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Executive Summary & Trends

1.       Country Overview

          1.1 Macroeconomic Setting

          1.2 Key Demographics

          1.3 Government Policies

2.       Tourism Overview

          2.1 Indian tourism - A period of strong, resilient growth

          2.2 Domestic tourism analysis

          2.3 Outbound tourism analysis

3.       Indian Travel Distribution & Trends

3.1 Size of Indian Travel Market

3.2 Domestic Travel Market

Time-series analysis by industry sector: travel sector trends; online vs. offline market values; direct vs. indirect; key players 

                3.2.1 Domestic Railways

                3.2.2 Domestic Cruise Travel

                3.2.3 Domestic Car Rental 

                3.2.4 Domestic Airlines

                3.2.5 Domestic Hotel 

3.3 Outbound Travel Market 

Time-series analysis by industry sector: travel sector trends; online vs. offline market values; direct vs. indirect; key players 

                3.3.1 Outbound Airlines

                3.3.2 Outbound Hotels

                3.3.3 Outbound Cruise Travel

                3.3.4 Outbound Car Rental

                3.3.5 Outbound Railways

3.4 Online Travel Agent (OTAs)

3.5 Metasearch Engines

3.6 Traditional Intermediaries

3.7 Package Tours

4. Indian Traveller - Search and Buying Behaviour

          4.1 Internet Users & E-commerce

          4.2 Internet usage characteristics  

          4.3 Mobile phones

          4.4 Payment solutions

          4.5 Consumer travel buying cycle insights 4

5. Marketing, PR & Sales

          5.1 Advertising Media and Online Marketing in Travel

          5.2 Basis of competition in key travel segments

6. Case Study

            6.1 Makemytrip: Leading through efficiency and aggression

 7. Going about Business in India

          7.1 One India, multiple languages

          7.2 A cultural perspective

          7.3 Regulatory framework

          7.4 E-commerce

          7.5 Entering India - Distribution, marketing and brand strategies

Useful Contacts

Research Methodology

Figure 1       India’s GPD at constant price (base year 1999)

Figure 2       India’s nominal GDP

Figure 3       GDP per capita of India at constant prices

Figure 4       Per capita GDP in nominal terms

Figure 5       Per capita GDP by state

Figure 6       Per capita travel and tourism consumption in INR (personal travel &

                    tourism expenditure) (2006)

Figure 7       Travel & tourism expenditure as a percentage of per capita income

                    (Personal travel & tourism)

Figure 8       Exchange rate against key currencies (average annual rates)

Figure 9       Foreign direct investments into India

Figure 10     Sector-wise foreign direct investments in India (INR billion) – year 2006-07

Figure 11     Employment growth by gender

Figure 12     Employment growth by gender & age group (per 1000 workerpopulation

                    ratios – rural & urban areas)

Figure 13     Tax rates for corporates

Figure 14     India’s population growth

Figure 15     Share of households in each income bracket

Figure 16     Middle class households – number (mn) & average annual consumption

                    per middleclass household (INR ‘000)

Figure 17     Average household size

Figure 18     Share of households vs. share of consumption

                    (household income in ‘000 inr) 2005

Figure 19     Share of households vs. share of consumption

                    (household income in ‘000 inr) 2025

Figure 20     Age-wise population distribution – India

Figure 21     Dependency ratio

Figure 22     Paid vacation days & paid public holidays

Figure 23     India’s consumption expenditure & share of urban

Figure 24     Urban population penetration (in %)

Figure 25     Education profile of Indians aged seven years and older, 2005

Figure 26     Internet subscribers (2002-07)

Figure 27     E-commerce revenues

Figure 28     Growth of credit cards issued

Figure 29     Growth in debit cards

Figure 30     Volume (in millions) and value (INR billions) of eletronic payment cards in

                    India

Figure 31     Break-up of online bookings at IRCTC website by mode of payment

                    (October 2007)

Figure 32     India tourism marketing budget (2005-06)

Figure 33     Segmentation of prepaid cards

Figure 34     Features of open loop prepaid cards

Figure 35     Features of prepaid cards

Figure 36     Telecom subscribers

Figure 37     Visa processing time for Indians

Figure 38     Growth in Indian travel & tourism (value & volume)

