Travel – Page 2 – Pertinent Observations

A mistimed trip to Ayutthaya

This day (5th December) last year I went to Ayutthaya, near Bangkok in Thailand. It wasn’t meant to be that way. When we booked a vacation in Bangkok between the 4th and 8th of December, the assumption was that we would go to Ayutthaya, the “Ayodhya of Thailand” on the 6th of December. And for sheer troll value, I would pose in front of one of the temples there giving the RSS salute and upload it on social media. Just for kicks.

But then it didn’t happen that way. On the 5th of December last year, we reached the “victory monument” in Bangkok from where private minibuses are available to nearby locations. Our plan for the day was to go to Kanchanaburi, where we could see the Bridge on the River Kwai and the related museum. But then we reached the Victory Monument at a time when the previous bus to Kanchanaburi had just left and the next one wouldn’t leave for another 45 minutes. The bus to Ayutthaya was going to leave in another 10 minutes and we gladly hopped on!

We got dropped off somewhere in the middle of Ayutthaya town and we seemed to be the only tourists on the minibus. There wasn’t much of a choice for us in terms of tuk-tuks to take us sightseeing, and we tried to strike a bargain with the one tuk-tuk that was there where the bus dropped us. I remember it being a particularly hot day (it was December but Bangkok is close to the tropics). The tuk-tuk driver knew no English. Instead he had a laminated sheet of A4 paper on which pictures of monuments had been printed. He pointed us to some three or four of these and said he would take us there. We settled at THB 150 per hour (if I’m not wrong).

And you read that right – we engaged the tuk-tuk by the hour. In a place like Ayutthaya, where there is little traffic, roads are good and you can go as fast as the tuk-tuk takes you; and where the monuments are all located close enough to each other that distance is not too much, the biggest cost for the driver of the tuk-tuk is his time. Thus, hourly engagement means that tourists are likely to hurry up and not take too much time in seeing the monuments. And this results in faster “turnover” for the driver and he can hope to take around more batches of tourists each day. And considering that he spoke no English, there was little “guide role” that he could play.

As we got on to the back of the tuk-tuk, we saw a woman and baby climb into the front with the driver – he was bringing along his entire family to take us around! So at each monument we would get off and take a look around and they would just hang around the tuk-tuk. As soon as we returned, the three of them would squeeze into the front of the tuktuk and we would get into the back (this tuktuk was like a Piaggio Ape), and off we would go! Each time we reached a monument, the driver’s wife would hold up that printed sheet of A4 paper and point us to a picture which corresponded to the monument!

The monuments were themselves nothing too special to write about – especially since we had spent the earlier three days at Siem Reap. But the overall process itself was interesting. Some monuments were really crowded, though, for it was also King Bhumibol Adulyadej (Rama IX)’s birthday, and people had got together in all places that seemed marginally religious to celebrate his birthday. Monuments attached to such places were crowded. Others had no people at all.

I remember spending three hours seeing all of Ayutthaya thus. We then went to a restaurant close to the bus stand. I remember the football fan in me facing a dilemma as to what beer to drink. Obviously there was no Carlsberg available there, and Chang was out thanks to it being Everton’s sponsor. I settled for the other Thai beer Singha. It was only later I was to find that Singha was Chelsea’s official beer!

Later that evening we went out for dinner and got caught in a monumental traffic jam thanks to the King’s birthday celebrations. We got off the tuk-tuk and started walking, using the maps on my dying phone to find out the directions. My sense of direction held good, but sense of sight didn’t as I hit myself quite badly against a parked car, badly injuring my shin as I later found out. And later in the night we had trouble finding transport back to the hotel. Now that Uber has started operations in Bangkok, next time it shouldn’t be as hard!

What a vegetarian missed out on

This is the menu card that I was given on my flight from Paris to Bangalore on Thursday. Lets look at what all a vegetarian would have missed out on:

1. Mashed potatoes with vegetables
2. Camembert cheese
3. Pineapple
4. Chocolate Tartlet

I ate all of the above and can attest that they were all most excellent – even if I were to judge them by standards not normally applied to airline food.

