Indian travellers are set to spend an additional $24 billion in three years on online travel bookings , according to a report.
As India’s travel spending is set to grow at 13% CAGR from $94 billion in 2018 to $136 billion by 2021, around 57% ($24 billion) of the incremental bookings will happen online, revealed a report by management firm, Bain & Company.
“The contribution of travel and tourism’s spend in India has reached developedmarket levels, from 6.7% of GDP in 2013 to 9.4% in 2018. This growth, combined with a rapidly growing internet user base and adoption of online bookings will lead to incremental revenues through online channels by 2021,” said Joydeep Bhattacharya, partner at Bain & Company.
Online penetration of hotel bookings, too, is expected to increase to around 35% by 2021 from 26% at present, fuelled by rapid growth in internet availability and hotel aggregators, including Oyo, While mid-market and budget hotels, which account for half of the total market, are set to fuel future growth at 15% CAGR, lodging spending at luxury hotels is expected to grow at 11%. The share of business generated by domestic tourists is currently 50% for luxury hotels, up from 30% in the last three years.
There will be a 12% growth in transportation ($50 billion), as well as a 13% growth in lodging ($21 billion) and consumption. This includes spending on shopping, recreation and food, which are set to grow at 13% CAGR ($65 billion) over the next three years.
Apart from digital disruption, government initiatives and infrastructural enhancement, factors including private funding for tech-enabled players and emergence of new tourist destinations are creating fundamental shifts in the Indian travel and tourism market. For instance, new locations such as (84% CAGR) and (39% CAGR) have witnessed strong growth in tourism during 2016 & 2017.
Despite the potential scope of growth for online players, the study said while a majority (86%) of Indian consumers use online channels to research before travel, there is a significant drop in online use during actual booking. Only around 50% travellers go online to book due to reasons such as lack of trust in payment systems and better pricing offline.
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