Figure 39     Domestic travel & tourism expenditure by segment

Figure 40     Domestic tourists

Figure 41     Domestic travel & tourism expenditure by objective, 2002

Figure 42     Top tourist places in India

Figure 43     Domestic travel figures, CAGR, market share

Figure 44     Average trip length by purpose of travel

Figure 45     Average length of stay for important tourism states (2005-06)

Figure 46     Growth in Indian outbound travellers (million)

Figure 47     Purpose of outbound travel, 2005

Figure 48     Destination selection criteria

Figure 49     Indian outbound tourists by destinations, 2005

Figure 50     Outbound Indians, segmented by destination

Figure 51     Dream outbound destinations by type of trip (India Consumer Snapshot

                    2007 survey data)

Figure 52     ‘Repeats’ as a percentage of total Indians visiting that country

Figure 53     Average trip length by Indians in major countries

Figure 54     Outbound traveller segmentation – FIT vs. group

Figure 55     Total Indian travel market size

Figure 56     Total Indian travel market - online vs. offline

Figure 57     Total Indian airline market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (USD million)

Figure 58     Total Indian railway market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (USD million)

Figure 59     Total Indian cruise market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (USD million)

Figure 60     Total Indian car rental market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (USD million)

Figure 61     Total Indian hotel market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (USD million)

Figure 62     Size of the Indian domestic travel market, break-up by online vs. offline,

                    2001-02 to 2011-12F (INR million)

Figure 63     Domestic travel market by segments 2007-08F

Figure 64     Domestic travel market by segments - 2001-02 to 2011-12F

Figure 65     Domestic online travel market by segments 2007-08F

Figure 66     Domestic online travel market by segments 2001-02 to 2011-12F

Figure 67     Online bookings by city

Figure 68     Domestic railways market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (INR million)

Figure 69     Rail - number of domestic reservation passengers carried

Figure 70     Growth in domestic online rail ticket bookings

Figure 71     Domestic cruise market size, online vs. offline market size (INR million),

                    2004-05 to 2007-08F

Figure 72     Growth in domestic cruise passengers

Figure 73     Domestic car rental market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (INR million)

Figure 74     Total number of cars registered as taxi (2002-12F)

Figure 75     Value of the domestic car rental market (2002-12F)

Figure 76     Domestic airline market size, online vs. offline market size,

                    direct vs. indirect online market size, 2001-02 to 2011-12F (INR million)

Figure 77     Domestic airline revenue & growth

Figure 78     Growth in total domestic airline passengers

Figure 79     Segmentation of domestic airline passengers by purpose of travel (2006)

Figure 80     Market share of airlines by revenue (value) and by number of passengers

                    (volume) - (2006-07F)

Figure 81     Market share of domestic LCC vs. FSC

Figure 82     Air travellers as a percentage of total domestic travellers

Figure 83     India’s per capita air travel is well below other countries (2005-06)

Figure 84     Air traffic concentrated in the metros

Figure 85     Weekly seat capacity on major domestic routes (September 2006)

Figure 86     Air traffic growth at select Tier I & Tier II cities (Passengers handled,

                    including inbound)

Figure 87     Fleet size of indian carriers – current & forecast

Figure 88     Online revenue from domestic air tickets

Figure 89     Revenue from domestic air tickets – online vs. offline

Figure 90     Online booking penetration, domestic FSC vs. LCC

Figure 91     Online direct vs. OTA air ticket revenuedia Report • Edition 1

Figure 92     Available seat kilometres by all scheduled passenger airlines

Figure 93     Passenger load factor of all scheduled passenger airlines

Figure 94     Domestic hotel market size, online vs. offline market size, direct vs. indirect

                    online market size (INR million), number of rooms, 2001-02 to 2011-12F

Figure 95     Size of domestic Indian hotel industry in INR billion

Figure 96     Hotel preference for domestic tourists (% of total tourists visiting the

                    state – FY 2005-06)

Figure 97     Size of domestic organised Indian hotel industry

Figure 98     Break-up of hotel industry revenue by star category (2006-07)

Figure 99     Size of Indian hotel industry – no. of approved rooms (2001-02 to 2011-12F)

Figure 100    Number of approved hotel rooms by hotel category (2006-07)

Figure 101    Size of domestic Indian hotel industry (organised and unorganised)

Figure 102    Online and offline domestic bookings (2001-02 to 2011-12F)

