Times of India has an article that Tirumala Tirupati Devasthanam (TTD) wants to hike ticket prices.
TTD tickets range from Rs 50 to Rs 5,000. Most devotees buy special darshan tickets for Rs 300. At least 2,000 devotees go for VIP darshan every day, shelling out Rs 500. "The revenue gap can be bridged with a mild hike in ticket rates or Rs 5 to Rs 10 raise for various seva," said officials.
It's BAD IDEA to enforce across the board hike! In fact, it is a lazy move. Instead, target additional revenue through higher revenue from rich and upper middle class. In my calculation below, let me show you how TTD can raise additional revenue of Rs 500 crores without increasing cost on middle class and the poor.
TTD's image of subsidizing the poor while collecting higher rates from the rich is not entirely accurate. TTD leaves a lot of money on the table when it comes to optimizing revenue from the upper middle class and the rich. TTD can do both - subsidize the cost for the poor and increase exponentially the charges for the upper middle class & rich for the same service that they receive today.
Before we get to recommendations, let's look at revenue streams for TTD. From TTD 2016-17 Annual report summary:
- Investment & Capital Income: Rs 1,889 crores (70% of all revenue)
- Hair: Rs 150 Crores. Leave it untouched
- Loans & Advances to Employees; Lease charges for asset utilization: Rs 171 Crores
That's Rs 2210 crores of Rs 2678 crores that i am not recommending any change.
Accommodation: Rs 114.50 Crores
- Leave all accommodation at Rs 200 & below untouched. I am assuming that 80% of all revenue - Rs 91.6 crores from these levels.
- All rooms above Rs 200 to Rs 499 - double the room rates
- All rooms above Rs 500 to Rs 1999 - Increase the room rates by 4 times
- All rooms above Rs 2000 - Increase room rates by 8 times
- Institutionalize dynamic pricing that increases all room rates above Rs 200 by up to 8 times during peak season - These accommodation are occupied by the upper middle class, businessmen & politicians and not middle class citizens
- Target: Increase room rate from Rs 200+ rooms from Rs 20 Crores to Rs 75 Crores in 2 years - Rs 55 Crores increase in revenue
Seva: Rs 55 Crores
- Sevas can be classified into 2 categories. Category 1: Niche, low volume seva tickets (Suprabatham, Thomala Seva, Archana, Abhishekam, Visesha Pooja, Tue-Thu Morning Sevas). Category 2: Mass, large scale seva tickets (Kalyanam, Brahmostavam, Vasanthotsavam, Sahasra Deepalankarana Seva. I assume that 85% of revenues come from Category 2 - Rs 47 Crores. Rs 8 Crores from Category 1.
- Category 1 Seva Tickets: Align to market price
- Less than 10% of Category 1 tickets go to middle class & poor. It's usually the rich and the upper middle class that garner most of these tickets. I don't see pilgrims complaining 10 fold increase in these rates. That takes the revenue from Category 1 seva tickets from Rs 8 crores to potentially Rs 80 Crores.
- Anyone who can prove that their income is less than Rs 3 lakhs per year by producing their IT returns of the past year can avail the tickets at 50% of the new price. Without IT return, no discount can be provided.
- I've heard rumors of Abhishekam tickets hawking for Rs 3 lakhs for vastram and Rs 50,000 for vessels. I am sure Rs 125,000 for Abhishekam and Rs 7,500 for vessels will not break the bank for those try for these tickets.
- Even assuming 20% of all tickets are sold at 5 times current price, Sevas can bring in Rs 72 Crores, 9 time increase from today's price
- Leave Category 2 prices at current level. I do have a recommendation for additional revenue from Category 2 by bringing back earlier seva tickets
- Till mid-2000s, some of these seva tickets were 5x-10x the cost with the rights to bring additional members. For the high cost, TTD issues Silk Clothes, additional ladies.
- I understand their logic of charging Rs 250 per ticket for each Vasanthotsavam participant rather than charging Rs 2500 when only a family of 2 adults travel. However, if you give them both the options with the Rs 2500 ticket having silk clothes & more ladoos, you are giving the same experience to the pilgrims but optimizing the revenue from those who wish to pay
- Bring back 2 Tier Seva system - 10x for the higher tier (silk clothes, additional ladoos) and retain existing middle class friendly tier without reduction in benefits
- I can safely say 10% of folks in Category 2 will prefer to buy higher tier seva tickets. That's Rs 42 crores increase (Rs 47 crores instead of Rs 4.7 Crores) in Category 2 seva revenue
Darshan Tickets: Rs 209 Crores
There are 4 types of darshan tickets - Free, Rs 50, Rs 300 (Quick Darshan) and Rs 500 (VIPs - Cat 1, 2, 3).
