- Bindu Ananth, President IFMR Trust
What is the link between supply chain interventions and access to finance?
The Rural Tourism Network Enterprise (RTNE) has received a lot of attention from the press recently for its work in connecting rural homestays to budget travellers. This is a good time to recap the original hypothesis of RTNE and the link to IFMR’s mission (to ensure that every individual and every enterprise has complete access to financial services).
Several small businesses in rural India, (a rural homestay being a classic example), face tremendous volatility in revenues due to an uncertain market. It is no wonder then that they have enormous constraints accessing debt – lenders dislike volatility and seek predictability of cash flows. There are two ways to go about addressing this:
1. Infuse more equity into each small business so that their ability to withstand revenue shocks and leverage debt increases, or,
2. Minimise the root cause of revenue volatility itself.
We believe that Option 1 is not scaleable given the size of many of these businesses. We have taken the broad direction of Option 2. A company like RTNE reduces the revenue uncertainty to tens of thousands of rural homestays by providing an information and accreditation facility to potential travellers. This provides a steady base of travellers to qualified properties. In this manner, the revenue certainty and ability to leverage debt goes up for every single rural homestay accredited by RTNE.
We believe that this is a promising approach to improve access to debt for small businesses that have market uncertainty.
What do you think?
(Read the RTNE story in Financial Times here and Business Standard here.)
Building on its more than 250 rural stay options on offer through its portal, Rural Tourism Network Enterprise (RTNE) this summer would spread its wings to Uttrakhand state in Northern India.
Lansdowne, one of the regions that RTNE will initially focus on, happens to be named after the then Viceroy of India, Lord Lansdowne in 1887; the town had been used as a training centre for new recruits. Currently it is the regimental centre of Garhwal rifles of the Indian Army and happens to be the closest hill station from New Delhi – 250 km and is a good 6 hours drive from the capital. The town with a population of close to 8000 people is rich in history and is known for its scenic beauty.
Being a restricted area and because of scarcity of land, limited stay options are available which are by and large fully occupied. Thus paving way for property owners to offer their old-style British bungalows as homestay options to the visiting tourists.
The adjoining villages too hold tremendous tourism potential but have not been able to fully capitalize on the same, resulting in local people migrating to urban centers. A locally thriving tourism industry should have a positive effect in curbing this.
Lansdowne is a classic case of peak load demand where people travel but they have no place to stay; perhaps with RTNE’s intervention more number of travelers would find the town to be a perfect excuse to go back in time.
Follow RTNE on:
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Karmveer Rathore of RTNE-IFMR Ventures, contributed to this post.
RTNE Blog
Rural Tourism Network Enterprise which launched its website in the first week of December, 2009, has been steadily progressing towards answering one of the ultimate queries on every traveler’s mind – “I don’t know where to go” – by giving options and choices hitherto unheard of.
Though in its infancy, the website has managed to garner a top-line of Rs 1.5 Million by end of Jan ‘10. Starting with the Sindhudurg district, RTNE now covers three districts in the Konkan belt offering 132 unexplored properties, with an aim to offer 1000 such home-stay properties on its portal by end of March ‘10. It also plans to scale up to cover 15 different regions across the country by March next year.
Nachiket Mor, Bindu Ananth and Deepthi Reddy who had visited RTNE’s operation on the ground and interacted with the team and home-stay property owners to get a ground level assessment of things also stressed on the need to focus on scaling-up and reaching varied geographies apart from the ones being served right now.
Building on its unique offering of rural destinations, RTNE has tied up with partners like Bharat Homestay, Konkan Yatra, HolidayIQ and is in talks with Make my Trip to explore options for synergy.
As with larger plans to grow and scale, it is easy to be swayed by the big picture and miss out on the critical part of ‘listening’ to the customer. To avoid such pitfalls and constantly refine services, RTNE has engaged with a Chennai based company to collect feedback through IVR from customers who have booked and stayed through the RTNE website.
With more uncharted destinations on offer, the wandering traveler might just get his perfect getaway in a place he never thought existed – Escapism, perhaps the rural way.
ET article quoting Bindu Ananth on Rural Tourism Network Enterprise (RTNE): “By 2013, we will be present in 20 states with over 38,000 properties that sell 35 lakh room nights to tourists”
Click here to read the article
Visit RTNE Website for bookings.
- Fishing boat at Sagareshwar
- Traditional house at Sawantwadi
Photo Courtesy: RTNE
More at IFMR Flickr Group
A carefully crafted logo forms the genesis that ends up defining an entity and its various facets through it. The various dimensions that constitute it are reflective of the ‘core’ that it is trying to represent – Just as in the case of RTNE’s new logo.
The RTNE (Rural Tourism Network Enterprise) team has come up with the logo of NE Rural Tourism Pvt. Ltd. The Logo has been designed considering the core elements of tourism products of India.
The first box consists of sunrise from the back of a snowy peak – Himalayas; the second box with a bullock cart in a vibrant red box signifies the activities which rural India offers; the third box shows sea waves touching a coconut tree highlighting the vast coastline of India; and finally a neat thatched roof hut in green background showcasing neat and hygienic small accommodation options in rural India.
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Karmveer Rathore from the RTNE team contributed to this post.
