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Build together
Win together
Flying high: Online Travel
11th April, 2018
Context and Summary
2© Praxis Global Alliance |
• This document is an extract from our work in Indian Travel Industry.
• W...
25 24
26
31 31
36
40
43
47
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Travel and tourism direct contribution to GDP...
Indian T&T is riding a secular growth wave, driven by growing affluence and growing
spend share for travel; rooms, flights...
Online travel (air + hotels) in India is expected to grow to USD 13.6B by 2021 (~16%
2015-21P CAGR) driven by growth in pe...
Globally, Online travel penetration tapers around ~50-52% levels as internet
penetration saturates and some segments are s...
Domestic flights: ~70% of online bookings in 2021E is expected to come from
individuals and SMEs; major increment (2015-21...
Intl flights: ~67% of online bookings in 2021E is expected to come from individuals
and SMEs; major increment (2015-21E) w...
Hotels: ~86% of online bookings in 2021E is expected to come from individuals and
SMEs; major increment (2015-21E) would b...
Key questions for travel players
10© Praxis Global Alliance |
1. In the face of impending consolidation, which players wil...
About Praxis™
Praxis Global Alliance is a global business analytics, research and
advisory firm. We believe that clients s...
12© Praxis Global Alliance |
Contact us - We will be happy to share perspectives
Madhur Singhal
Managing Director, Mumbai
...
Build together
Win together
THANK YOU
© Praxis Global Alliance
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Flying high: Online Travel

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This report includes market sizing, growth opportunities and customer segmentation of the Online travel market in India for domestic flights, international flights and hotels.

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Flying high: Online Travel

  1. 1. Build together Win together Flying high: Online Travel 11th April, 2018
  2. 2. Context and Summary 2© Praxis Global Alliance | • This document is an extract from our work in Indian Travel Industry. • With this document, we aim to give an insight into the overall and online travel industry, its size and direction. • As a part of the study, we did extensive research on the travel industry through primary and secondary interviews, surveys and research across • Different segments in the travel market (Air, hotels, bus) • Different geographies (India, Middle-east and South Africa) • Online and offline players • Intermediaries and their incentives
  3. 3. 25 24 26 31 31 36 40 43 47 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Travel and tourism direct contribution to GDP (USD B) Indian travel and tourism industry (USD 47B in 2016E) is growing at a CAGR of 10%; expected to reach ~USD 74B by 2021 3© Praxis Global Alliance |Source: World Travel and Tourism Council’s Economic Impact 2015, IMF, Praxis analysis Travel and tourism industry in India is growing at a CAGR of 8% and reached USD 43B in 2014 Travel and tourism industry is projected to grow to ~USD 73.6B by 2021 8% CAGR 2.02% 1.87% 1.97%2.08% 1.97% 1.70% 2.15% As a % of Nominal GDP 2.11% 10% CAGR 2.08% 1,201 , 25 1,187 , 24 1,324 , 26 1,657 , 31 1,823 , 31 1,828 , 36 1,857 , 40 2,035 , 43 2,112 , 45 0 10 20 30 40 50 60 70 80 90 - 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 TravelandTourismdirectcontributiontoGDP(USD B) Nominal GDP of India (USD B) Regression between T&T and Nominal GDP 73.6 USD 3,560 B as projected by IMF for 2021 2021P R2 = 0.89 Implies ~9.5% 2016-21 CAGR
  4. 4. Indian T&T is riding a secular growth wave, driven by growing affluence and growing spend share for travel; rooms, flights growing @15-17% CAGR 4© Praxis Global Alliance |Source: Census, 2011, Statista, Praxis analysis Consumer share of wallet on travel is increasing # rooms and flights booked in India are growing at CAGRs of 15% and 17% respectively 5.0 5.9 7.0 8.6 9.9 10.9 11.4 2010 2011 2012 2013 2014 2015 2016 No of hotel rooms in India (MM) 52.7 61.4 67.4 81.1 99.9 113.3 2012 2013 2014 2015 2016 2017P No of domestic flights booked (MM) 2% 3% 3% 4% 2005 2010 2015 2020E Spend on travel as a percentage of wallet spend Demand factors Supply factors 15% CAGR 17% CAGR
