India's Growth Brings Both Challenges And Opportunity

Buyers managing inbound and outbound corporate travel for the rapidly growing business market in India face several challenges, ranging from high prices for sparse hotel rooms and airline seats to limited corporate card acceptance.

Technology-industry hotspot Bangalore, for example, has 1,600 four-to five-star bedrooms, of which around 900 are blocked out for long-term bookings. Demand for the remaining 700 is exceptional, leading to rampant inflation, warned Intel global sourcing manager Megan Stowe and TQ3 Travel Solutions Pacific senior vice president Bicky Carlra at last month's conference of the Association of Corporate Travel Executives in London. "It's a nightmare and the hotels know it, so they are charging $300 to $400 per night," Stowe said.

Other difficulties enumerated by Stowe included introducing a card program in what she called a "cash country" and the high demand for airline seats. This problem is compounded by regulations requiring tickets to be issued within a certain period after booking, failing which the reservation is canceled. Apex and restricted fares must be ticketed immediately.

There is potential relief in the rapid development of the air market. India now has seven domestic airlines, with another three launching in the next three months. Even here, however, there are problems. Stowe said Intel will not let employees use most new low-cost carriers because the firm cannot obtain adequate safety information from them.

The airlines also are held back by a rickety aviation infrastructure, including underdeveloped airports that cannot cope with the surge in demand. It is normal to wait in the air for 45 minutes before landing, said Stowe. Many tickets, meanwhile, are handwritten, Carlra said, making collection of management information a laborious task.

Stowe also warned fellow buyers about the cumbersome task of obtaining visas for Indian employees, with visa services overwhelmed by demand. "Planning a trip to the U.S. three days before departure does not work," she said.

Despite all the problems, solutions are emerging. Stowe said Intel saved $2 million by using serviced apartments in Bangalore. They are usually less than half the price of hotels, although their rates are beginning to rise quickly as well. Most serviced apartments are of excellent quality but are independently run, so Stowe said it is vital to have someone on the ground in Bangalore to make the relevant arrangements.

Corporate airline agreements are beginning to emerge, especially for international routes. A small number of buyers are overcoming the problem of short supply by securing guaranteed allocations on every flight. "Companies are starting to book one, two or three seats on certain routes," said Carlra.