in Trends

I had to be in Mumbai on Friday morning, go spend the whole day travelling around the city meeting people, spend the evening with family then get to a hotel and finally call it a day. Easier done than said, the rise of Indian e-travel platforms has brought the power to book tickets and hotels at the fingertips of millions of Indians..

There is a radical revolution that is finding roots in the indian travel segment; one that is new and equally exciting and set to disrupt the status quo. The air fares just got a whole lot easier on your pockets and now you can catch a flight from Bengaluru airport to Kochi airport for probably lesser than what a bus ticket would cost plus you shave 12 hours off your travel. How cool is that?

meme-cool-story-bro

While international travel might still be off the books for most people in the mid-range income segment; the dream of flying to exotic vacation hubs just got easier to realize, provided you fly within the domestic boundaries. A glance into this sector will reveal that domestic air travel has seen a boom in the past 5 years and so has hotel bookings.

Let’s put things into perspective by looking at a few numbers. According to the HVS report, the total number of branded hotel rooms across major cities in India during March 2015 was 1,12,284. There was a growth* in demand for hotel rooms at 7.8% , however the supply growth stood at just 4.4%; which translated into more money for the hotels this year.

There was a growth in demand for hotel rooms at 7.8%, however the supply growth stood at just 4.4% Click To Tweet

Air Travel

In the case of air travel, 2015 was a good year both for passengers and fleet operators. According to the DGCA (Director General of Civil Aviation) report a total of 6,63,050 flights were operated throughout the year and these flights carried 8,07,53,743 passengers across India; an increase of 17% over the previous year. During February 2016 alone, 74.76 lakh passengers travelled domestically on flights

 20142015% Change
Total Passengers6,64,42,0378,07,53,743+17.72
Number of Flights6,05,9626,63,050+8.6

The general trend has been an increase in the no. of people who are taking to the skies for their travel requirements and this implies more revenues for the airline companies.

The year 2012-13 is more popularly referred to as the year of the low fare carriers. With the entry of carriers such as Indigo, SpiceJet, Jet Lite and Go Air; domestic aviation in India would never be the same again.

Hotels

Growing side by side with the airline industry is the hotel industry. The hotel industry has been catering to the tourism industry for a long time now but their primary focus had always been on international tourists. In the recent past there has been a shift to a more domestic centric approach from the hotels, considering the increase in domestic air travel. As more and more people are able to afford air travel, the demand for domestic hotel bookings have also increased multifold. Unfortunately, hotel rooms have not been growing at par with the demand though and the cost of rooms are always on the higher end.

“The depreciation of the INR against the USD combined with the affordable air fares have rendered international travel less enchanting and more people are now substituting foreign vacations with a domestic one.”

This translates into opportunity for the hospitality sector as demand for domestic stay increases. According to the HVS report on ‘Hotel Trends in India’ there were 1,12,284 rooms from branded hotels across the country. Overall the hotel segment in India saw a growth** of 11% to 14% annually. Bengaluru saw a growth of 11.4% and Gurgaon topped the list with a growth of 17.3%.

hotel-meme

To see how the hotels have been performing, let’s look at a few major cities.

 2011 - 122012 - 132013 - 142014 - 15
Agra1739129912931719
Ahmedabad1975247727772991
Bengaluru771385361016211317
Chennai4904633071057464
New Delhi10697113381237013277
Gurgaon3782455951906088
Mumbai12052128071302212731

The HVS report also forecasts that the no. of rooms in the country will be up to 1,46,485 by 2019-20 on the back of the ever growing domestic demand. Bengaluru airport saw a growth of 22% in domestic arrivals and this has has a positive impact on the hotels in the city. The report also forecasts that the city expects to add 2,780 additional rooms in the next 5 years.

The Small Business Side of it

Finally we address the ostrich in the room and as a further elaboration to the scenario that I had started off with, we’ll look at the bigger picture to this growth pattern.

So domestic air travel has grown considerably in the past decade and so has the hotel industry. This has interestingly opened up a whole new niche in the travel and hospitality industry. The result has been the emergence of new enterprises that act as a platform to complement the airline and hotel industry.

Makemytrip.com, via.com and other online platforms have spring up across the country to cater to the growing market. So now I can book my flights, get suggestions for hotel bookings nearby my destination or just go ahead and book a flight and hotel together at a discounted rate or book a vacation package; all just by visiting the website. It changed my life and I no longer have to go to a travel agent to book my flight tickets.

According to a report by Octane Research on e-travel marketing; 95% of consumers are turning to the internet to take advantage of ease of booking and competitive pricing. To add to this, these online platforms don’t just take care of ticket booking, there is an industry trend among these platforms to be a stop shop for all the travellers needs.

The online travel industry in India is estimated to be worth $7.3 billion based on the stats by the IAMAI report on the travel industry in India. This industry is also growing at a rate of 30.60% and is higher than China, Russia or Brazil.

Now because a large chunk of the population has moved online; Hotels have also started to tap into this user base to determine how best to grow. Surprisingly, the future of the Indian hospitality segment does not lie in the metro. Hotels in India are set to grow in the tier II and tier III cities. As per the PWC report “Hospitality Insights from the Indian CEO’s Desk’ (2014) 37% of the hospitality segment is eyeing at growing in the tier II cities.

growth-potential-hospitality-industry

India is a mobile friendly country, in fact mobile phones are the backbone of the internet in India. This is the reason why most of the online platforms have their own apps out there. Take for example the case of the travel giant- MakeMytrip; their andriod app has been downloaded 10 million times. This is an important step in gaining the market, because 50%+ of all online travel booking take place through mobile apps.

Technology is changing the face of Indian e-commerce and now that summer’s just around the corner and you want to grab a vacation; you know where to get one. Airline tickets rates are affordable and with lucrative vacations hubs across India, domestic tourism is the new cool in town.

*Growth in the hotel industry is in reference to no. of rooms.
**Overall growth again is inclusive of all branded and non-branded
  hotel segments in terms of no. of rooms

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