New Delhi: As more Indians find it convenient to book hotel rooms online, websites that saw most of their business coming from selling air tickets are finding a fast growing revenue stream, company officials and analysts said.
Online travel firms that include MakeMyTrip (India) Pvt. Ltd, Cleartrip Travel Services Pvt. Ltd and Arzoo.com, are seeing their low-volume, high-margin hotel bookings expanding some 10-25% every month for the past six-eight months.
“The hotels business is a fast growing and important segment for MakeMyTrip. In early 2007, we generated 10% of our total revenue from hotel bookings. In the last quarter, this rose to 34%,” said Deep Kalra, chief executive officer and founder of MakeMyTrip.
Launched in India in October 2005, MakeMyTrip helps book 800-1,000 hotel rooms daily, and Kalra said both international and domestic online bookings have doubled this year compared with the same period last year.
“Consumers are more comfortable buying hotels online now because of a lot more user-friendly information and a lot of hotel supply is coming out in the market in the next couple of years,” said Ram Badrinathan, general manager, Asia Pacific, at PhoCus Wright Inc., a travel business focused technology research firm, who said online hotel bookings market is growing at 80-90% a year.
Government data shows India currently has around 90,000 hotel rooms, and needs some 350,000 rooms by 2010 Commonwealth Games in New Delhi.
“In the last two-three years all the portals have done aggressive marketing, each spending around Rs80-90 crore last year,” Badrinathan said. “The growth of online hotels after 2010 will be even greater.”
Cleartrip said its hotel business grew 22% every month from April to September this year and 10% in October and November. It sold 5,500 hotel room bookings in November.
“In the first six months from launch (July 2006), hotels contributed 2-3% of the gross sales, now they contribute 10%,” said Noel Swain vice-president, marketing and supplier relations, at Cleartrip.
The Sabeer Bhatia-run Arzoo.com generates around 60-70% of its business from air tickets, but has seen a monthly 10% growth in its hotel business for the past six months.
“Two years back, hotels contributed not even 0.25% of our total business, but now that’s 4-5%. In the next year, we expect this to grow exponentially,” said Amal Parandare, GM, India operations at Arzoo.
Mostly budget and mid-market hotels such as Sarovar Hotels Pvt. Ltd and the three-star Ginger hotels run by Roots Corp. Ltd, a wholly-owned subsidiary of India’s largest hotel chain Indian Hotels Co. Ltd, are driving this growth as they ramp up in hotel bookings, volumes, and penetration through websites. Though online bookings of Ginger is available on local websites, its sales are mostly through its own website and call centre. The business from third-party websites rises in the peak season—between October to March, a company official said.
“We expect business from OTAs (online travel agents) to grow further during next year as Ginger plans to expand to 30 locations by 2010, from the 15 existing properties,” said Prabhat Pani, chief executive of Roots Corp.
The website firms are, therefore, optimistic in their outlooks.
“Going forward, we would like to constantly invest in the hotel market and get this product to start contributing 30% of our business, which is an ideal product mix,” said Cleartrip’s Swain.