But someone who asked got a vegetarian platter (or had a vegetarian meal pre-booked) would have had none of the above. They would’ve instead had to make do with a sealed cup of yogurt, and a saffron semolina cake with almonds. Sounds rather sad, even if it were part of a special menu created by the oberoi group.

The problem is that the number of travelers who are vegetarian and foodies is quite small – so small that it makes no sense for the airline to career specifically to them.

Serving food on board is expensive business for airlines, and the less the number of choices they offer the better it is for them in terms of slack they have to build into their system. Hence they offer only what they believe are popular choices and hope that people’s preferences are within one of the choices they offer.

There are special meals on offer though for people with special dietary requirements but they are on offer only for those who have specifically pre booked them – this restriction means airlines don’t need to carry slack on this count. But for everyone else it’s a choice between one of the main meals on offer, and for vegetarians who like to eat well it’s a rather sad choice.

If I were offered this menu three years back when I was still vegetarian there’s a high probability I would have asked for the French cuisine. And eaten everything but for the chicken (and perhaps the mashed potatoes since they came in the same container as the chicken).

Or better I might have tried to negotiate with the airline staff to give me everything from the French menu but for the hot stuff – which would come from the vegetarian option. Given its air France I don’t know if I would’ve succeeded but would’ve tried.

I remember this fight in 2011 on Aegean airways from Rome to Athens when we had pre booked vegetarian meals and were given sad looking fruit bowls in lieu of pastries. We has asked the staff if they could give us pastries instead of our fruit. And they ended up giving us both! But then not all airline staff are so empowered!

It’s not easy being a minority, on whatever axis. Markets are too illiquid to cater to you.

Is TripAdvisor killing Expedia?

The coming of the internet has led to one round of disintermediation in the travel market, and I hypothesize that review websites such as TripAdvisor are going to lead to another. Let me explain.

In the “good old days” if you wanted to travel there was no option but to reach out to the neighbourhood travel agent who would give you options of a few airlines and hotels. The best you could do to figure out if you were being taken for a ride was to check across multiple agents, but even then the only thing you could compare was price. It was impossible to compare hotels in terms of quality and you would take the word of the travel agent.

And then the internet happened.

Now, with sites such as Expedia or Travelocity, you got more transparency in pricing – especially when it came to airline ticketing. The travel agent could no longer take you for a ride when it came to the air fares – you could cross check online and bypass the agent if he wasn’t offering you a good deal (of course some things such as flexible schedules were best booked via agents, and they continue to hold sway in the corporate segment for that reason). Simultaneously airlines started selling tickets direct, via their own websites (this was led in part by “low cost carriers” who saw this as a good way of saving cost by cutting out agent fees).

This was the first round of disintermediation in the travel industry. Airlines selling tickets direct and customers being able to book directly online meant the overall business of travel agents reduced. Some of them were cut out completely while others were replaced by large-scale technology enabled agents such as Expedia or Travelocity. Those that survived either have corporate clients (who need flexible schedules and have little time to book online) or have resorted to packages – where they arrange for flights, accommodation and cars, and quote you a consolidated fee – in which there are margins to be made.

The move to large-scale technology-enabled agents meant that some of these agents were now large-scale aggregators. This gave them significant bargaining power vis-a-vis hotels and this allowed them to bargain for deep discounts. While earlier conventional wisdom was that “travel agents” could get you “good deals”, now these large online aggregators were the ones providing the “best deals”. Thus it made eminent sense to book via these aggregators.

Simultaneously most hotels also started direct booking on their own websites. However, the problem was that the hotels themselves did not have the technological capability to implement good revenue management practices on their own websites. They also did not have the technological capability to offer a seamless and smooth booking experience. Thus, large online agents such as booking.com and Agoda prospered.

