India Online Travel Market

Indian OTA Market
Industry Overview
2010 RedSeer Consulting Confidential `and Proprietary Information
www.redseerconsulting.com
query@redseerconsulting.com
India, which has the worlds second fastest growing GDP,

will produce one of the worlds largest high income pool
Real GDP Growth
(2005-2015)
Indian households with annual income >USD 50k

(2005-2015)
3.5
12.0
Growth Rate (Base=2005)
3.0
2.5
India
2.0
Thailand
US
1.5
Germany
UK
10.0
CAGR
10.6%
8.0
6.0
4.0
2.0
0.0
1.0
2005 2006 2007 2008 2009
Number of households (in millions)
China
2010 2011 2012 2013 2014 2015
2005
2007
2011
2013
2015
Years
Years
Source: EIU, RedSeer Analysis, web search
2009
2009 RedSeer Consulting Confidential and Proprietary Information.
www.redseerconsulting.com.
Indian upper and middle class is increasing which will give

a boost to the travel sector
Household Income
Class
Annual
disposable
income (USD)
Segment Size (Households

MM- 2007) and % CAGR (20002007)
>$25,000
9.7%
Travel habits
Minimum one foreign
Business owners in
1.8
Upper class
Common Occupation
small and medium

enterprises
High level corporate/
Government employees
leisure trip annually
Multiple foreign business

trips
Frequent domestic flyers

Prefers luxury hotels (4-5
stars)
Middle Class
Tier-I
Middle ClassTier-II
Salaried Employees
New service employees
1.7
$15,000-$25,000
(e.g. IT media)
9.7%
Shopkeepers
Rich farmers
Shopkeepers
Non-urban small
22.6
$5000-$15,000
18.7%
23
187
Lower class
$500-$5000
23
0.7%
Shopkeepers
Non-urban small
business owners
Lower level employees
Either a budget foreign trip
or a lavish domestic trip

annually
4-5 domestic round trips
annually
Stays in 2-3 star hotels
Travel by train-AC or low

cost carrier
Prefers to stay in budget

hotels
Travels in general train and

buses
business owners
Lower level employees
Indian travel and tourism market is 42 billion USD industry

growing with a CAGR of 10.2% over the next 10 years
Indian Travel and Tourism Industry- Market Size
(2010-2020)
120.0
111
Market size (in USD billion)
100.0
96.4
CAGR
10.2%
82.8
80.0
Discussion
Governments boost to tourism,
rising middle class and
increasing aggregate disposable
income will lead to a significant
growth in travel and tourism
industry in India
69.2
Indian middle class is expected

to increase by 10 times between
2005-2025
55.6
60.0
42
40.0
The aggregate disposable

income from Indian households
is expected to increase with a
CAGR of 7% between 2005-25
20.0
0.0
2010
2012
2014
2016
2018
2020
Years
Changing dynamics of Indian travel industry

Changing Attitude of
Indian traveller
New Information
sources
EARLIER
NOW
Personal knowledge
Word-of-mouth
Online research
Social Media
Increased Flexibility
Standard packages
Lack of options
Plan-it-yourself
flexible trips
Unexplored
destinations
Less frequent & long

trips to famous places
Weekend getaways
Explore the
unexplored
Since OTAs provide increased flexibility, lower pricing

and more options in terms of destinations, it is being
increasingly adopted by new-age Indian traveller
Indian online travel industry is growing with 49% CAGR;

OTAs account for 17.5% of total gross bookings
Indian Online Travel Gross bookings
(2007-2010)
Indian Online Travel Gross bookings- Breakup

