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TRAVEL DISTRIBUTION
INDIA
REPORT
Edition 1
EyeforTravel Research
7-9 Fashion Street
London
E1 6PX
UK
Table of Contents
1. Country Overview 13
2. Tourism Overview 47
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Table of Contents
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© EyeforTravel Research. All rights reserved.
Travel Distribution India Report • Edition 1
List of Figures
List of Figures
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List of Figures
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© EyeforTravel Research. All rights reserved.
Travel Distribution India Report • Edition 1
List of Figures
Figure 92 Available seat kilometres by all scheduled passenger airlines 90
Figure 93 Passenger load factor of all scheduled passenger airlines 90
Figure 94 Domestic hotel market size, online vs. offline market size, direct vs. indirect
online market size (INR million), number of rooms, 2001-02 to 2011-12F 91
Figure 95 Size of domestic Indian hotel industry in INR billion 91
Figure 96 Hotel preference for domestic tourists (% of total tourists visiting the
state – FY 2005-06) 92
Figure 97 Size of domestic organised Indian hotel industry 92
Figure 98 Break-up of hotel industry revenue by star category (2006-07) 93
Figure 99 Size of Indian hotel industry – no. of approved rooms (2001-02 to 2011-12F) 93
Figure 100 Number of approved hotel rooms by hotel category (2006-07) 94
Figure 101 Size of domestic Indian hotel industry (organised and unorganised) 94
Figure 102 Online and offline domestic bookings (2001-02 to 2011-12F) 96
Figure 103 Size of domestic online Indian hotel industry (2001-02 to 2011-12F) 96
Figure 104 Break-up of total domesticonline market between supplier website and
OTAs (2001-02 to 2011-12F) 97
Figure 105 Guest profile by purpose for Indian hotels (2005-06) 100
Figure 106 Value of domestic business travel and leisure travel revenue in hotels 100
Figure 107 Revenue mix at Indian hotels (2006) 101
Figure 108 ARR and occupancy rates for different category of hotels (2005-06) 101
Figure 109 Monthly occupancy at Indian hotels (2005-06) 102
Figure 110 IHCL hotels – revenue in INR billion (2005-07) 104
Figure 111 ITC hotels – revenue in INR billion (2005-07) 104
Figure 112 Hotel Leelaventure limited – revenue in INR billion (2005-07) 105
Figure 113 Eih limited – revenue in INR billion (2005-07) 106
Figure 114 Size of the Indian outbound travel market, break-up by online vs. offline,
2001-02 to 2011-12F (INR million) 106
Figure 115 Indian outbound travel by segments 2007-08F 107
Figure 116 Indian outbound travel by segments 2001-02 to 2011-12F 107
Figure 117 Indian online outbound travel market by segments and supplier vs. OTA
websites 2007-08F 108
Figure 118 Outbound airline market size, online vs. offline market size, direct vs.
indirect online market size (INR million) 108
Figure 119 Outbound airlines market revenues (2001-02 to 2011-12F) 109
Figure 120 International traffic from India 110
Figure 121 International traffic to & from India by airport (2005-06) 110
Figure 122 International departures from India by airport (2003-04) 111
Figure 123 Online bookings in outbound air travel (INR billions) 113
Figure 124 Online bookings in outbound air travel by point of purchase (direct vs.
indirect) 113
Figure 125 Outbound hotel market size, online vs. offline market size, direct vs.
indirect online market size, 2001-02 to 2011-12F (INR million) 114
Figure 126 Growth in outbound hotel revenues 114
Figure 127 Nights spent by indian visitors in UK (2005) 115
Figure 128 Type of hotel (2005) 115
Figure 129 Online bookings in outbound hotel industry (INR billions) 116
Figure 130 Online bookings in outbound hotel industry by point of purchase (direct vs.
indirect) 116
Figure 131 Growth in outbound cruise passengers 117
Figure 132 Growth in outbound car rental market revenues (INR millions) 118
Figure 133 Growth in outbound railways market revenues (INR billions) 118
Figure 134 Share of OTAs in Indian travel market 119
Figure 135 Online travel market share, supplier vs. OTA (2001-02 to 2011-12F) 120
Figure 136 Top of mind brand recall (Searched and Booked) 121
Figure 137 Comparative analysis of domestic OTAs 122
Figure 138 OTA market (overall) and its segments 123
Figure 139 Players in the domestic OTA segment 123
Figure 140 Metasearch engines in India 125
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List of Figures
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Executive Summary
Travel Distribution India Report • Edition 1
The Indian travel industry posted a strong growth for the fifth consecutive year in 2007.
