India’s travel spends to grow to $136 billion by 2021

Rajesh Kurup Mumbai | Updated on April 16, 2019 Published on April 16, 2019


The Indian travellers have spent about $94 billion in 2018 on around two billion domestic and international trips and this momentum is expected to continue. The industry is expected to grow at 13 per cent growth rate per annum to $136 billion by 2021, according to a report by Bain & Company and Google India.

The report ‘How Does India Travel’ outlines how India spends on travel, the influence of online channels in their purchase journey and potential growth opportunities for travel businesses till 2021.

Deep diving into the $136 billion spends, the report cites a 12 per cent growth in transportation ($50 billion), 13 per cent growth in lodging ($21 billion), and consumption (which includes spends on shopping, recreation and food) to grow at 13 per cent ($65 billion) over the next three years.

Additionally as more people come online, smartphone penetration improves, and use of digital payments goes up, the report estimates that Indian travellers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 per cent in 2018 to 35 per cent in 2021.

Online significance

The report states that during key research-heavy phase digital plays a pivotal role, with over 86 per cent of travellers being influenced by online channels. During this phase, travellers spend their maximum time on search, travel tour provider websites, price comparison websites and travel articles.

Online video too plays a significant role with 21 per cent of travellers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 per cent of customers book transport and lodging online, and over 50 per cent share feedback online with social media being the dominant platform.

Vikas Agnihotri, Country Director-Sales at Google India said:“New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travellers; and existing travellers research online but the lack of trust in payments and booking experience make them end up booking offline. If travel players tap these online users through personalised marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”

Arpan Sheth, Partner at Bain & Company said: “There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.”

Decoding the Indian travellers

Nearly 70 per cent of the frequent fliers book online and cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences. About 86 per cent of budget business travellers research online, whereas only 60 per cent book online, cumulatively spent $20 billion in 2018.

Around 70 per cent of the experience-oriented travellers did bookings online and cumulatively spent $22 billion in 2018, while 90 per cent of budget group travellers research online and 55 per cent book online, cumulatively spent $29 billion in 2018. They make multiple decision-makers in the process and take the final decisions based on minimal cost.

About 92 per cent of occasional travellers visiting friends or relatives researched online but only 60 per cent booked online, spent $6 billion in 2018.

Published on April 16, 2019
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