A recently released report by Google India has projected that the Indian domestic travel market is expected to be worth $48 billion by 2020. The report suggests that technology, which is currently the most important trend emerging in the tourism sector, will pave the way for a more concise market penetration. The report also notes that technology associated ease provided to the consumer will go a long way in fuelling various aspects of the sector, like airlines, and hotel rooms etc., which will in turn lead to a vast growth in numbers.
According to several media reports, Google India, along with Boston Consulting Group(BCG), recently released a report which predicts that the Indian domestic travel market is set to become worth $48 billion by 2020. The Compound Annual Growth Rate(CAGR) is expected to be around 11% to reach this target by 2020. Air travel is set to be the biggest contributor to this sector, and is expected to be worth $30 billion by 2020, with its CAGR projected to be around 15%. Hotels are expected to grow at 13% to $13 billion while railways will remain largely stagnant at $5 billion as per the report.
The Google India report, which is titled ‘Demystifying the Indian Online Traveler’, was published after a study was conducted over eight weeks from November 2016 to January 2017. The study was aimed at mapping the offline and online behaviours of 256 people, who had intentions of travelling, to provide insights on the potential growth opportunities for travel businesses till 2020. The report emphasises the importance of the industry moving ‘online’ and notes that as the number of travellers choosing the online medium increases, smartphone penetration, along with digital payments, will grow. This increased penetration is especially expected to boost the online hotel market in the country, which is expected to grow to $4 billion with 31% penetration at a CAGR of 25%, by 2020.
“India’s domestic travel market is on an acceleration path. One of the key findings of the report is that by 2020, one in three hotel rooms will be booked online — a clear indicator of the growing importance of digital in travel research, planning and booking. There are several actionable insights for domestic online travel players including the role of mobile and the level of curation and personalisation that Indian travellers are looking for.” Vikas Agnihotri, Industry Director, Google India is quoted as having told the press.
The Google India report provides an insight in to the travel planning and executions of the domestic Indian traveller and exhibits that for Indians, a vacation is a well-planned and thought through process. The Indian domestic vacationer tends to start planning weeks in advance and the time spent online in planning for the event, on an average, is 49 minutes spread over 46 days. The process includes visiting as many as 17 online touch points as a part of the planning. The consumer spends about 64% of one’s time at online travel agency sites, 33% on search engines and 26% to search maps, the report said. The report further mentions that 57% of the consumers feel they get better deals online and 41% of the consumers use the online medium for convenience whereas just 12% of consumers use offline mediums to conduct travel related research. However, something interesting that the report revealed was that the average time of an online session spent in planning a vacation was less than 3 minutes. “Travel is a high investment – both monetary and emotional – category. Technology has led to democratisation of travel through better information and price discovery – and shall lead to 11-11.5% growth in years ahead. The question is how to address the 17 different touchpoints of three minutes each over 49 days,” Abheek Singhi, Senior Partner and Asia Pacific Head of Consumer Practice, BCG, was quoted as sharing with the media.
The rise of the Indian travel market has been attributed to some key drivers. Apart from ever evolving technology, other factors like government intervention (introduction of e-visas, for example), increase in the spending power of the consumer, the will to consume etc. have played a crucial role in this projection. These combined with the market environmental factors like competition, reduced margins, high cash burn rates have made an important contribution in fuelling the growth of the tourism sector. The Google India report goes on to highlight that advocacy and word of mouth are also immensely important factors which impact travel related decisions and that reviews and ratings from other consumers are the single most important criteria for selection of any booking channel.