Figure 103    Size of domestic online Indian hotel industry (2001-02 to 2011-12F)

Figure 104    Break-up of total domesticonline market between supplier website and

                     OTAs (2001-02 to 2011-12F)

Figure 105    Guest profile by purpose for Indian hotels (2005-06)

Figure 106    Value of domestic business travel and leisure travel revenue in hotels

Figure 107    Revenue mix at Indian hotels (2006)

Figure 108    ARR and occupancy rates for different category of hotels (2005-06)

Figure 109    Monthly occupancy at Indian hotels (2005-06)

Figure 110    IHCL hotels – revenue in INR billion (2005-07)

Figure 111    ITC hotels – revenue in INR billion (2005-07)

Figure 112    Hotel Leelaventure limited – revenue in INR billion (2005-07)

Figure 113    Eih limited – revenue in INR billion (2005-07)

Figure 114    Size of the Indian outbound travel market, break-up by online vs. offline,

                     2001-02 to 2011-12F (INR million)

Figure 115    Indian outbound travel by segments 2007-08F

Figure 116    Indian outbound travel by segments 2001-02 to 2011-12F

Figure 117    Indian online outbound travel market by segments and supplier vs. OTA

                     websites 2007-08F

Figure 118    Outbound airline market size, online vs. offline market size, direct vs.

                     indirect online market size (INR million)

Figure 119    Outbound airlines market revenues (2001-02 to 2011-12F)

Figure 120    International traffic from India

Figure 121    International traffic to & from India by airport (2005-06)

Figure 122    International departures from India by airport (2003-04)

Figure 123    Online bookings in outbound air travel (INR billions)

Figure 124    Online bookings in outbound air travel by point of purchase (direct vs.

                     indirect)

Figure 125    Outbound hotel market size, online vs. offline market size, direct vs.

                     indirect online market size, 2001-02 to 2011-12F (INR million)

Figure 126    Growth in outbound hotel revenues

Figure 127    Nights spent by indian visitors in UK (2005)

Figure 128    Type of hotel (2005)

Figure 129    Online bookings in outbound hotel industry (INR billions)

Figure 130    Online bookings in outbound hotel industry by point of purchase (direct vs.

                     indirect)

Figure 131    Growth in outbound cruise passengers

Figure 132    Growth in outbound car rental market revenues (INR millions)

Figure 133    Growth in outbound railways market revenues (INR billions)

Figure 134    Share of OTAs in Indian travel market

Figure 135    Online travel market share, supplier vs. OTA (2001-02 to 2011-12F)

Figure 136    Top of mind brand recall (Searched and Booked)

Figure 137    Comparative analysis of domestic OTAs

Figure 138    OTA market (overall) and its segments

Figure 139    Players in the domestic OTA segment

Figure 140    Metasearch engines in India

Figure 141    Number of approved travel agents by state

Figure 142    Package tours – percentage of domestic tourists with package trip for

                     important tourist states (2005-06)

Figure 143    The internet user population (various estimates)

Figure 144    Average number of e-commerce transactions per month

Figure 145    Internet users & travel purchase

Figure 146    Urban internet users

Figure 147    The Internet user base across top 8 metros

Figure 148    Broadband subscribers in India

Figure 149    Broadband households & penetration in India by access technology, 2005-11F

Figure 150    Time spent online

Figure 151    PC penetration

Figure 152    Forecast of PC sales in India

Figure 153    Internet point of access

Figure 154    Main point of Internet access across segments

Figure 155    Mobile subscriber growth (2006-2012F)

Figure 156    GSM & CDMA subscriber base - historical (2000-2007)

Figure 157    Mobile content product/services used

Figure 158    Mobile content market

Figure 159    Website options for online bill payment

Figure 160    Travel planning and decision making

Figure 161    Factors influencing decision making

Figure 162    Goods and services bought online (2006-07)

Figure 163    Online shopping demographics

Figure 164    Wallet size - amount spent online in the last 6 months - demographics

Figure 165    Where did you hear about the destination for your last holiday?

Figure 166    Common themes & check points for Indian consumer concerns about

                     booking travel online

Figure 167    Open question “Is there anything that concerns you about booking travel

                     online?”

