Future of Online Travel in India

The Online Travel sector in India is taking a big leap with MakeMyTrip, Yatra, TravelGuru, ClearTrip and few others already having made their presence felt and lucratively inviting others to join the race of OTA trend.

Online travel sales in India will nearly quadruple to $2 billion in 2010, according to Euromonitor. The online travel market is growing in several Asian countries, thanks to rising Internet use in large cities.

India will be Asia’s fastest growing market for online travel retail by 2010, according to global market analyst Euromonitor International. Other markets topping the table include Vietnam, Hong Kong, Indonesia and China, as online travel retail takes off in Asia.

The online travel retail market in India is expected to boom over the next five years, with Internet-based travel retail transactions increasing by an incredible 271% between 2005 and 2010. Euromonitor International predicts that online travel retail sales generated in India will exceed US$2 billion in 2010 alone.

“High computer ownership rates and large urban populations provide the ideal infrastructure for Internet services,” said Parita Chitakasem of Euromonitor. “With double-digit growth forecast in the number of urban households between 2006 and 2010, India is showing great potential for online businesses and as a result, great potential for online travel retail.”

New baby-boomer market emerges for online travel retailers

In its report, Abacus emphasised that there are currently around 62,000 physical travel agencies in Asia, up from around 52,000 in 2003 according to Euromonitor. Offline travel sales make up a healthy 89% (or US$218 billion) of the total Asia Pacific travel market, compared to the 11% (US$26 billion) gained in online sales, according to 2007 projections from EyeforTravel Research.

“This is no reason for the region’s traditional travel agents to be complacent however. The offline share of the travel market has been growing at just 2.3% CAGR from 2002-2007, compared to the bounding 49% CAGR recorded by online sales over the same period (EyeForTravel). Despite this rapid growth, Abacus estimates that less than half the region’s current travel agents have any web presence at all and fewer than 10% have websites with real-time transaction facilities,” stated Abacus in a release.

But with online travel bookings in Asia Pacific projected to grow from US$15.9 billion in 2005 to US$55 billion by 2010 (EyeForTravel, The Asia Pacific Online Travel Report 2007), traditional travel agencies who ignore the changes heralded by Travel 2.0 are playing with fire.

“Travel is an emotional decision, so having a human contact makes an important difference. Many people feel more secure when dealing with a real person, a real agent,” says Don Birch, Abacus President and CEO

Euromonitor International also predicts that online travel companies in Asia will benefit from a recent shift in demographic usage of the Internet, to increasingly include older travellers. The over-65 generation in Asia is becoming more adept at using the Internet and as such, they should be a target consumer group for all online travel companies, particularly as over 65s typically have high disposable income levels to spend on expensive or long-awaited holidays.

At present, Japan is leading the way by offering Internet services tailored to its ageing population. Euromonitor’s Chitakasem comments, “In Japan, there has been a rise in computer schools that cater specifically for people over 60, plus a growing number of websites aimed at senior bloggers. Although it is only early days in Asia for this emerging trend, it is clearly not a development to be ignored”.


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