Unlike Doshi, one-time hotelier, Sreekumar, ‘sailed’ smoothly into his new houseboat venture by first investing in two small houseboats . “With our experience in the hospitality industry, we got sufficient funds from State Bank of Travancore”. With a seed capital of INR 30 lacs and initial investment of INR 10 lacs, Sreekumar compares Aria Holidays’ running costs to that of a hotel. “Cost-heads”, he spells out, “include booking, reception, housekeeping, food and beverage service and compensation for his 20 crew members. In addition, we have to arrange appropriate routes to suit our guests, maintain the houseboat décor, engines and spend on sewage treatment and safety equipment”. Sreekumar’s maintenance costs on an average are INR 3250 per day on the small houseboat and almost INR 6000 for a 6-bedroom boat. Despite these high maintenance costs, the returns on investment until December 2008 have exceeded 25% (a healthy ROI for this industry ranges between 20%-30%). In six years of its existence, Aria Holidays has spent INR 210 lacs on building seven boats (small boats cost upto INR 20 lacs while the 6-bedroom boats costs over INR 100 lacs). “Pollution of backwaters is the greatest threat to him and the industry”, he mentions, and more recently, the economic slowdown.
In comparison, the Moving Clouds model required a low initial investment of INR 0.5 lacs in 2004. How? Deshpande answers, “Being one-man driven, large funding was never required. And as we have outsourced all our equipment requirements to specialists and companies that conduct such tours, we are able to stick to our core competence of planning, organizing, execution of itineraries. So our main cost heads are limited to individual travel to find new routes, properties, itineraries etc”. Not surprisingly, Moving Clouds has seen profits coming in from Day 1 and Deshpande’s ROI is in excess of 200%. But Deshpande’s set of challenges are different. “Mid-level, clean, no-frills accommodation needs to be up scaled everywhere. Outdoors safety in recent times has become an issue too. And there is still a mindset about having to pay a fee to have a travel itinerary ‘designed’! Indians are caught up by designer cars, designer homes, designer clothes, but not too many opt for that exclusivity in seeing the hinterlands of this fantastic country of unparalleled beauty-of raw nature, monuments, history and culture”. That said, Deshpande also notes that, “Delayed flights/trains, rasta roko, landslide, cattle crossing, public rally/procession hold ups, vehicle breakdowns, hotel issues are always waiting to happen, no matter how precisely one has planned”.
He vividly narrates two 11th-hour unforeseen glitches from his own personal experience, “A family was travelling to Bhutan last year in hi-peak season. Although all hotels were re-confirmed, they had to wait for their rooms at a remote destination for over eight hours as the booking clerk had left her job abruptly without passing the message ahead. Or when, a hi-profile bureaucrat was taking his African counter part to showcase Agra. The hotel selected was good as per budget. I get a call at 9 pm saying that since the hotel rooms were freshly painted, the smell of paint was suffocating the guests! We had to make quick alternate arrangements.” Having a majority of international clients, Deshpande advices new entrepreneurs to “set the expectations upfront about India” as a necessary first step, also explaining differences between India as a travel destination and other nations that experience high tourism.
Challenges apart, each of the three outdoor ventures enjoy a healthy conversion ratio. Their markets have grown and “repeat customers” is a term we heard often.
| ARIA HOLIDAYS & RESORTS | |
 | |
 | |
| Started in | 2002 |
| Operating Officer | N. Sreekumar |
| Nature of business | Houseboating |
| Initial Investment | INR 10 lacs, Seed fund of INR 30 lacs |
| Total Investment | INR 210 lacs |
| Team size | 20 |
| Break even | 200 day occupancy/year |
| Regulations | Fire extinguishers, Life buoys, life-jackets |
| Boat costs | INR 20L for small boats (1-2 bedrooms); INR 100 L for large boats (6 bedroom) |
| Running costs | INR 3250/day for small boats and INR 6000 for the large boats |
| ROI | 25% |
| Tariffs | INR 6000/day for A/c room and INR 4500/day for non A/c room (twin sharing, inclusive of food) |
| Threats/Challenges | Pollution of backwaters; overcrowding of backwaters;economic slowdown |
| Business promotion | *Through a network of travel agents *Tourism fair participation |
| Customer Profile | *Age group 20 - 50yrs ; *80% Indian (Maharashtra, Gujarat,Delhi,Calcutta, Karnataka, Hyderabad Andra Pradesh & Chennai) *20% are International(Europe, US, Russia, S,Africa & Australia) *80% of luxury-seeking guests, not on an ethnic/cultural tour |
| Sreekumar’s quote: Try to employ and encourage talent locally | |
Has their passion and perseverance softened these hurdles along their journeys to pick best business practices? Deshpande is so passionate about his ‘product’ namely India & the sub-continent that when asked about a lean season, he emphatically replies, “Every season has a region to offer! Summer has hill options, south-west monsoon have rain-shadow regions & east coast, north-east monsoon have the other coast line”. An intrepid traveller, Deshpande is a walking-talking almanac on tour routes that he has created, a clear edge over other destination-management services.
Personalised service offerings have made the markets of both Moving Clouds and Strawberry Outbound “multiply”. Strawberry Outbound’s Doshi says, “Our clients are beginning to understand that we are aiding their growth process”. An impressive range of 120 program formats have been created thus far!
Finicky about providing an authentic Kerala experience to his guests, Sreekumar offers bamboo mats in all their houseboats despite their high maintenance. And as value for money to its corporate clientele, one of Aria Holidays’ large houseboats (having 6 bedrooms) has been designed with a large A/C conference hall. Working closely with 250 other players (that own 450 houseboats across Kerala) to maintain the cleanliness of lakes and canals, Sreekumar’s advice to anyone who would like to get into eco-tourism is, “Any venture like ours ought to try and protect ethnic and cultural ethos. Provide employment and encouragement to the locals and not harm Nature’s balance in any way”. Sceptical about the current slowdown, he plans to whole-heartedly participate in the Travel & Tourism Fest once again this year.
Mother Nature, as their mentor, has not just infused perseverence and an innovative streak in them but offered them a vast canvas. The three entrepreneurs on their part, have been eager, never restraining themselves from experimenting with their wildest of dreams!
Irawati Gowariker is a communications specialist with 15 years in the media and IT services industry, She started her career with an export promotion project that handheld aspiring exporters and manufacturers to export to Germany.
Philip Anderson is INSEAD Alumni Fund Professor of Entrepreneurship, Director, Rudolf and Valeria Maag International Centre for Entrepreneurship and Director, 3i Venturelab.
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written by Prabakaran, May 21, 2011
written by Manimaran, November 15, 2009
We have developed a six swiss cottage tented resorts in a lesser known hill stations called Kolli Hills which is 275kms from Bangalore. Total expenses are 17 lacs.
Total bookings per year 100 days. 12000Rs. per day
12,00,000 Rs per year. Expenses Rs. 5,00,000/ and the profit is 7 lacs per annum.
But we need to put more efforts to develop the marketing to know this place.
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