Luxury tourism in Delhi gets a new name — The Royal Time Machine. Other cities are waiting
Is this India’s terrestrial answer to the Venetian Gondolas? A luxury bus fitted out in an early Mughal setting, 19 people sitting under crystal chandeliers, drinking from tinkling silver designer glasses, enjoying period snacks served by liveried attendants.
Add four LCD screens, multi-lingual voice-overs and chemical restrooms to this mix and you get the Royal Time Machine —a new venture from TRTM Tourism and promoted by Suparna Chopra and Shivani Chopra.
How much does all this cost? The basic bus comes for Rs 55 lakh ($140k) and a ticket is at $160 (Rs 6,400) for a half-day trip. Royal Time Machine has been started by TRTM Tourism, a privately-owned luxury travel and hospitality company, with an initial investment of around Rs 7 crore ($1.75 million). Having started off with two buses, the company plans to pump in a further Rs 40 crore ($10 million) over the next five years into the venture.
| DARE/facts |
| Sector: Tourism Big idea: Conducted tours in the city of Delhi, enveloped in luxury, at a price Target Audience: The well-heeled foreign tourist Entrepreneurs: Suparna Chopra and Investment: Initial: Rs 7 Cr ($1.75 m) Further: Rs 40 Cr ($10 m) Company: TRTM Tourism (www.theroyaltimemachine.com) |
Well into its fifth month, it’s filling up its posh seats rapidly, thanks to the value for money that it offers to the well-heeled thirsty traveler. At $160, it works out pretty cheap for foreign tourists. The ticket covers the entry charges of all significant monuments of the city in addition to the modernized Mughal luxury. With average seat occupancy hovering around 60-70%, it can rise upto 85-100% during festivals or the peak tourist season. This means that there remains an exploitable market for more such ventures, especially during the peak season.
The major challenge faced by TRTM in starting the Royal Time Machine was the lack of a benchmark since it is the first of its kind in the country. “India is coming out of the image of being a low-cost destination and has become the 3rd most preferred destination in the world. Premium segment tourists have special requirements which are not limited to just sight-seeing. They want to have an unforgettable experience,” says Suparna Chopra.
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Now that the Royal Time Machine has been launched and has gained popularity amongst the tourist circuit of the city, it would not be difficult to initiate businesses based on similar ideas. So how would the opportunity look like to an entrepreneur planning to venture ot into these waters?
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Considering the tourist inflow and the average market size, there is space for around 40 to 50 more such buses in Delhi. The initial investment will be around Rs 5-6 crore, including cost of the bus, luxury arrangements and related staff and infrastructure. Annual operational and maintenance costs will set you back by not more than Rs 40-50 lakh per bus. Assuming you start off with an average occupancy of around 60%, you still earn Rs 87k every day, that is, annual earnings of Rs 1.75-2 crore! Counting in your annual expenses, you still end up with a figure in crores!
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Your return on investment would be strongly dependent on intrinsic factors such as your service and extrinsic factors such as regional or national events on the lines of the upcoming commonwealth games of 2010. Unfortunate events such as a terrorist attack or an outbreak of bird flu could hamper tourist inflow and impact the business.
The average seat occupancy is not likely to fall below 60%, thanks to an increasing number of affluent resident middle class as well as the affluent domestic and NRI tourists, which would adding further volumes.
Since this is a niche offering, previous experience in the tourism or transport industries would be an advantage. Competition for this and similar services will come from cheaper sightseeing tours and from the Palace on Wheels trains of the Indian Railways. Brand-building is an important part of the deal since you would need to differentiate yourself from the cheaper local sight-seeing tours. To achieve the same, you would need to recognize appropriate marketing channels. The basic problem faced while launching the Royal Time Machine, as mentioned by Suparna Chopra, was in zeroing in on the right marketing channels since there were no other comparable ventures in the country. Although somewhat similar models exist in the form of the Palace on Wheels trains, she and her team had no way of knowing whether a luxury city tour would be sought after or not.
| DARE/estimates |
| This is how the opportunity looks like All India data for 2006 Annual foreign tourist arrivals: 40 lakh Annual growth rate: 13% Annual forex inflow from tourism: Rs 24,000 Cr ($6 bn) Growth in forex inflow: 18% Delhi Annual foreign tourist arrivals: 19,36,749 (48% of total tourist arrivals for the country) Assuming 10% as target market: 1,93,675 Target market size per day: 968 Market size: 42 buses Finances per bus Basic cost of bus: Rs 55 lakh Seating capacity per day (2 trips): 38 Occupancy per day (60%): 23 Realization per ticket: Rs 3,840 Income per day: Rs 8,7552 Annual revenue per bus@200 days: Rs 1.75 crore |
| Assumptions: 10% of tourist arrivals form target market 40% commission on tickets sold 60% occupancy per trip Season=200 days of service=400 trips per year DISCLAIMER: This data and analysis are indicative and Cybermedia makes no warranties about its accuracy. You are advised to do your own analysis if you are evaluating a similar venture. |
Do similar opportunities exist elsewhere? Yes. The obvious choices are the other metros. However, lack of aviation infrastructure across the country would limit tourist inflow beyond metros. Well-frequented tourist circuits are the other likely contenders. Inter-city tours like Delhi-Jaipur-Agra, Bangalore-Mysore, Chennai-Mahabalipuram, and pilgrimage tours like Chennai-Tirupathi are sure to be great hits. There could be a playing around with themes as well. Whereas a heritage theme works well in Delhi considering its historical significance, certain other themes inspired by local tastes can also be explored.
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