Indian online travel industry to reach $2-billion mark next year

By Vipin Agnihotri

The Indian online travel industry is in full form. It has come into the notice of The India Street that the industry grew at 126 per cent from a base of $295 million in 2005 to $796 in 2006. This year, there is a good chance that it will record a 66 per cent growth to $1.3 billion. According to sources, by 2008, online travel is expected to be a $2-billion industry. Interestingly, more than 17 per cent of all the flight tickets booked in India are done via Internet websites.

But there is still one issue with the Indian online travel industry. Unlike in plenty of Asia-Pacific countries, where these online intermediaries start as hotel consolidation platforms, their Indian counterparts have followed the US and UK model where air has been the driver for growth.

Because of this reason, barring a couple of companies large chunk of these sites have 80-90 per cent of their numbers coming from air alone and the rest from hotel booking. It is worth mentioning in this regard that air is a volumes-driven, low-margin normally 2-5 per cent business. On the other hand, margins in hotels are higher, at 10-12 per cent.

Taking this into account, there is hardly a surprise that majority of portals have now started focusing more sharply on hotels. For example, Travelguru, with around 4,000 hotels in its database, intends to double the hotel-booking segment by March 2008. If experts are to be believed, on any given day these portals see around 750 hotel transactions and another 2,000 in flights.

Apart from Travelguru, Cleartrip, which at the moment has 3,500 domestic hotels, is also looking to add more domestic hotels across categories in all major locations in India. According to company officials of Yatra Online, at present, hotels comprise 6 per cent of their business, which they want to scale up to 20 per cent by December 2008.

MakeMyTrip is also interested in increasing the hotel bookings business from the current 20 per cent to 50 per cent in a phased manner. In my opinion, such a shift will go a long way in assisting plenty of these online businesses enter the black.

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Reviewing the Reviewer: A Review of India Hotel Review (Indiahotelreview.com)

I recently reviewed the site Indiahotelreview.com which is still in beta, but highly functional. As a test, I chose Bangalore as the city to review the site. I also selected the top hotels I typically stay in when visiting the city.

India Hotel Review claims it’s the largest online India hotel directory aggregating around 9000 Indian hotels spread across more than 800 destinations. “This includes wide category of stay options ranging from budget hotels to 5 stars luxury hotels, cottages, guest houses & home stays.”

IndiaHotelReview.com leading is aiming for both the budget minded and wealthy High Net Worth (HNW) individual and the local Indian and foreign Multi-National Corporate (MNC) business traveler for travel and vacation bookings.

The Positives:

• The site design is well done and is pleasing to the eye

• The range of hotels in the system appears to be the largest I have seen

• They seem to have access to hotel rooms not on other competitive sites

• The book by phone option is easy

• The hotel review by traveler option is good

• As the expert section, although there does not appear to be many responses yet

• The distance markers to nearby landmarks and transportation centers are a nice feature

The Negatives:

• Typing in a city – Pull down menu is too large to find a city quickly.

• I found some hotel reviews but they were disconnected from the actual booking pages. This makes it difficult to see how a hotel was rated by travelers prior to booking it.

• Some of the fares (see below) were far above what I found on other sites.

I also made some hotel reservations for the given dates below using my usual Expedia.com vs. Indiahotelreview.com The results were mixed, with Expedia cheaper than Indiahotelreview.com but IHR.com clearly had more options for my favorite hotels in Bangalore.

Date of Booking	Hotel Name	IHR.com Price	Expedia Price
Oct 10 – Oct 17 2007	Leela Palace	$3489 or INR 1,39,563	$3130 or INR 1,25,200
Oct 10 – Oct 17 2007	Chancery	$2893 or INR 1,15,720	$1463 or INR 58,520
Oct 10 – Oct 17 2007	Le Meridien	$2273 or INR 90,920	$2667 or INR 1,06,680
Oct 19 – Oct 23 2007	The Oberoi	$1476 or INR 59,056	No rooms available
Oct 10 – Oct 17 2007	Hotel Royal Orchid	$2110 or INR 84417	Expedia doesn’t have reservations for this hotel

In summary the site is very deep and a very good answer for last minute travelers or those looking for bargain options in India. Some of the fares for the higher end hotels appear to be hit and miss when comparing to competitive sites. While the site is new, if it builds out with more user generated content, it will make hotel booking easier and more transparent. Like always, use 2 or 3 travel sites when looking for the best options and price. I do plan to add Indiahotelreview.com to my list of sites to check before booking a hotel.

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