RedSeer Perspective on Online Travel market in India
India, which has the world's second fastest growing GDP, will produce one of the world's largest high income pool
Real GDP Growth(2005-2015)
Indian households with annual income >USD 50k(2005-2015)
Indian travel and tourism market is 42 billion USD industry growing with a CAGR of 10.2% over the next 10 years
Indian Travel and Tourism Industry- Market Size
- Government's boost to tourism, rising middle class and increasing aggregate disposable income will lead to a significant growth in travel and tourism industry in India
- Indian middle class is expected to increase by 10 times between 2005-2025
- The aggregate disposable income from Indian households is expected to increase with a CAGR of 7% between 2005-25
Three major players account for 90% of Indian OTA market
share, with Make My Trip as market leader
OTA Market Share1 – by Players (2010)
- OTA industry is very competitive with more than 30 players in the market.
- The industry is very pricesensitive especially in air-travel segment, due to which Net revenue margins are low
- While global giants like Travelocity and Expedia still have to make a mark in the industry, bigger Indian companies are venturing out into countries with high NRI population.
The competition is shifting towards non-air travel segments like hotel bookings due to high margins
Net Revenue Margins (2010)
- Air travel Net revenue margins consist of commissions from airlines, service fees from customers and fees from Global Distribution System (GDS) partner
- Margin on Hotel & package tour bookings come from mark-up on services.
- Hotels and package tour services also give OTAs an opportunity to differentiate themselves in the industry
Recent Trends In OTA Industry
Consolidation amongst players
- Major companies are acquiring smaller companies to expand their services
- Makemytrip acquired Ticketvala.com, Travelocity acquired Travelguru and Yatra acquired Ticket services International
Focus on hotels and tours
- For the industry leader Make My Trip, while gross bookings for Air-travel and tours grew by 45%1 each (2008-10), net revenue grew by 49% and 84%, respectively
One-stop solution mantra
- Most OTAs have partnered with IRCTC for rail bookings to generate traffic
- OTAs are also partnering with bus ticketing websites and car rental companies to become one-stop solution for travel needs
Merging online and offline
- Yatra has started 50 lounges across India while Make my trip has an agent network across 450+ cities
- Yatra has also partnered with Reliance World (120 centers across India) where customers can book tickets and hotels
This document covers a perspective of Indian Online Travel Agent (OTA) industry covering its key trends and growth dynamics.