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Travel & Transportation By Jaydeep Hingne Industry Overview •
Segmentation of Industry
•
Major IT Drivers affecting the domain: Travel: Transport: • Reservation and • Vehicle Scheduling Departure Control • Availability and • Fleet Mgmt Schedules • • • • •
Fares Messages and Queues Crew Scheduling Loyalty Management Self Service and Remote check-in
•
Transportation Mgmt
• • •
Warehouse Mgmt Relocation Mgmt Regulatory Compliance Mgmt
Logistics: •
Cargo Information
• •
Supply Chain Mgmt Need for Trace and Track
•
Distribution Mgmt
Market Overview: a) Global Travel & Tourism: Worldwide investments on Travel and Tourism industry by public and private sectors combined were USD 1010.7 bn in 2006 (9.3% of total investments). They are expected to cross USD 2059.8 bn in 2016 (9.6% of total investments). (Source: ISI securities analytics) Transportation and Logistics: The global logistics industry was valued at US$3.5 trillion in 2005, whereas US logistics industry size was around US$900 billion, 25% of the global logistics industry.
b) India Transportation and Logistics: Transport sector’s contribution to India’s GDP is estimated to be around 6.6% in 2005-06 (approximately US$ 48 billion) and road transport has a dominant role in this contribution with a share of 4.7% in India’s GDP. Logistics industry in India is estimated to be around 13% of the GDP, which comes to around US$94 billion in 2005-06. BMI’s India Freight Transport Report concludes the country will reach average annual freight traffic growth of 10.2% in the 2007-2011 period. Travel & Tourism: There has been a significant increase in the number of foreign tourist arrivals during 2006. Foreign tourist arrivals which were 3.92 million in 2005 rose to 4.43 million in 2006 showing an increase of 13 per cent. Foreign exchange earnings from tourism also showed a phenomenal growth from US$ 5.73 billion in 2005 to US$ 6.56 billion in 2006, achieving an increase of 14.6 per cent. India’s tourism industry is poised to grow to more than US$ 90 billion, from the current US$ 39 billion, in the coming decade. Major Contributing factor :: Medical Tourism: Medical tourism industry in India is presently earning revenues of US$ 333 million. Encouraged by the incredible pace of growth exhibited by the industry, the Confederation of Indian Industry (CII) and McKinsey have predicted that the industry will grow to earn additional revenues of US$ 2.2 billion by 2012. USP "cost effectiveness" combined with the attractions of tourism. Medical care, packaged with traditional therapies like yoga, meditation, ayurveda, allopathy, and other traditional systems of medicines, attract high-end tourists especially from European countries and the Middle East.
c) Singapore Transportation & Logistics: • Singapore – a major Asian transportation hub, strategically lying on the midpoints of certain sea and air trade routes. • Transportation industry comprises over 10% of Singapore's GDP (approx US$ 15 billion). Singapore port was the busiest port in the world in 2005 in terms of shipping tonnage handled. Also Singapore is connected to more than 60 countries by air for passenger traffic and for cargo movement. • 17 out of the world’s top 25 3PLs have a substantial presence in Singapore. Travel & Tourism: • The Singapore tourism industry is booming with tourist arrival in the country increasing on an annual basis, owing to the country’s buoyant economy and improved travel confidence. • Singapore received 820,000 tourists in May 2007, an annual increase of 7.1% over the last period. Growth rate expected to increase upto 12% per year for next 5 years. • Major players in the Singapore tourism industry include Singapore Airlines, Cathay Pacific, PT Garuda, Qantas Airways Ltd, Thai Airways International Plc, Shangri-la Hotel, Prime Travel & Tour, and WTS Travel & Tours.
