Online travel sector sees growth despite sluggish economy
Online booking of railway tickets has seen y-o-y growth of 17%, while air tickets grew from 1.45 mn bookings in 2012 to 1.70 mn in 2013
The online travel sector started gaining momentum in early 2000 as consumers started getting attracted to the much convenient option of checking confirmation of railway and air tickets online rather than standing in long queues. The trend of offering discounts online later came as additional benefit for users who were now open to explore the e-commerce space in general.
The online travel market has recently seen a northward trend worldwide. According to industry statistics, in USA – the second largest country in terms of international arrivals (first being France), 50 per cent of leisure trips and 40 per cent business trips are booked online. More than 114 million US travelers research online and almost 94 million users make reservations online.
Indian online travel space also witnessed a similar trend. The space exhibited a y-o-y growth of 17 per cent in the online booking of railway tickets, while online booking of air tickets grew from 1.45 million bookings in 2012 to 1.70 million bookings in 2013. Online travel on the whole has seen a significant impetus, in spite of the slowdown and depreciating Indian Rupee.
The growth catalyst
Tough economic scenario has managed to impact spending patterns of the consumer. However, Indian citizens were not seen compromising a lot on their travel plans.
According to a research conducted by Yatra, 63 per cent of respondents were actively pursuing their holiday plans. Thus, a strong base of consumers willing to travel, combined with e-commerce growth witnessed in India, has been one of the major boosters of the online travel sector.
“Despite the slowdown, people are still willing to travel, though the preference for international travel may have shifted to the South East Asian countries. We shall be witnessing a growing preference for domestic travel. Also, we have been witnessing a growing inclination towards booking holidays and hotels online and 83 per cent of travellers said they would prefer booking their tickets by themselves,” said Sharat Dhall, President, Yatra.
Smart phone, smart travel…
Deeper penetration of smartphones has made consumers life easy in numerous ways and online travel is definitely one of them. “Mobile internet and applications have revolutionised the online travel agencies’ (OTA) segment. Access channels have evolved with the growing dependency on smartphones, and today more and more people are booking via mobile and this trend is here to stay for the coming years,” explained Manish Kalra, Head – Marketing, MakeMyTrip. Kalra further added that MakeMyTrip (MMT) received 10 per cent of their hotel bookings from mobile.
The entry of global players in the travel space has made online travel even more attractive. “Over the years, we have witnessed a consolidation and emergence of global players in the Indian market, which has further fuelled the growth of Indian OTA segment,” added Kalra.
Survey conducted by Yatra also pointed out that 62 per cent respondents say they are optimistic that with the entry of international flight operators in the country, international and domestic travel will become increasingly affordable. Also, the growth of the Indian travel market has led Indian OTAs to differentiate and focus on non-air business streams to drive revenue and profitability.
Travellers now prefer tailor-made plans that cater to places of their interest and are pre-planned in order to avoid glitches at the time of execution. “The Indian traveller is evolving rapidly and is increasingly demanding personalisation to her travel – engaging and experiential itineraries, tailor-made to their unique interests. This discerning sophistication in requirements is challenging to do online,” said Abraham Alapatt, Head – Marketing, Thomas Cook (India).
Ease and affordability
The huge inventory of stay and travel options serves as a good USP. Also, there is convenience of payment through various options with less risk. Last minute travels have also been a major catalyst for the growth of OTA and especially for the growth of online railway tickets, which grew from 5.83 million in June 2012 to 6.81 million in June 2013. Online bookings for air tickets have witnessed a growth of 18 per cent over last year and online bookings for railway tickets have witnessed a growth of 17 per cent over last year.
With the sluggish economy and with e-commerce players shedding their entourage, online travel space was expected to see a dip. However, with the changing traveller demographics, entry of global players and mobile penetration, OTA are witnessing an upward trend. Also, new and fancy services by players such as Borderless Prepaid Card, RoutePlanner, and EMI options on cash on delivery have managed to attract consumers on an altogether new level.
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