  5. 5. Online travel (air + hotels) in India is expected to grow to USD 13.6B by 2021 (~16% 2015-21P CAGR) driven by growth in penetration in intl flights and hotels 5© Praxis Global Alliance |Source: TA interviews (N=95), Expert interviews, Secondary research, Praxis Travel Market Model; Praxis analysis 2.66 5.71 13.6 2012 2015 2021P Online travel penetration (Air + Hotels), USD B 1.3 2.7 6 2012 2015 2021P Online travel penetration (Air: Domestic), USD B 0.76 1.01 2 2012 2015 2021P Online travel penetration (Air: International), USD B 0.6 2 5.6 2012 2015 2021P Online travel penetration (Hotels), USD B 29% CAGR 16% CAGR 27% CAGR 9% CAGR 49% CAGR 15% CAGR 12% CAGR 19% CAGR Overall online travel bookings are expected to increase at a CAGR of 16% Domestic flights: Online penetration saturated (2015- 21P CAGR of ~15%) Intl flights: Online bookings for intl flights are expected to grow faster than history Hotels: Online penetration is expected to grow by 19% by 2021 as hotels get online 23% 35% 43% Online travel (as a % of total travel category) 35% 50% 51% 25% ~30% ~40% 13% 27% 37% Note: Hotel included branded hotels and budget hotels; Does not include campsites, dharamshalas (community lodging), B&Bs/Home-stays 28% CAGR 26% CAGR
  6. 6. Globally, Online travel penetration tapers around ~50-52% levels as internet penetration saturates and some segments are slower in moving online 6© Praxis Global Alliance |Source: IATA, PhocusWright (2016), Praxis analysis 44% 47% 50% 52% 44% 45% 45% 45% 27% 31% 34% 37% 23% 28% 31% 34% 2014 2015 2016 2017 Online Travel Penetration, Global markets Europe U.S. and Canada APAC Eastern Europe OTA penetration in mature markets like USA and Europe have tapered for developing markets Mature markets Online travel penetration tends to stabilize after 45- 52% levels 43% 49% 59% 62% 65% 68% 69% 75% 74% 71% 72% 70% 75% 71% 73% 75% 76% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Online penetration in USA (as a % of total population) Onlinepenetrationis saturatinginUSA Hotelsaremuch slowerinmoving online 55% 8% 14% Air (flights) Hotels Online travel penetration in segments (OTA+direct website) Stabilising penetration rates Direct website OTA
  7. 7. Domestic flights: ~70% of online bookings in 2021E is expected to come from individuals and SMEs; major increment (2015-21E) would be due to large corporates 7© Praxis Global Alliance |Source: TA interviews (N=95), Praxis Travel Market Model, Praxis Analysis Corporates - SMEs, 49.0% 46.0% Individuals, 24.0% 24.0% Large corporates, 16.0% 18.0% HNIs, 5.0% 6% Groups, 6% 6.0% 2015 2021E Online bookings by each customer segment (as a % of total online bookings in domestic flights) 16% 15% 18% 18% 19% 2015-21E CAGR ~$2.6 B ~$6.3 B
  8. 8. Intl flights: ~67% of online bookings in 2021E is expected to come from individuals and SMEs; major increment (2015-21E) would be due to other segments 8© Praxis Global Alliance |Source: TA interviews (N=95), Praxis Travel Market Model, Praxis Analysis Individuals, 45% 41% Corporates - SMEs, 23% 26% Groups, 15% 13% Large corporates, 12% 14% HNIs, 5% 6% 2015 2021E Online bookings by each customer segment (as a % of total online bookings in intl flights) 10% 10% 14% 14% 14% 2015-21E CAGR ~$1 B ~$2 B
  9. 9. Hotels: ~86% of online bookings in 2021E is expected to come from individuals and SMEs; major increment (2015-21E) would be due to online group bookings 9© Praxis Global Alliance |Source: TA interviews (N=95), Praxis Travel Market Model, Praxis Analysis Corporates - SMEs, 62% 61% Individuals, 22% 25% Large corporates, 11% 8% HNIs, 3% 3% Groups, 2% 3% 2015 2021E Online bookings by each customer segment (as a % of total online bookings in hotels) 16% 14% 8% 16% 22% 2015-21E CAGR ~$2 B ~$4.3 B