d) UAE Transportation & Logistics: • Dubai – perfectly positioned for ocean freight; Jebel Ali Airport (JXB) – world’s largest airport to be constructed near Dubai (cost approx Dhs 30 billion) for Dubai's passenger and cargo air transportation needs until 2050 and beyond. • Dubai Logistics City – 1st phase of the World Central project – will be adjacent to the new JXB, and will be capable of handling up to twelve million tons of cargo a year through an integrated combination of multi-modal transport and logistics. (expected completion : 2007 end). • 50 logistics companies, including Kuehne Nagel, have opted to build their own facilities currently covering more than two million square metres of DLC land. Travel and Tourism: • Dubai is fast becoming the holiday capital of the Middle East. By 2010, tourism will contribute 20 per cent to the country's GDP, which represents a rise of 8 per cent from 2004. • Tourism indirectly drives the growth of Dubai construction sector. This is due to the fact that tourism needs good infrastructures such as roads, airports, hotels, apartments and man-made attractions. The number of tourists visiting Dubai is projected to reach 15 million by the year 2010. • Major projects in Dubai to promote tourism : The Palm, The World, The Waterfront Project, Dubai Marina, Burj Dubai, Dubailand, Dubai Healthcare city etc.
Major players in the Domain: •
•
List of major suppliers/ services companies: • • •
Satyam TCS HCL
•
NIIT Technologies
List of major customers o Emirates Group o Dassault o Bombardier o United Airlines o Nothrop Grumman Corp
• Perot Systems • Infosys • Hexaware Technologies Kale Consultants (Upcoming Player)
o o o o o
Airbus United Technologies British airways Boeing BAE
My Analysis: Travel and Tourism: • Coming years is going to be the boom time for India's Travel and Tourism sector. Reasons : surge in business traveler arrivals, a soaring interest in the country.
• • • •
World’s leading travel and tourism journal, “Conde Nast Traveller”, has ranked India amongst top 4 preferred holiday destinations in the world. Medical tourism, Adventure tourism, Heritage tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism -- the scope for theme travel is vast in India. The launch of medical visa (M-Visa) – great move for medical tourism. I think 100% foreign direct investment regime in tourism permitted through the automatic route will help boost the India's tourism. With the country hosting the 2010 Commonwealth Games, this share will increase to about 1.5 per cent in 2010, from a mere 0.52 per cent in 2006.
Transportation: • Strong economic and foreign trade growth is underpinning the freight upturn. • In the road freight sector, demand is getting boosted by door-to-door logistics, the move to higher value/lower bulk shipments, the rising size of the vehicle fleet and the new impetus to improve and extend the network, using private sector highway operators and (BOT) schemes. • All other transport modes would experience faster growth, with international air cargo turnover performing strongly as more private airlines join the market. • Rs 30,000 crore dedicated freight corridors and metro projects of various states has attracted MNC’s like Toshiba (in talks for manufacturing of coaches and locomotives in India), Bombardier (Rail equipment manufacturing), Mitsubishi Corporation (Locomotive manufacturing and maintenance). ERP systems would be essential in these projects !!! • A major factor over the next few years driving change will be the rising competitive pressures from cargo operators among India’s immediate neighbors. In all these ERP systems, WH management systems will play a major role. Not only in India but all across the world, the main driver for IT in Travel & Transportation is going to be the “Aviation Sector”. By 2010, India's fleet strength will stand at 500-550. Boeing alone will be delivering 911 new aircrafts to various Indian carriers by 2027. Also with the arrival of biggies - Airbus’ A380 and Boeing’s 787 Dreamliner, it is going to be the high time for various IT services like Application Development and Maintenance, Packaged Application Services, Infrastructure Services at all the major airports around the globe, ERP solutions, CRM solutions, Business Analysis and Analytics etc.