From the Rural Tourism Network Enterprises team, Karmveer Rathore shares his insights on developing tourism solutions for the rural landscape.
Please click here to read more
Above Picture: Tsunami Island, in Sindhudurg District.
Tourism per se for any economy is a key industry which has a ripple effect in terms of its benefits which roll over to other sectors. For a country like India which largely lives in the rural landscape, it is obvious there are terrains which hold tremendous potential to be marketed as a tourism destination – Sindhudurg along the coast of Maharashtra is a case in point.
The irony of Sindhudurg is that while the destination is as exotic as they come, it is, however completely ignored, rather undiscovered – And Sindhudurg is just one such example of that irony.
To address such issues and work around a model for ‘Rural Tourism’, Gaurav Dhingra, from ‘Rural Tourism Network Enterprises’ undertook an in-house knowledge management session briefing about the work which RTNE has done in its pilot in Sindhudurg.
“There is no aggregation at the supply side whereas there is at the demand-side” mused Gaurav. Dwelling further, one of the biggest stumbling blocks towards discovery of such destinations is lack of information, he lamented. Something which RTNE intends to fill by creating a back-end platform which connects the property owner, travel agent and the customer by providing information specific to their needs.
Briefing about the back-end platform and future plans regarding scaling through the franchisee route, some of the key learnings among other things which Gaurav shared from their pilot in Sindhudurg included:
- Tariff and commission rationalization is required
- For such areas real-time inventory is not critical
- Multiple payment modes are required
- Travel agents demand credit
- A way to generate constant feedback is vital
- Destination manager has to be a local thus addressing issues pertaining to language, trust and conflict resolution
The unknown has always held a sense of aura at the same time inertia with it. One of the areas where this duality exists is when it comes to exploring newer travel destinations. Reasons for this could range from simply being unaware about the destination to uncertainty regarding logistics, accommodation options, facilities, activities and quality levels among other things. With rural areas constituting a significant chunk of India’s geographic landscape the need to allay such concerns and showcase unexplored rural destinations is pressing.
Precisely, a cause upon which the Rural Tourism Network Enterprises (RTNE) team has dedicated itself for; it works in the Rural Tourism space to address the gaps in the supply chain and identifies business opportunities.
The RTNE started its foray into the rural tourism space with an extensive survey of the rural landscape looking at various business models. To understand the weakness and opportunities, the team had a series of interactions with industry leaders and came up with an opportunity matrix on social-economic parameters. This also helped them in defining the rural tourism supply chain and to identify critical gaps leading to inefficiencies.
To eliminate inefficiencies in the rural tourism supply chain, RTNE proposed to build a platform to be shared across destinations and markets, acting as a connecting bridge for the property owners, the travel agents and the customers. The platform stands for certain minimum ‘Standards’ & ‘Best Rates’. A platform that will address multiple issues like booking and payment solutions, unavailability of real-time inventory, unavailability of budget accommodations and quality of service levels. On this platform RTNE has adopted a not so popular uniform transaction fee model, instead of charging a transaction fee based on percentage of room rates – to ensure transparency and equality. Even at low margins, RTNE firmly believes in commercial viability of this model at a large scale.
RTNE is testing the viability of the idea in Sindhudurg District (Maharashtra), and in a short span of time has scaled up to cover all the five major tourism destinations [Malvan, Vengurla, Shiroda, Sawantwadi, Amboli] in the districts.
Beach escapades at Sindhudurg
RTNE team physically surveyed more than 100 accommodation options and classified them based on quality parameters and connected more than 30 properties to travel agents [more than 90 agents as of now as compared to 5 agents actively selling Sindhudurg earlier] selling or interested in selling Sindhudurg through a technology platform. A connect which would not have been possible earlier but for the RTNE’s initiative.
Accommodation Options
Puppet Show at Sindhudurg
The Konkan region comprising of Sindhudurg, Ratnagiri & Raigadh districts is sold as a package, and therefore to cross-sell, RTNE is planning to expand to the other two districts of Konkan by replicating the model. RTNE is also looking for partners to scale up through the franchisee route.
The team behind RTNE comprises of Karmveer Rathore, Saurabh Jha and Gaurav Dhingra involved in transforming these ideas into viable business opportunities.
With vast heritage and virgin destinations which are yet to be explored, India’s rural landscape has a lot to offer and makes for a viable business opportunity for the willing. Though as with any good opportunity comes equally demanding challenges – Rural Tourism being no different.
One of the biggest hurdles in the growth of Rural Tourism is lack of information. Whether this lack of information is in the form of a customer not aware about an exotic location nearby his hometown; a tour operator’s lack of information regarding payments, logistics, bookings for a particular facility; or a property owner’s lack of information in how to market his facility.
The Rural tourism team of the ITAS (IFMR Trust Advisory Services) has tried to address some of these issues through its pilot project in the District of Sindhudurg (in Maharastra).
Some of the key findings of the survey are:
- The area has largely properties in the range of Rs.400-800/room/night, mostly family run entities.
- Most of the property owners do not advertise, so a lot of visits happen through word-of-mouth.
- Providing information regarding the destinations along with photographs is a huge draw for the customers and tour operators as this helps in clearing the air.
- Promoting trust between property owners and tour operators with respect to commission, tariffs etc is a crucial area which has to be addressed for growth of tourism in that area.