- VIP Tickets:
- All VIP tickets need recommendations from top bureaucrats &/or politicians. Category 1 is for the highest level and is mostly self-declaration. In my interactions with Temple officials, the average volume is 100 Category 1, 400 Category 2 and 600 Category 3 VIP tickets daily yielding Rs 20 crores approximately
- In 2015, Deccan Chronicle reported TTD insiders selling Category 1 tickets for Rs 10,000
- My PoV is that Category 1 & 2 can see 10x increase in prices without losing demand while Category 3 ticket prices can be increased 5 times. So, if you want the privilege of 'VIP Darshan', asking to shell out Rs 5,000 for Category 1 & 2 and Rs 2,500 for Category 3 isn't out of the ordinary.
- Revenue Increase from VIP Tickets from Rs 20 Crores to Rs 140 Crores
- Quick Darshan:
- There are 23,000 Quick darshan tickets every day (Will link once i find it!). I say that we have ticket purchase utilization of around 60% (just a guess). That's Rs 83 Crores
- Increasing the ticket price to Rs 400 isn't going to reduce the demand. So, revenue goes up to Rs 111 crores. Even accounting for elasticity of demand (trust me, it doesn't exist) - Rs 100 crores isn't out of reach
- Introduce Dynamic demand for Quick Darshan tickets of upto 2x price around key holidays. Of the current capacity of around 200 days, around 50 days can qualify as high demand days. That's Rs 25 crores of additional revenue from Quick Darshan - once again, a service used mostly by upper middle class & the rich
- Between price raise from Rs 300 to Rs 400 and introducing Dynamic demand, TTD can increase quick darshan tickets from Rs 83 crores to Rs125 crores
- Rs 50 Ticket
- Leave it unaltered
Prasadam Receipts: Rs 175 Crores
- Leave Ladoo Prasadam price as-is. It costs Rs 34 to produce but is sold for Rs 25. With 3 lakh ladoos a day, Rs 100 crore subsidy.
- My recommendation is for TTD to ramp up Prasadam sale in other areas to cover for this loss. Let me show you 2 such areas
- Big Ladoos are only available for Kalyanam tickets or letter from JEO. There's demand for open market sale and TTD should consider 5000 large ladoos at 100% mark up price. At 5 times the weight, let's assume that the cost/gm remains the same. That's a cost of Rs 170 per Big Ladoo. I am sure there's demand for buying large ladoos at Rs 300/large ladoo. That's Rs 55 Crores of additional income every year and an ability to decrease small ladoo subsidy by Rs 24 Crores.
- Vadas: Vadas are available only for Kalyanam tickets. It's a pain to get prior approval for additional vadas. Assuming each vada cost Rs 100 to make (just guessing!) and if sold for Rs 200, my guess is that there's demand to sell 5000 vadas a day. That's Rs 36 Crore revenue for Rs 18 additional cost and more importantly covering Rs 18 Crore of the ladoo subsidy
- Annam Prasadam (Rice Prasadam): In 2009, during my trip, we purchased Sweet Pongal Prasadam for Rs 350 and received 3 Kgs of Prasadam after the food was offered to the Lord in the morning. Unfortunately, this scheme was revoked shortly thereafter. Why not bring it back and make it pilgrim friendly
- Rs 75 for 100 gms of rice prasadam (Tamarid Rice, Pepper Pongal, Curd Rice, Sambhar Rice, Sweet Pongal) - 1 package per pilgrim
- Rs 500 for 500 gms - max of 5 packages
- Rs 3000 for 1000 gms - unlimited
- Have a daily preparation quota for the first 2 years. Let's say 1000 Kgs (might seem a lot but the TTD kitchens prepare this quantity as free 'Prasadam' every day)
- Assuming 600 Kgs for 100 gms packet; 300 Kgs for 500 kms packet and 100 Kgs for 1000 gm packages - Annam Prasadam will yield revenue of Rs 130 Crores per Year
- My estimate is that TTD will be able to absorb up to Rs 50 Crores of Ladoo Subsidy through this scheme, thereby reducing the ladoo subsidy from Rs 100 crores to less than Rs 10 crores - though subsidy reduction isn't the main aim. Additional services & privileges to pilgrims is the main intent here
In total, Government will increase Prasadam sale from Rs 175 crores to Rs 400 Crores.
I don't have details on lease, hair revenue schemes and thus let it stay as-is. Let's summarize Revenue stream increases:
- Accommodation: Rs 114 Crores to Rs 170 Crores
- Seva Tickets: Rs 55 Crores to Rs 106 Crores
- Darshan Tickets: Rs 209 Crores to Rs 371 Crores
- Prasadam Tickets: Rs 175 Crores to Rs 400 Crores
Thus, revenue from these 4 streams will increase from 553 crores to 1,047 Crores - nearly 500 crores jump in TTD revenue. Instead, TTD will be happy to do Rs 5-20 raise across the board. Is that logical or justified?
Let me know your thoughts ...