The industry has evolved from INR 431 billion market in 2001-02 to INR 861 billion in
2006-07, at a CAGR of 15%. This includes spending by Indians in India (called the domestic
travel market, which excludes spending by foreign inbound tourists) as well as outside
India (called the outbound travel market). The domestic travel market has prospered at
12% CAGR over the past five years, increasing from INR 303 billion in 2001-02 to INR
541 billion in 2006-07. The outbound travel market, though small in volumetric terms,
accounted for 37% of the total travel market and was worth INR 321 billion in 2006-07.
Airlines and Hotels, which together constituted approximately 75% of gross bookings in
2006-07, registered CAGR of 21% and 15% respectively, while Rail, Cruise and Car rental
increased 6%, 21% and 15% respectively over the period 2001-02 to 2006-07.
With a robust growth forecast for the economy as well as personal disposable income,
the travel industry is expected to continue the momentum over the next five years at a
growth rate of 18%. In value terms, the market is expected to grow from INR 861 billion
in 2006-07 to INR 1,962 billon in 2011-12. The domestic travel industry is predicted to
grow at 13% CAGR over the next five years to reach up to INR 987 billion level, thus the
outbound market is set to outpace the domestic market growth rates by increasing by
25% CAGR over the next five years. Among the segments, Airlines is expected to post a
strong growth and increase its share in the total market from 35% in 2006-07 to around
44% in 2011-12, while the Hotel segment’s share of the total market is expected to reduce
to 39% in 2011-12 from 40% in 2006-07.
There are several factors that have driven the growth of the online travel segment in India.
These include a growth in credit card usage due to a significant increase in the Internet
population, as well as increasing confidence from Internet security initiatives & online
awareness created by OTAs (Online Travel Agents) and suppliers. Online bookings in the
Indian travel industry began early this decade and have grown quickly from INR 87 million
in 2001-02 to INR 55 billion in 2006-07. This significant growth can be attributed to the
emergence of online bookings in airlines, especially domestic LCC, (Low Cost Carriers)
which constitute 23% of the total online market. The launch of the online booking facility
by Indian Railways has also gained popularity as the segment claimed the third largest
share of the total online travel market. Despite such high growth rates overall, in 2006-07,
online booking has penetrated merely 6.4% of the market. But the level of penetration
is expected to increase by up to 20% in the next five years. Online penetration in the
domestic market is around 6% while in the outbound market it is around 7%.
Bookings made via supplier websites account for a significant 78% share of total online
travel bookings while OTAs account for the rest (in 2006-07). OTAs have emerged
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Executive Summary
as an ‘online substitute’ to the traditional street agents, offering lower rates, better
convenience, enhanced control, 24-hour access and up-to date content, and have thus
enjoyed significant growth.
Passenger Load Factor in the domestic airline industry reached an all time high of 68%
in 2006-07 due to better utilisation of the flights. Gross domestic bookings for the LCCs
grew at a 45% CAGR in the period 2001-02 & 2006-07 vs. 21.2% CAGR for legacy carriers.
Online bookings in the airline industry grew to INR 24.1 billion (USD 533 million) in 2006-
07 and by 2007-08 it is expected to account for more than 27% of the total bookings
in airline segment. While the online penetration was high for LCCs at 42% in 2006-07,
it was minimal for the legacy carriers or FSC (Full Service Carriers) at 12%. In terms of
e-bookings, overall supplier website bookings accounted for 73% of the total online air
bookings in 2006-07 and are expected to decrease by up to 65% by 2011-12, owing to
the increase in the number of OTAs.
Hotel & Lodging segment - Offline business dominates but with reduced
market share
The outbound hotel industry recorded a healthy growth, increasing from INR 44 billion
in 2001-02 to INR 124 billion in 2006-07, a growth rate of 23% CAGR. The industry is
expected to experience faster growth to reach at 367 billion level by 2011-12. Online
penetration in the outbound hotel industry was around 9% in 2006-07 which is expected
to increase up to 20% in the next five years.
OTAs are adopting various tools and strategies to combat supplier competition, such as
improved search facilities for the best travel deal, best rate guarantee, assimilation of a
broad range of products within a single place, targeting of niche segments, m-commerce
and international expansion. They have also extended this through partnerships with
retailers to leverage their loyal customer base to sell them various travel products
offline.
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© EyeforTravel Research. All rights reserved.
Executive Summary
Travel Distribution India Report • Edition 1
The share of OTAs in the total online Indian travel market shows an increasing trend. In
value terms, the OTA segment was valued at INR 12 billion in 2006-07 and is expected to
reach INR 140 billion in 2011-12.
Challenges of the online segment – How Suppliers and OTAs are dealing with
the competition
Though online travel bookings possess significant growth prospects, there are many
blockers. These include -
• Credit card security, fear of online identity theft, lack of human interaction, website
performance issues, distrust and confusion
• Lower broadband penetration. Poor performance of the websites combined with high
response time.
Suppliers and OTAs are equipped to manage these challenges and are developing
secured payment gateway, real-time online assistance and differentiated online services,
all of which should be able to support the growth of the online travel industry.
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