(2010)
7000
5739
Market size (in USD million)
6000
CAGR
49%
5000
IRCTC14%
4041
OTA17.5%
4000
2738
3000
2000
1 billion
USD gross
bookings
68.5%,
Others
1750
1000
0
2007
2008
2009
2010
Years
Three major players account for 90% of Indian OTA market

share, with Make My Trip as market leader
OTA Market Share1- by Players
(2010)
OTA industry is very competitive

with more than 30 players in the
market.
10%,
Others
18%,
Cleartrip
48%,
Make my Trip
24%,
Yatra
Discussion
The industry is very pricesensitive especially in air-travel

segment, due to which Net
revenue margins are low.
While global giants like
Travelocity and Expedia still have
to make a mark in the industry,
bigger Indian companies are
venturing out into countries with
high NRI population.
Notes:
1. Market share by gross bookings
Source: RedSeer Consulting
The competition is shifting towards non-air travel

segments like hotel bookings due to high margins
Net Revenue Margins
(2010)
Discussion
16
14%
Net revenue margin (%)
14
12
10
8
7.6%
Air travel Net revenue margins

consist of commissions from
airlines, service fees from
customers and fees from Global
Distribution System (GDS)
partner.
Margin on Hotel & package tour
bookings come from mark-up on
services.
6
4
2
0
Air ticket
Hote & package tours
Hotels and package tour services

also give OTAs an opportunity to
differentiate themselves in the
industry
Notes:
1. Market share by gross bookings
Source: RedSeer Analysis, MMYT Investor presentation 2009 RedSeer Consulting Confidential and Proprietary Information.
Recent Trends In OTA Industry

Trends
Description
Consolidation
amongst players
Major companies are acquiring smaller companies to expand their services

Makemytrip acquired Ticketvala.com, Travelocity acquired Travelguru and
Yatra acquired Ticket services International
Focus on hotels
and tours
For the industry leader Make My Trip, while gross bookings for Air-travel and
tours grew by 45%1 each (2008-10), net revenue grew by 49% and 84%,
respectively
One-stop
solution mantra
Most OTAs have partnered with IRCTC for rail bookings to generate traffic
OTAs are also partnering with bus ticketing websites and car rental
companies to become one-stop solution for travel needs
Merging online
and offline
Yatra has started 50 lounges across India while Make my trip has an agent
network across 450+ cities
Yatra has also partnered with Reliance World (120 centers across India)
where customers can book tickets and hotels
Creating online
ecosystem
Makemytrip has created online communities of tourists through

offisialatyachaar.com and oktatabyebye.com while Cleartrip has associated
with Tripadvisor.com
Global expansion
of players
OTAs are expanding globally in countries with high NRI population.

Makemytrip started trading on Nasdaq to raise money for global operations
Notes: 1. 2008-2010
Source: RedSeer Analysis
Enablers for industry growth

Increasing internet
and credit card
penetration
Internet users in India
grew 2.5 times from
2006-2010
Number of credit cards in
Growth in tourism
arrivals in India has

increased by 8% CAGR
(2004-09), compared to
world average of 3%
India grew by 3 times

between 2006-2010
Emergence of new online

segments like car rentals
OTAs are integrating their
portals with online bus
and train ticketing
services and car rental
services
Discussion
International tourist
Indian OTA industry has a

high potential, and
opportunity for growth.
Governments boost to
Growth in Civil
Aviation market
Airline industry in India
travel and tourism,

combined with increased ecommerce penetration, will
help OTA industrys growth
OTAs are increasingly
has grown by 400%

(2004-2010).
By 2020, India will be

third largest aviation
market after US and
China
NRHM :National Rural Healthcare Mission, SEZ: Special Economic Zones

integrating services like

rail, bus and car rentals to
generate higher number of
transactions
10
Enabler: Growing internet and credit card penetration
Number of credit cards and internet users (in million)
Credit cards and Internet users- India

(2006-20141)
250.0
Discussion
Internet penetration in India
is 7% (compared to 31% in
China) is set to increase
drastically
200.0
150.0
Credit card
Internet
100.0
Indian Government has

allocated 10 billion USD for
Bharat Nirman, a project to
extend internet in rural areas
50.0
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Years
Increasing urbanization in
India will also lead to
increased internet and credit
card penetration

