‘Indian outbound travel to grow faster than most western mkts’

As the global travel market recovers to pre-pandemic levels, one company said the Indian outbound travel market is so promising that it is expected to outpace many other countries, faster than almost any market in the west. Even in the Asia Pacific region, it’s going to be one of the top growing markets.

Agoda Co. Pte. Ltd’s chief executive, Omri Morgenshtern, who was visiting India recently told Mint that the Singapore headquartered company was very bullish about the Indian market, both in terms of domestic travel as well as outbound travel.

Agoda buys bulk inventory of hotel and rental properties and has about 3.2 million hotels and holiday properties in its listings. For it, India is in the top 3-4 countries in the world and as a feeder market for travellers to other countries, it is in the top two.

The company is a subsidiary of Booking Holdings that also owns websites like Booking.com, Priceline, Rentalcars, Kayak and OpenTable.

The company’s chief executive said India recovered very well from the pandemic in 2022. Travel in general—based on searches made on the portal—is already higher than it was in 2019. It’s expected to surpass the current levels by 20% this year, he said. The search information includes inbound, outbound and domestic travel which is over twice as high than the 2019 data for their platform.

“The market is booming. Domestic travel is showing a crazy, crazy growth, so is outbound. Indians are going outside Asia, and the power of the Indian customer is growing very, very fast worldwide. Business from India can grow in double digits, one of the fastest in the world,” he added.

As a trend, the company has observed that leisure travel around the world recovered much faster than business travel and as a medium, booking online recovered much faster than offline. India recovered much faster in both aspects. Last year, the total travel returned to the 2019 levels.

In India, a majority or 90% of travellers are booking rail tickets online, 60% use online platforms to book plane tickets but just 40% use platforms to book hotels.

But the company has observed that travel to India from abroad has not grown at the pace it was expected to.

However, as a feeder market to other countries, many more Indians are now travelling abroad. Even if China goes back to its original numbers, as it was sending out globally pre covid, he still expects India to grow in many markets, much faster than any other country.

“I suspect that India will gradually become the number two market for outbound travellers to the world. People tend to think that the Indian traveler is not a big spender, but that’s not true. What we’ve seen is that they are actually big spenders. Across the industry, the customer actually outspends the Chinese customer on an average. So, it’s a very lucrative customer for many countries. In the next three to five years, the financial impact of Indian customers around the globe where they travel to, would be at least 20%,” said Morgenshtern.

But he said the flight capacity out of China is still very, very limited and while the Chinese traveller is still very important, and they are starting to see the Chinese people trickling back, it’s still nowhere near the numbers of 2019. At the moment, it is very hard to predict how long the business will take to recover from the country.

The company said it is now heavily focused on localization in the country. In Asia Pacific there is a need for companies like theirs to adjust their user experience to suit the consumer. “India is one of those markets that if you don’t do that, you don’t stand a chance with them. One such example is supporting the local payment options like UPI,” he said.

Last week, Booking Holdings reported its total revenues for 2022 at $17.1 billion, an increase of 56% from the prior year (approximately a 71% increase on a constant-currency basis). Its net income for last year was $3.1 billion, an increase of 162% from the prior year. But the company did report a decrease in room nights booked in its third quarter (July-September 2022), which is usually considered the strongest travel period since they are summer months. While the decline was marginal, from $246 million to $240 million in the year, buyers of its stock around the world are still in wait and watch mode.