References: http://site.securities.com http://www.researchandmarkets.com http://www.ibef.org http://www.businessmonitor.com http://www.airbus.com http://www.boeing.com ISI securities analytics papers Sector updates by Batliwala and Karani (B & K securities) http://www.edb.gov.sg/
http://biz.yahoo.com/ http://www.synergyworkd.com.sg/ http://www.rncos.com http://eyefortransport.com http://dailylead.com http://commercecan.ic.gc.ca
Segmentation of Industry
•
Major IT Drivers affecting the domain: Travel: Transport: • Reservation and • Vehicle Scheduling Departure Control • Availability and • Fleet Mgmt Schedules • • • • •
Fares Messages and Queues Crew Scheduling Loyalty Management Self Service and Remote check-in
•
Transportation Mgmt
• • •
Warehouse Mgmt Relocation Mgmt Regulatory Compliance Mgmt
Logistics: •
Cargo Information
• •
Supply Chain Mgmt Need for Trace and Track
•
Distribution Mgmt
Market Overview: a) Global Travel & Tourism: Worldwide investments on Travel and Tourism industry by public and private sectors combined were USD 1010.7 bn in 2006 (9.3% of total investments). They are expected to cross USD 2059.8 bn in 2016 (9.6% of total investments). (Source: ISI securities analytics) Transportation and Logistics: The global logistics industry was valued at US$3.5 trillion in 2005, whereas US logistics industry size was around US$900 billion, 25% of the global logistics industry.
b) India Transportation and Logistics: Transport sector’s contribution to India’s GDP is estimated to be around 6.6% in 2005-06 (approximately US$ 48 billion) and road transport has a dominant role in this contribution with a share of 4.7% in India’s GDP. Logistics industry in India is estimated to be around 13% of the GDP, which comes to around US$94 billion in 2005-06. BMI’s India Freight Transport Report concludes the country will reach average annual freight traffic growth of 10.2% in the 2007-2011 period. Travel & Tourism: There has been a significant increase in the number of foreign tourist arrivals during 2006. Foreign tourist arrivals which were 3.92 million in 2005 rose to 4.43 million in 2006 showing an increase of 13 per cent. Foreign exchange earnings from tourism also showed a phenomenal growth from US$ 5.73 billion in 2005 to US$ 6.56 billion in 2006, achieving an increase of 14.6 per cent. India’s tourism industry is poised to grow to more than US$ 90 billion, from the current US$ 39 billion, in the coming decade. Major Contributing factor :: Medical Tourism: Medical tourism industry in India is presently earning revenues of US$ 333 million. Encouraged by the incredible pace of growth exhibited by the industry, the Confederation of Indian Industry (CII) and McKinsey have predicted that the industry will grow to earn additional revenues of US$ 2.2 billion by 2012. USP "cost effectiveness" combined with the attractions of tourism. Medical care, packaged with traditional therapies like yoga, meditation, ayurveda, allopathy, and other traditional systems of medicines, attract high-end tourists especially from European countries and the Middle East.
c) Singapore Transportation & Logistics: • Singapore – a major Asian transportation hub, strategically lying on the midpoints of certain sea and air trade routes. • Transportation industry comprises over 10% of Singapore's GDP (approx US$ 15 billion). Singapore port was the busiest port in the world in 2005 in terms of shipping tonnage handled. Also Singapore is connected to more than 60 countries by air for passenger traffic and for cargo movement. • 17 out of the world’s top 25 3PLs have a substantial presence in Singapore. Travel & Tourism: • The Singapore tourism industry is booming with tourist arrival in the country increasing on an annual basis, owing to the country’s buoyant economy and improved travel confidence. • Singapore received 820,000 tourists in May 2007, an annual increase of 7.1% over the last period. Growth rate expected to increase upto 12% per year for next 5 years. • Major players in the Singapore tourism industry include Singapore Airlines, Cathay Pacific, PT Garuda, Qantas Airways Ltd, Thai Airways International Plc, Shangri-la Hotel, Prime Travel & Tour, and WTS Travel & Tours.
