New Delhi: As traditional travel agencies lose share in the tourism market, declining dramatically from 32% in 2005 to a mere 10% in 2008, online travel agencies are all set to triple theirs, according to a new study.
Driven by the need to access a fragmented travel supply market and sophisticated online retail and shopping experience, the old paradigm of hiring a travel consultant to plan your trip is rapidly changing, says a comprehensive report on trends in Indian tourism by PATA (Pacific Asia Travel Association).
PATA in its report cites a PhoCusWright Inc. study The Emerging Online Travel Marketplace in India which claims the Indian online travel industry is set to see its value increase manifold over the next two years, boosted in particular by the rise in Low Cost Carriers (LCCs) and the emerging middle class.
PhoCusWright estimates the growth in the market from some $295 million in 2005 to an estimated $2 billion by 2008.
“An influx of start-up online travel agencies is expected to have a major effect on existing travel agency business,” the study says.
“Investment in infrastructure, a renaissance in the banking sector to push online payments, and the early success of a website for mammoth Indian Railways system, was also a significant motivator for this market,” it adds.
Boosted by the growing trend towards independent travel, the online booking will increase from just 2% in 2005 to more than 10% in 2008, it says.
Despite strides in IT sector, PATA in its report noted that with the possible exception of young people, Indians are usually wary of net-based payments and they are not very net-savvy.
“They would prefer personal interaction and, since they are price sensitive, they like bargaining, which is not possible online,” PATA report said.
“But those who do go online to purchase or research travel options are looking for the lowest prices and the longest credit periods,” it said.
“As for quality control, they certainly think it is important, but only as long as there is no additional cost involved,” it added.
The report observed though it is not easy to separate out domestic and international online travel, but the domestic tourism sector is clearly being led by LCCs and Indian Railways.
By the end of 2006 there were six online travel agencies in India, led by MakeMyTrip.com, which has a presence across the country. Some 25% of its business is from repeat travellers.
Indiatimes.com has been positioned among the top five e-commerce sites, and it also sells distressed airline and hotel inventory. Travelguru.com is one of four private equity/venture capital start-ups targeting the unmanaged business travel sector. Launched in mid-2006, Yatra.com also powers the hotel engine of LCC Spicejet, PATA in its report observed.
Other players are Ezeego1.com, which was due to be launched by Cox & Kings in 2006 to sell hotel inventory, and Xplorz.com, selling mainly airline tickets and hotel inventory. Foreign online groups too have a presence, notably Travelocity and Mobissimo, the report added.