11
Challenges faced by Indian OTA industry
Limited
reach in
tier-II and
tier-III cities
Low
operating
margins
Challenges
faced by OTA
Industry
Nonreliability of
offline
partners
Discussion
OTA industry is lowmargin, high volume. Due

to low internet penetration
in India, their reach to tierII and tier-III cities is limited
which affects the volumes
Incompetence of hotels
Payment
processing
issues

and tour operators reflects

badly on OTA for
consumers who book
through them. Controlling
their quality is a major
challenge
12
Major Industry Players

Make my trip
Yatra
Established: 2000
Gross bookings: 480 million USD (2010)
Largest market share in Indian OTA industry
First Indian OTA to be traded on NASDAQ
Sister websites: Offisialatyachaar.com,
oktatabyebye.com
Global presence: US, Canada, UAE
Covers 450+ cities in India through travel agent
partners
Investors: SAIF, Helion, Sierra
Cleartrip
Established: 2006
Partnered with Reliance World for ticket
distribution
Started Holiday Lounges in 50 major cities in
India
Global presence: US, UK
Investors: Reliance, TV18, Norwest, Intel
Capital
Travelocity
Established- 2006
Partnered with Tripadvisor.com and Lonely
Planet
Global presence: Middle East (UAE, Oman,
Qatar, Bahrain, Kuwait)
Investors: KPCB, Sherpalo ventures, DAG
Ventures, DFJ
Established- 1996 (US); 2007 (India)

Gross bookings: Global- 10 billion USD (2007)
Acquired Travelguru, India based OTA with
focus on hotel bookings, in 2009
Owned by: Sabre Holdings
Global acquisitions: site59.com,
lastminute.com
Global presence: US, Canada, Germany
France, Scandinavian countries, UK and
Mexico
13
Thank You!
(query@redseerconsulting.com)
RedSeer Consulting
14

India Online Travel Market

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India Online Travel Market

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Indian OTA Market

2010 RedSeer Consulting Confidential `and Proprietary Information

India, which has the worlds second fastest growing GDP,

Indian households with annual income >USD 50k

Growth Rate (Base=2005)

Number of households (in millions)

2010 2011 2012 2013 2014 2015

Source: EIU, RedSeer Analysis, web search

2009 RedSeer Consulting Confidential and Proprietary Information.

Indian upper and middle class is increasing which will give

Segment Size (Households

Minimum one foreign

small and medium

leisure trip annually

Multiple foreign business

Frequent domestic flyers

Source: EIU, RedSeer Analysis, web search

Either a budget foreign trip

or a lavish domestic trip

Travel by train-AC or low

Prefers to stay in budget

Travels in general train and

2009 RedSeer Consulting Confidential and Proprietary Information.

Indian travel and tourism market is 42 billion USD industry

Market size (in USD billion)

Indian middle class is expected

The aggregate disposable

Source: EIU, RedSeer Analysis, web search

2009 RedSeer Consulting Confidential and Proprietary Information.

Changing dynamics of Indian travel industry

Less frequent & long

Since OTAs provide increased flexibility, lower pricing

Indian online travel industry is growing with 49% CAGR;

Indian Online Travel Gross bookings- Breakup

Market size (in USD million)

Source: EIU, RedSeer Analysis, web search

2009 RedSeer Consulting Confidential and Proprietary Information.

Three major players account for 90% of Indian OTA market

OTA industry is very competitive

The industry is very pricesensitive especially in air-travel

2009 RedSeer Consulting Confidential and Proprietary Information.

The competition is shifting towards non-air travel

Net revenue margin (%)

Air travel Net revenue margins

Hote & package tours

Hotels and package tour services

Recent Trends In OTA Industry

Major companies are acquiring smaller companies to expand their services

Makemytrip has created online communities of tourists through

OTAs are expanding globally in countries with high NRI population.

2009 RedSeer Consulting Confidential and Proprietary Information.

Enablers for industry growth

Number of credit cards in

arrivals in India has

India grew by 3 times

Emergence of new online

Indian OTA industry has a

travel and tourism,

OTAs are increasingly

has grown by 400%

By 2020, India will be

NRHM :National Rural Healthcare Mission, SEZ: Special Economic Zones

integrating services like

Enabler: Growing internet and credit card penetration