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CEO Sunil Gupta of Avis speaks to Shalini Seth about the hard work of being the first mover in the organised rent-a-car segment

TGI: What percentage of your business comes from hotels?

More than half our business, that is 55% comes from hotels and out of that, 40% comes from the Oberoi group – the Trident, the Vilas hotels. Leisure is 20% of this. We are also number one across India among all chains which supply to hotels. We service other hotel chains as well – the Radisson and the Marriott – so we run the largest number of hotel counters across our industry. The remaining 45% of our business comes from corporate segment. We offer the entire range of services – short term hire, long term hire – all mobility solutions. We also offer packages out of city and within the city.

We like to have a presence at the entry points for leisure and business travellers. We are in 18 cities already, where we have about 44 offices. You will find us in Ananda in Himalayas, Amritsar, Udaipur, Jaipur, in addition to the metro cities where we have business.

TGI: What is the ownership structure for Avis India?

We are 67% owned by the EIH, which owns the Oberoi and the Trident hotels. The other 33% is owned by Avis Europe. In the entire Asia Pacific area Avis has taken a direct stake only in China and India because these are the two engines of growth.Here they have put their own money because they feel that both these markets are going to be important. Already, they’re seeing growth here that is unheard of in Europe and North America. Everywhere else Avis has a licensee agreement, which means there is a partner who is allowed to use the branding.

TGI: A senior Avis official was quoted saying the company’s growth in India is hampered because of lack of quality infrastructure. What is the difference in the Indian and the Chinese markets?

For people coming into China, it is not easy to get driving licenses. This hampers growth as people cannot pick up cars for self-drive. Here there is no restriction on foreigners coming and driving.

The big difference between Avis here and in other parts of the world is that here self-drive is in its infancy. Less than 3% of our turnover comes from self-drive, whereas internationally it is 38%. That is because it is relatively easy and cheap to have a guy drive you around compared to Europe. Second, the infrastructure is not as good. Road signage is poor on the highways. Parking is a problem. People find it more comfortable to get a chauffeur.

However, things are improving. On a small base, we’re seeing good growth in self-drive, especially in the leisure circuit. Indians who may have a smaller car want to upgrade for the duration of their two-week holiday and opt for a bigger car, which can accommodate two families. They want an SUV. When we push this concept more people will realise that it is very easy to hire a self-driven car. There are also people who to experiment with a bigger car before they buy one. Or drive an SUV without ever buying it. Outside Bengaluru and Mumbai, we are seeing that some people are do not take their own car when they go on holiday. This is another segment we are tapping into. As the roads improve we are already seeing that outside big cities there is an improvement. Five, six, 10 years later you will see a surge in self-drive. We have Avis cars in 174 countries across the world. Customers arrive, pick up their keys and are on their way in three minutes.

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TGI: Warren Avis had set up shop outside most major airports. Is that the focus in India?

You don’t need to be in the airports in India because we have a paging system here. If you have a self-drive car you need to be at the airport because you land and want the keys in your hands. In India 95% is a chauffeur-drive market.

TGI: How important are FITs to your business?

Most of our focus is B2B. Our B2C is driven by self-drive where we are doing serious promotions. We do campaigns encouraging Indians to go abroad on self-drive holidays. Self-drive has been seen as an add-on component to an outbound holiday – another hassle after organising tickets and hotels. So we decided to make it easier for the customer. We started promoting self-drive holidays which are all inclusive. You land at the airport, pick up the car and your holiday begins.

At the top end of the FIT market you either have a chauffeur-driven car or you have seat in coach. Our concept does away with the inconvenience of coach travel that often demands waiting for five other flights to land so the coach operator can collect all other customers, resulting in wastage of two hours before reaching the hotel. We are also targeting the middle class that is looking for convenience and does not want to wait for other travellers to get into the coach.

TGI: Which destinations are on offer and how is a booking made?

We have promoted Thailand and Europe – a mix of short haul and long haul. We tried to create awareness that a self-drive holiday is just a call away. You call the call centre and we do everything for you revert in 24hours with a quotation. We offer a one-stop-shop concept including transportation, airfare, sightseeing.

TGI: Are you working with any tour operators for this?

We want to create a one-stop-shop, not an outbound division, so we tie up with Thomas Cook, Mercury etc. Companies that see this segment emerging tie up with us. In fact, we are open to all travel agencies. There are a lot of relatively smaller agencies which present immense potential because they offer countrywide reach – being almost 16,000 of them. They have a select set of dedicated customers who will not move to another agency. They also have a need for more revenue streams today, with airline commissions being what they are. We will bundle it for smaller agents and give them a net price. We are really keen to reach out to the small agencies.