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Indian hotel industry: Online bookings to double by 2016

Indian hotel industry: Online bookings to double by 2016

Ravi Capoor, Former CEO, IBEF

Sep 30, 2015 5:45 PM

The Indian hotel industry is all set to enter the next phase of growth on the back of untapped growth potential. The industry is estimated to touch US$ 1.8 billion by 2016, up from a current total size of US$ 800 million, according to a recently released report from ICRA. In fact, it is the area of online hotel bookings that holds one of the largest growth potential within the sector. The report from ICRA also mentioned that hotel bookings is one of the least penetrated segments within the travel categories in India and online bookings account for 16 per cent of the hotel bookings currently. The number is expected to grow to 25 per cent in 2016. In other words, around 8.4 million Indians are likely to book hotels online by 2016, up from 3.5 million in 2014. It is important to note here that 70 per cent of the hotel rooms are booked through online booking portals in Europe and around 35-40 per cent in USA.

The deepening penetration of internet usage and smartphones in India has led to increased booking of hotels through online portals and applications in recent times, the report added. While online travel agents like Makemytrip, Cleartrip, Yatra and Goibibo continue to dominate the travel bookings industry on the internet, online accommodation reservation services like Oyo Rooms, Stayzilla are gaining popularity. In addition, meta search engines like TripAdvisor and Kayak, that operate like travel discovery platforms have been able to establish presence in the Indian market and this segment is also expected to attract competition in coming times.

With OTAs and online accommodation booking services starting loyalty schemes, its market share compared to the direct bookings channels from branded hotels is expected to improve drastically. Overall, the Indian hotel industry is expected is register a huge surge in online bookings and the low penetration levels coupled with the increasing smartphone and internet usage is expected to turn into a big opportunity for home-grown start-ups and international brands alike.

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