d) UAE Transportation & Logistics: • Dubai – perfectly positioned for ocean freight; Jebel Ali Airport (JXB) – world’s largest airport to be constructed near Dubai (cost approx Dhs 30 billion) for Dubai's passenger and cargo air transportation needs until 2050 and beyond. • Dubai Logistics City – 1st phase of the World Central project – will be adjacent to the new JXB, and will be capable of handling up to twelve million tons of cargo a year through an integrated combination of multi-modal transport and logistics. (expected completion : 2007 end). • 50 logistics companies, including Kuehne Nagel, have opted to build their own facilities currently covering more than two million square metres of DLC land. Travel and Tourism: • Dubai is fast becoming the holiday capital of the Middle East. By 2010, tourism will contribute 20 per cent to the country's GDP, which represents a rise of 8 per cent from 2004. • Tourism indirectly drives the growth of Dubai construction sector. This is due to the fact that tourism needs good infrastructures such as roads, airports, hotels, apartments and man-made attractions. The number of tourists visiting Dubai is projected to reach 15 million by the year 2010. • Major projects in Dubai to promote tourism : The Palm, The World, The Waterfront Project, Dubai Marina, Burj Dubai, Dubailand, Dubai Healthcare city etc.
Major players in the Domain: •
•
List of major suppliers/ services companies: • • •
Satyam TCS HCL
•
NIIT Technologies
List of major customers o Emirates Group o Dassault o Bombardier o United Airlines o Nothrop Grumman Corp
• Perot Systems • Infosys • Hexaware Technologies Kale Consultants (Upcoming Player)
o o o o o
Airbus United Technologies British airways Boeing BAE
My Analysis: Travel and Tourism: • Coming years is going to be the boom time for India's Travel and Tourism sector. Reasons : surge in business traveler arrivals, a soaring interest in the country.
• • • •
World’s leading travel and tourism journal, “Conde Nast Traveller”, has ranked India amongst top 4 preferred holiday destinations in the world. Medical tourism, Adventure tourism, Heritage tourism, Wellness tourism, Pilgrimage tourism, Golf tourism, Eco-tourism, Wildlife tourism -- the scope for theme travel is vast in India. The launch of medical visa (M-Visa) – great move for medical tourism. I think 100% foreign direct investment regime in tourism permitted through the automatic route will help boost the India's tourism. With the country hosting the 2010 Commonwealth Games, this share will increase to about 1.5 per cent in 2010, from a mere 0.52 per cent in 2006.
Transportation: • Strong economic and foreign trade growth is underpinning the freight upturn. • In the road freight sector, demand is getting boosted by door-to-door logistics, the move to higher value/lower bulk shipments, the rising size of the vehicle fleet and the new impetus to improve and extend the network, using private sector highway operators and (BOT) schemes. • All other transport modes would experience faster growth, with international air cargo turnover performing strongly as more private airlines join the market. • Rs 30,000 crore dedicated freight corridors and metro projects of various states has attracted MNC’s like Toshiba (in talks for manufacturing of coaches and locomotives in India), Bombardier (Rail equipment manufacturing), Mitsubishi Corporation (Locomotive manufacturing and maintenance). ERP systems would be essential in these projects !!! • A major factor over the next few years driving change will be the rising competitive pressures from cargo operators among India’s immediate neighbors. In all these ERP systems, WH management systems will play a major role. Not only in India but all across the world, the main driver for IT in Travel & Transportation is going to be the “Aviation Sector”. By 2010, India's fleet strength will stand at 500-550. Boeing alone will be delivering 911 new aircrafts to various Indian carriers by 2027. Also with the arrival of biggies - Airbus’ A380 and Boeing’s 787 Dreamliner, it is going to be the high time for various IT services like Application Development and Maintenance, Packaged Application Services, Infrastructure Services at all the major airports around the globe, ERP solutions, CRM solutions, Business Analysis and Analytics etc.
References: http://site.securities.com http://www.researchandmarkets.com http://www.ibef.org http://www.businessmonitor.com http://www.airbus.com http://www.boeing.com ISI securities analytics papers Sector updates by Batliwala and Karani (B & K securities) http://www.edb.gov.sg/
http://biz.yahoo.com/ http://www.synergyworkd.com.sg/ http://www.rncos.com http://eyefortransport.com http://dailylead.com http://commercecan.ic.gc.ca
