Business - India Abroad

In 1976, teenager Lalit Sheth arrived in Mumbai from Kolkata and placed an advertisement in the Gujarati Mumbai Samachar: "Do you want the kind of holiday where three people are assigned to a room in a basic hotel with no star ratings, there is no attached bathroom, and it takes five days to reach Kashmir in overcrowded buses and slow passenger trains? If not, then contact me at Raj Travels."

Idea

That pretty much summed up Sheth's strategy to break into the travel business: construct premium tours and don't be afraid to charge for them. He charged Rs 1,320 a head, almost double the going market rate of Rs 750.
Twenty-one people signed up for that first the trip. Before setting off, the 19-year-old Sheth, who had no experience in running a business, arranged for them to meet each other over high tea at Hotel Oberoi in Nariman Point, so that they could get to know each other.
He arranged for his clients to travel on an express 30-hour train to Jammu, followed by an eight-hour deluxe coach with reclining seats to Kashmir. His tourists reached Paradise on Earth in just a day and a half. He then put them up in luxury, three-bedroom houseboats with living rooms and attached bathrooms, and carried a small TV and a library of books for them.
"They were very excited by the fast train and bus ride because back then, people used to spend half their vacation time actually getting to Kashmir," Sheth recalled. "I never try to undercut the rest. My belief is that I am here to sell a product. Even now, I don't follow the market rate."
When Sheth published his bold first advertisement, there were about 50 travel agents in the city, most of who were targeting Maharashtrians. But Sheth decided to focus on Gujaratis, figuring that they had higher disposable incomes and a greater yen to travel. At that time, most Indians travelled within the country, and most trips offered poor quality hotels, transport and food.
So Sheth moved fast to convert his idea into a company, today known as Raj Travel World, headquartered in Chowpatty in south Mumbai. It attracts 5,000 customers a day, has a yearly turnover of Rs 300 crore and makes an annual profit of Rs 20 crore. "I had to create new demand," Sheth, 52, said, in his silver-themed office. "I didn't believe in snatching business from others. But I did not want to be run-of-the mill. I prefer to be a locomotive and pull a train than be the carriage and be pulled."

Business

Sheth's business had humble beginnings. He started with a table in a shared office in Masjid Bunder, in south Mumbai, and Rs 2,200 to his name. But after the first tour, his customer base grew via word-of-mouth and regular small newspaper advertisements.
In 1979, he organised his first overseas tour to the Far East after studying the mountains of brochures he asked tourist offices of various countries of that region to send him. "People thought I had been to the countries, but I hadn't," he said. Until 1985, he ran the business without borrowing money, but that year, he applied for a bank loan to open new branches, the first one at Ahmedabad. Since then, he has kept borrowing to expand. The second branch opened in Chennai and the third in Srinagar.
In 1984, he moved out of a shared office and into the diamond merchants' hub because most of his clients were based there.
Six years later, he moved to his current premises because he needed more space and it was also near where many of his clients - Mumbai's Gujarati industrialists - lived. He still writes all the ads for TV and print, ensuring each one speaks directly - some might say bluntly - to the customer. A recent one boldly claimed that no travel agent in India included as many sights on their European tours as Raj Travel World did. "Eighty per cent of my products are sold through the ads alone," he said. "Only 20 per cent rely on sale agents."
To counteract the industry's high staff attrition rates, he offers generous incentives. Senior staff can earn more than Rs 2 lakh a month, while sales agents can get Rs 500 for each passenger they book onto a tour. Most get to travel for free as they also double up as tour guides. "This means they won't make false promises to the client," said Sheth. "And if a customer calls a sales agent on his mobile at 2 am, he will pick it up, because he knows he might miss a sale otherwise."
When selling a new destination or tour, Sheth starts by researching it on the Internet, finding out the 'must go' new places there are. If he can, he travels there himself. He and senior staff also regularly travel to trade fairs to pick up information.
Based on all this data, he personally draws up the itinerary and designs the brochures. Next, the hotel rooms, flights and train seats are block-booked, based on projections from the previous years' sales, and the advertisements are placed. He makes sure his staff gets a more detailed brief about each destination so that they can answer any questions customers might have. Sales start after the ads appear.
When any tour departs, the following day, he gets a print-out stating how many men and women were on it, their ages, languages, where they were from, and crucially, whether the tour made a profit or loss. He also mingles a lot with customers walking into his head office. "Lalit is a genius at encouraging a passenger to take a tour," said sales agent Ashish Durve, 43.
"He interacts with the customers a lot, and often goes round serving them tea and coffee. He personally replies to all customer feedback and complaints, and frequently does spot checks, turning up unannounced in the middle of tours."
InnovationsIn 1981, his company pioneered the idea of sending Indian chefs to Europe. Now it has got them stationed at all the hotels it uses there. Although these chefs originally served Gujarati cuisine, now they dish up anything from Jain vegetarian to south Indian fare to Thai curries.
Mohan Suarne, 60, from Andheri, admitted it was the main attraction for him to use Raj, even though the price was higher.
Mahendra Mehta, 58, who lives in Sion, said the fact that he could eat Jain food and there were no hidden costs were reasons he bought a European package. Sheth takes pride in the fact that his trips have no add-on charges, and he claims he packs in more than anyone else. "We take people to the top of the Eiffel Tower. Others take you to the first floor. We even offer Indian food on top of Schilthorn," he said.
Nischal Nanil, 32, a government bond broker, who lives in Kandivli, seemed convinced of this. "You get in maximum destinations in the least time," he said. Sheth continues to innovate and find new markets to tap. His website will be the first online portal in India to sell Heathrow Express tickets online. Two years ago, he created Raj National Express, now perhaps the only pan-Indian private coach operator, which claims to offer more leg room, leather seats, travel kits, bottled drinks and blankets.