There are two functions that a travel agent performs – helping customers discover hotels and then actually executing the booking. In the traditional model, agents don’t charge for the discovery process. That service is instead cross-subsidized by the fees they make on the actual booking process. The first level of disintermediation in the travel agency (which we’ve seen above) has chipped away at this model, however. What do I, a travel agent, have to gain if I put in painstaking research and find you a hotel, only for you to find that you can book it for a lower price online? Agents, however, have not figured out a way to charge for the discovery process.

However, it is unlikely that they need to. For you now have websites such as TripAdvisor which have user-generated reviews and ratings for a large number of hotels, and which rank hotels in each city by type and user ratings. TripAdvisor has become so ubiquitous for user-generated ratings for hotels that nowadays travel agents add links to TripAdvisor profiles of hotels that they are recommending. Thus, we can see that the hotel discovery process can exist independently of travel agents.

What of the bookings itself? Don’t we need travel agents for that? Note that irrespective of whether a travel agent is online or offline, the hotel has to pay them a commission for selling their inventory. In the past given their size, hotels (unlike airlines) were unable to effectively sell rooms on their own websites and thus resorted to paying travel agents. However, advances in technology now mean that it is easy for a hotel to adopt a third-party software to effectively manage their inventory and sell tickets on their own website, and at a fraction of the cost they need to pay travel agents.

So, if TripAdvisor helps you discover hotels and then you can book hotels directly through their own websites, who needs travel agents? For now, most large online aggregators have a price matching policy and thus match the prices that hotels quote on their own websites. However, in order to save booking fees (rumoured to be of the order of 17% of the total booking value) hotels are trying to innovate and add freebies to their offering.

For example, a hotel in Cambodia I stayed in last week offered a free massage to guests who had booked through their own website (unfortunately I booked via Agoda and couldn’t avail of this offer). The Bangkok hotel I stayed in last week offered a 10% discount on payments made via American Express on their own website (again we discovered this after we had booked on Agoda, using an AmEx. To their credit, Agoda gave us a refund to the extent of the discount we would have got on the hotel website).

Essentially hotels have figured that with the growing popularity of platforms such as TripAdvisor, they don’t really need travel agents, small or large. As TripAdvisor gets more popular and third party hotel booking softwares gain traction, we are likely to see the decline of large travel aggregators such as Expedia, Travelocity and Agoda.

In essence, the growth of TripAdvisor is going to lead to the partial downfall of its erstwhile parent Expedia.

Rail track utilization, per Railway Minister

Now I guess you know how I work. I come across a data set and then torture it to extract as much information as I can before I let go of it. So continuing with the railway data put out by the EPW, in this post we will look at the track utilization. The metric is simple – how many passenger trains go over a piece of railway track each day?

We have numbers for the total route length and the total number of passenger train kilometers. Dividing the latter by the former gives us the number of trains that pass over the average piece of track in a year. Divide that by365 and you get the number of trains that go over the track per day. In 1992, this number was 16. An average piece of track was run over by 16 trains each day. By 2009, this number had gone to 25!

Data source: Economic and Political Weekly May 18, 2013 vol xlviII no 20

Note that these are average numbers. They hide the fact that there might be tracks on which no trains run, and other tracks on which maybe 100 trains run each day (even higher if you think of something like the Mumbai local train tracks). Yet, they give us a good indication of how the railways have utilized the infrastructure that is most scarce (tracks are the hardest thing to add, given the complexities involved in laying additional track – taking into account land acquisition, etc.).

Notice that though this is a largely linear growth, there have been times when growth has been faster than in other times. Next, let us look at how much utilization has been added each year. And let us look at it in terms of who the railway minister was in that financial year!

Notice that the outlier years are the first two years of Nitish Kumar’s occupation of the Ministry. During his unbroken 5 year tenure, Lalu Prasad Yadav also consistently added significantly in terms of track utilization. Unfortunately the data for passenger train kilometers ends with 2009, so here we are not able to see how Mamata Banerjee performed in her second stint in the ministry.