E-commerce: Online travel Industry in India

Online travel Industry in India : 

—Indian online travel revenues are currently dominated by ticket bookings, with air and train bookings accounting for close to 90% of the segment revenues.—Online travel penetration was estimated at around 28% in 2011, which is significant considering the online travel in China accounted for just 16% of the total travel, and that the APAC average was at 18%.— Even several developed countries such as Italy, Spain, Japan Singapore lag India in online travel penetration. The online travel market is currently estimated at Rs 24,900 Crore ($5.5 billion) in 2011. 

The online travel market is expected to grow at a rate of 22% over the next 4 years and reach Rs 54,800 Crore ($12.2 billion) in size by 2015.

—This assumes a growth rate of13% for the overall travel market and online penetration increasing to 37% (from the current 28%).

Online Travel Agents

—In the US, the OTA market is dominated by Expedia, Orbitz, Priceline and Travelocity. CTrip, Baidu, and eLong lead the show in China.

—India seems to have followed the same pattern. As on March 2010, the top-3 OTAs commanded a 90% market share. MakemyTrip (MMYT) was the undisputed leader with 48% market share, followed by Yatra and Cleartrip.

Traditionally, airline OTAs have struggled in bus travel - a different target segment .

—Top 20 travel sites in India. Ticketvaala and Travelyaari are the closest competitors in the space.

However, there are clear opportunities for them to offer domestic packages and deals with tier 2-3 hotels

Competition From Supplier Websites

—Most supplier websites find a spot in the top 15, with Indian railways at 1, Jet Airways (India’s largest airline) at 8, and Indigo, Spicejet and Air India coming in at 9, 10 and 11 respectively.

—Of the online travel market, supplier websites commanded a 61% market share in India in2010.

Infrasructure Barriers

Payment Cash And Collection

— Vendor Management: 

— Taxation

— Logistics

—Information Security

—Multiple gaps in the current legal and regulatory framework

—  Limited Internet access among customers and SMEs.

— Poor telecom and infrastructure for reliable connectivity.

Future Scope

The online penetration of train travel is around 32% and for air travel is around 50% the online penetration in hotels and packages is less than 5% and that in bus travel is less than 4% of the total market today.

—For MakemyTrip,, net margins on air travel have hovered around 7% for the last few years. And train ticket margins range between 5% and 10%.

— Therefore the OTA market has significant headroom for growth of revenues and profitability going forward.

Existing OTAs will try to strengthen their position by: Getting into unorganized sectors (e.g. bus ticketing)

—Foreign players will try to gain a stronger foothold in the domestic market

—Offline players in the Indian travel market may try to develop a stronger position online

—Expedia and other major global players are set to expand the OTA market.

What are your Opinions on the online travel Industry in India ? Do you forsee major inroads by foreign players or will domestic OTA's be a major chunk of the travel pie ? Give your opinions in the comment section and please like if you found the article helpful.