Figure 168    The most important features of travel related websites for Indian

                     consumers

Figure 169    Brand ambassadors of travel companies

Figure 170    Advertisement expenditure by media type

Figure 171    Print media – readership, circulation, number

Figure 172    Distribution of newspaper circulation by language

Figure 173    Readership of dailies (all languages; readers in million)

Figure 174    Share of ad volumes of domestic airlines by channel genres in 2006

Figure 175    Radio listenership data – major stations

Figure 176    Online advertising market in India

Figure 177    Top Indian advertisers – estimated annualised spend for SEM (INR)

Figure 178    Keyword portfolio

Figure 179    Most popular websites for specific online activities

Figure 180    Advertising expenditure of airlines - 2007

Figure 181    Marketing expenditure per available room and as a % of revenues

Figure 182    Top tour operators - Franchise programme overview

Figure 183    Comparative analysis

Figure 184    Top advertisers on the travel & tourism category on print media in 2003

Figure 185    Makemytrip - Revenues and growth

Figure 186    Top of mind ad and brand recalls (Searched Only)

Figure 187   Technology response areas

Figure 188    Makemytrip - Chronology of events

Figure 189    Languages spoken in India

Figure 190    Diverse linguistic demography

Figure 191    Ministry of tourism guidelines

Figure 192    Barriers to online purchase

Figure 193    USD to INR exchange rates (2001-02 to 2011-12F)

Indian travel market definition

For the purpose of this report, the Indian travel market refers to travel demand by Indians, which consists of the domestic travel market (Indians travelling in India) and the outbound travel market (Indians travelling abroad), and excludes the inbound travel market (foreigners travelling in India).

The size of the Indian travel market is estimated as a sum of revenues of five different sub-segments; namely airline, hotel, cruise, car rental and railway corresponding to domestic and outbound market segments. The revenues generated from travellers for all purposes such as business, leisure, Visiting Friends and Relatives (VFR), religious, meetings and conferences make up the market.

Furthermore, we have based our valuations on the spending of Indian travel consumers on travel and accommodation only, whereas travellers' additional expenditure on food & beverage, shopping and other leisure activities is not considered. We have estimated the overall market size using a mix of demand-supply approaches. To estimate the overall market size in India, we have calculated the value of the different sectors of the travel industry individually. To validate the estimations, the demand side approach has been used at an overall level. We have also adopted demand side approaches to estimate the inbound and outbound markets.

 
Consumers - For the purpose of this report, we have considered the consumption of travel products and services by Indian consumers only. Thus, the spending on travel products and services by foreigners coming into India (inbound market) are calculated separately for different segments and deducted subsequently. Similarly, we have calculated the spending on travel products and services by Indian travellers going abroad (outbound) and added this to the domestic market.

Suppliers - The suppliers of travel and related services are based in India and earn their revenues in India. However, the outbound market, i.e. spend by Indians outside India, are estimated on the basis of average spend per tourist on different travel products i.e. hotel, airlines, etc.

Online bookings are defined as customers who purchase the travel product with an online payment. It does not include those bookings where actual payments are made offline even though the booking may have been made online or over email. We have considered only those online booking revenues where the purchase is made directly by the customer on the supplier or OTA (on-line travel agents) website and hence the revenues generated from online booking at supplier website by travel agents is excluded.

Methodology for market sizing

We have used a bottom-up approach to arrive at the total market size. The travel market is segmented into domestic, inbound and outbound travel markets, which are further categorised into sub-segments such as airlines, hotels, railways, car rentals and cruise. We have used a two-pronged approach comprised of primary and secondary research. The primary research involved extensive in-depth interviews with the leading travel companies in India, as well as interviews with other relevant industry experts and panel members across the different sectors.

Domestic and inbound travel market

To arrive at the value of the domestic market, we combined total revenues generated by different travel segments in India and then subtracted the value of the inbound market. We used a bottom-up approach to value the domestic as well as the inbound market. We calculated the expenditure of inbound tourists in each sector separately and then calculated the overall market, using surveys and other qualitative information from both primary and secondary research.

Outbound travel market

A combination of bottom-up and top-down approaches were used to estimate the value of the outbound travel market. We have derived the historical values for the total outbound expenditure by multiplying our estimated per tourist spend with the total number of tourists. From this, we extracted the expenditure on accommodation and travel from the total outbound expenditure. We have forecast spend by Indians in the individual segments and calculated the results to arrive at the overall outbound market.