  10. 10. Key questions for travel players 10© Praxis Global Alliance | 1. In the face of impending consolidation, which players will lead the travel market? 2. How will the position of offline players like consolidators, Travel Mgmt Companies and tour operators be affected due to the existence and growth of OTAs and online aggregators? 3. Considering that the online penetration tapers off at 50-52% levels, how would the Offline players need to adapt to stay in the game? 4. As a result of changes in distribution of tickets and bookings, how are the flight and hotel take rates and distribution costs expected to change? Does it make it easier for large hotels to go direct? 5. Given the fragmented hotel market across countries, what country-wise content customization would be required to suit the needs of international travelers? 6. How is the customer purchase and experience journey changing? How can OTAs adapt to it especially as voice search takes off? Contact us on contact@praxisga.com to schedule a tailored discussion
  11. 11. About Praxis™ Praxis Global Alliance is a global business analytics, research and advisory firm. We believe that clients should get a very high ROI on research and advisory spends. We do this by combining domain experts, technology and ‘lean cost’ delivery approaches. Praxis is ‘Practical’ We work with agility, flexibility and embed with your teams to enable SUPERIOR OUTCOMES We bring the best domain expertise (deep pool of industry practitioners) and implementation teams as two-in-a-box We leverage technology deeply to enable higher- ROI on your consulting/analytics spend Financial Investors PGA Labs PraxDigital™ Business Transformation Pre-deal support, Commercial DD, Post- acquisition value creation Next-gen business advisory (lean-cost, long duration engagement) Data engineering and analytics, AI, OpenData and Visualizations Cutting edge business research and tools Our expertise:
  12. 12. 12© Praxis Global Alliance | Contact us - We will be happy to share perspectives Madhur Singhal Managing Director, Mumbai Disclaimer: This material has been prepared by Praxis Global Alliance, which is the trade name of Praxian Global Private Limited (“Praxis”) with the intent to showcase our capability and disseminate learnings to potential partners/clients. This material can be referred to by the viewers on the internet but should be referenced to Praxis Global Alliance, if reused or adapted in any form or in any forum. The frameworks, approaches, tools, analysis and opinions are solely Praxis’s intellectual property and are a combination of collection of best data we could find publicly, and Praxis team’s own experiences and observations. We make no representation or warranty, express or implied, that such information is accurate or complete, and nothing contained in here can be construed as definitive predictions or forecasts. Before reading further, the Recipient expressly agrees that this might not address any and all risks and challenges facing Recipient, its business and the markets within which it operates, nor all possible market conditions. No responsibility or liability whatsoever is accepted by any person including Praxis or its Business partners and affiliates and their respective officers, employees or agents for any errors or omissions in this document. This document is not complete without an accompanying oral discussion and presentation by Praxis though Praxis is not obligated to do so. Praxis does not have any duty to update or supplement any information in this document. Praxis shall not be responsible for any loss sustained by any person who relies on this presentation. Build together. Win together. New Delhi I Mumbai I Bengaluru I Singapore | …and growing. Twitter Linkedin Aryaman Tandon Director, New Delhi www.praxisga.com I www.insights.praxisga.com Share your thoughts with us using the hashtags #PraxDigital #PraxInsights aryaman.tandon@praxisga.com +91 11 4932 3564 madhur.singhal@praxisga.com +91 908 221 8254
  13. 13. Build together Win together THANK YOU © Praxis Global Alliance

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