economy. For instance, accommodations should not only be sorted by location and how clean the rooms are, but also be categorised by the quality of working conditions for their staff. Do they get fair pay, fair contracts? Do operators follow green business practices? Are men and women treated equally? By displaying these sets of data platforms have a big role to play in helping consumers to make good decisions.
Read the full interview on the Tourism Watch website.