State of Online Travel Industry in India

The growth in the online travel industry is not surprising, given that the country’s online population totals 25 million currently, and is projected to cross 100 million mark by 2008.

Online travel sector growth in India was established and driven by Indian Railways, and the second phase of growth was lead by airlines, predominantly Low Cost Carriers (LCCs) like Air Deccan, Spicejet and Kingfisher. This is also a major driver of online travel bookings in other Asian countries. LCCs in India today channel over 60% of their business through their own supplier-direct websites. Online hotel bookings are predicted to grow rapidly in the next 5 years, and on Online Travel Agent (OTA) sites. In fact it’s predicted hotel distribution will grow from 45% to 56% via intermediaries by 2010 in Asia Pacific. In India, the figures are even more dramatic, with growth predicted to grow from 35% (2005) distribution via OTAs today, to 57% by 2010.

Not only are hotels a relative latecomer online, but OTAs themselves represent the third phase of online development as the market matures. Today OTA sales account for less than 16% of the total online travel market.

The scope for growth in online travel sector is immense. While more than 65% of the tickets are sold online in the US, online sales account for less than 10% in Asia Pacific.

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