Success
Six thousand customers travel on Sheth's coaches each day, bringing in a annual turnover of Rs 52 crore. Nearly 100 per cent of their visas were successfully processed, Sheth said, because their name was respected, and they did not sell to people who looked dubious. "Many generations of the same family use us," said Durve, the sales agent. Indeed, the company boasts 60 per cent repeat customers and is, according to Sheth, the largest package tour operator in India focusing on overseas trips. Nanil also seemed to think it was the first of its kind. "It's the oldest large tour operator in India and it's well known for its family trips," he said.
It is all a far cry from when Sheth started with nothing but a rented table. Now, he rents 8,000-plus square feet of office space in Chowpatty alone, and more than 25,000 square feet across India.
Little did he have all this in mind, when as a mere boy, he turned up in Mumbai alone to escape Naxalite violence in Kolkata and to find work. His father's tea export business had folded because none of the children had been old enough to take it over when he died.
In Mumbai, Sheth targeted travel agents for work because that was all he knew. At the age of 16, he had taken 93 children on a tour around Nepal all by himself as the secretary of a children's welfare club. Wanting the best for his clients, he had arranged for them to meet the then Nepalese King Mahendra. He started off staying in a men's dormitory, six to a room.
Today, he has a three-bedroom town house in expensive south Mumbai. Since his wife Rekha has taken over the accounts, profits had begun soaring. Being Gujarati has helped too, since Gujaratis like to travel with their own kind, but he was reluctant to play that card, he said.

Obstacles
Of course, there is competition. The other two big Indian travel agents in Mumbai are Raja Rani Travels and Kesari Tours, while the major international players are Kuoni, Cox and Kings and Thomas Cook.
But Kesari and Raja Rani focus on Maharashtrians whereas Sheth focuses on north Indians and Gujaratis. "Do you ever see Mercedes competing with Maruti?" Sheth said, his eyes sparkling.
Despite his confidence, travel agents of all sizes face challenges today. Margins are becoming thinner while advertising costs are ballooning. "Year-on-year we have been growing at 45 per cent, but this year already there has been a slowdown, so we have put a more conservative estimate of 25 per cent," Sheth admitted. "This is because people have less money to spend." Anoop Kanuga, chairman of the Travel Agents Association of India for the western region, predicted that large-scale general package tours would die out as Indians start to travel independently.
Vishvajeet Patil, director of Raja Rani Travels, agreed. "You can't afford to start a general business unless you have money to sink in because advertising costs are high," he said. "The success factor for a fresher today is to be niche, like offering adventure-driven tours or religious tours or destination management." Sheth disagreed. "I don't see package tours coming to an end," he said. "It's the difference between eating at home and going to a restaurant. Restaurants will always make good business. I have clients who could afford a tailor-made holiday with their family, but they would prefer to go on a package tour because they like meeting other people."
But he admitted he was looking at segmented package tours in future such as singles tours. The trick, he said, was to have one's finger in many pies and offer a buffet, including corporate incentive trips.
Future
Sheth claimed he had raised the game of tourism in India, forcing other travel agents to offer greater comfort on their tours so the overall tourist experience is better. By pioneering Indian food in Europe, he said he had actually encouraged more Indians to travel than otherwise would have. Now he is looking at a major expansion. Convinced that travel by road is the future in India, he plans to increase his fleet of Raj National Express coaches to 10,000 and to become the first in India to offer wi-fi and live TV.
A new 44,000-square-feet office is coming up in Ahmedabad in two years and a 24/7 call centre will open up within days, just yards away from his office, and will employ 150 staff. "The group needs to grow 25 per cent next year and have a turnover of Rs 373 crore, add branches and increase departures," he said. "That is because we feel this is achievable. I will launch my IPO within a year because the way we are growing, we need more money."