Hop-on-hop-off Services in India - Exploring a Sustainable Financial Model
G Kumar Dubey, Urban Mass Transit Company Ltd, IN
Hop-On-Hop-Off Services had largely been absent in India prior to Delhi starting it in October, 2010. This paper intends to understand the financial viability and explore possible sustainable financial models for running these services.
Even though the concept of Hop-On-Hop-Off Services has been in existence and in practice worldwide since long, there was an absence of such services in India. The reasons for this could be attributed to disinterest on the part of Tourism Department, lack of sufficient political will to implement the concept, and lack of clarity on the financial sustainability of such services. However, Delhi got its own Hop-On-Hop-Off bus service just prior to the inception of the XIX Commonwealth Games in October, 2010. A joint venture of two firms won the bid for operating the services on a simple revenue sharing model. The operator shall share a part of the net profit generated from the third year of operations with the State Tourism Department, the revenue being generated from fare and advertisements. Five months since its inception, the service has witnessed varying levels of patronage owing to various factors, climatic variations being one. Lack of clear information on number of tourists visiting the city and those likely to use the service puts a great risk on the operator running the service as well as on the agency contracting the services to the operator. This instigates the need for understanding the financial viability and exploring possible sustainable financial models for running these services.
This paper attempts to understand the financial risks involved in starting and running such operations. Hop-On-Hop-Off services differ from the usual urban bus services since their patronage relies on tourists, in particular foreign tourists, visiting the city whose in-flux has seasonal variations and their intra-city travel patterns have myriad variations and hence it becomes difficult to establish any associated O-D pattern. In such case, making assumptions on the expected patronage becomes tough while working out a financial model. This paper seeks to answer the following basic questions: (i) What is the way to approximately predict the expected patronage for these services? (ii) What can be the innovative ways of financing and operating such services? (iii) Which are the ways to increase the expected and existing patronage of these services? (iv) How to account for seasonal variations in tourist in-flux and its impact on viability of the services?
The study uses the data and contracting model details of the existing Delhi?s Hop-On-Hop-Off services and refers to some of the best practices abroad. The study explores various possible contracting models, viability of running dedicated feeder services from stops till the actual tourist spot and its impact on patronage, routing considerations, ways of tapping domestic tourists, etc. The answers to the research questions mentioned above are vital for potential operators and likely to prove beneficial to the growth of such services elsewhere in India.
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