The Indian Online travel Industry - Potential for rapid growth

With greater access to technology and connectivity than ever before, a booming middle class and several other tailwinds are expected to bolster the already rapid growth of online tourism in India.

Oct 05, 2015 04:10 IST India Infoline News Service

The Investment Research practice at Aranca, the global research and analytics company, today released its new report “The Indian Online travel Industry – Potential for rapid growth”.
 
With greater access to technology and connectivity than ever before, a booming middle class and several other tailwinds are expected to bolster the already rapid growth of online tourism in India. ‘We believe that factors such as the increasing number of budget hotels in Tier-1 and Tier-2 cities, the entry of new airlines - given the government’s “Open skies Policy” -, the government initiative to build 150 new airports by 2020 and India’s love for travel could contribute to a robust, long-term growth outlook for India’s travel market in the future’, explains Kunal Doctor, Senior Research Analyst at Aranca.
 
The 10 Key points outlined in the analysis include:
  • The Indian travel and tourism industry, set to grow at 12% CAGR over the next three years, is the second fastest growing market, following China, which is growing at 16%.
  • With 41% of travel gross bookings taking place online, the increasing Internet and mobile Internet penetration rates could play a vital role in the Indian online travel market growth story.
  • The increasing disposable income of a growing middle-class has led to more families and individuals planning both domestic and international vacations, at least once a year
  • The card use in India has a long way to go. Online travel will become more popular as people become aware of the benefits and ease of using plastic cash.
  • The Indian government has implemented several initiatives - such as “Incredible India 2.0”, “Clean India”, and many more, at the central level, to stimulate growth in the Indian travel and tourism sector.
  • The states - such as Kerala, Rajasthan and Gujarat - are also taking it ahead and promote tourism
  • Infrastructure - India has a vision of becoming the third largest aviation market by 2020 and is expected to be the largest by 2030.
  • The online hotel segment in India is rather under penetrated, with only 10% of hotels accepting bookings online, while the overall user-base of people seeking information on hotels online was very high.
  • Makemytrip dominates the market of Online Travel Agencies (OTAs)
  • The key risks to the sector are: a slower-than-expected Internet penetration, a potential for credit card frauds, the fluctuations in foreign exchange rates and the security/cyber threats.

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