Online hotel booking set to become $1.8 bn industry in 2016

New Delhi: Online hotel booking is set to zoom with increasing Internet penetration.

It is likely to more than double to $1.8 billion by 2016 with over eight million Indians booking their hotel rooms on Internet, said a new Google Inc. report on Wednesday.

India has about 300 million Internet users, according to the data compiled by the Internet and Mobile Association of India.

“Consumer confidence to do online hotel bookings is on the rise in India, with an estimated 8.4 million Indians likely to book hotels online by 2016. The online hotel booking industry will be worth $1.8 billion from the current $0.8 billion,” the report said.

The report, compiled by Google India, is based on Google search trends in India between 2011 and 2014, and offline interviews with 3,716 travellers in the age group of 18-54 covering 12 cities, including Delhi, Mumbai, Bengaluru, Kolkata, Mysore, Kochi and Hyderabad.

There is a “significant headroom for growth in the sector”, with the ease of access to information and details online propelling consumer confidence to book hotels online, the report said.

While only 29% of the users book hotels online at present, 83% of users who research for hotels online are comfortable transacting online and do an online transaction once a month, the report said. It further said that more women (about 50%) research and book hotels online compared to men (41%).​

“The research findings reveal the high growth potential for online hotel bookings in India,” said Vikas Agnihotri, industry director, Google India. “While the overall user base of people looking for information on hotels online was very high, the conversion is still happening offline. We hope the report will provide meaningful insight to the industry to overcome the gaps that exists in their offerings and grow the sector to its full potential.”

Users in the age group of 35-44 are the most savvy and mobile phones have emerged as the preferred choice of device for accessing the Internet. On Google search, hotel searches from mobile saw 30-fold growth from 2011 to 2014. “This was validated in the offline research, where over 27% respondents said they use mobile phones to search and book hotels on the Internet and over 56% of users who book hotels online have a travel app installed,” the report said.

Indian travellers are increasingly preferring short trips of less than five days. Sixty-four percent of respondents said they prefer short trips while opting for two or more trips a year.

Budget accommodation has emerged as the most popular option for travellers in India with 49% users choosing them. Google said 32% users book economy hotels and 19% users book luxury hotels.

Thirty-seven percent respondents said they prefer to travel with friends, as opposed to 31% who said they prefer family members as the travel companions.

Online payment continues to be a challenge with two-third of Indian travellers preferring to pay offline; half of them pay directly at the hotel.

Safety and security of the online transactions, and trust in online hotel offerings came out to be the top deterrents.

“Complicated terms and conditions, concerns about online cancellation policies, better rates and discounts available offline as well as offline personalised services were some as the other reasons for users to still book hotels offline,” the report said.

Ahead of the summer holiday season, Google plans to organize the Great Indian Travel Festival on the lines of Great Online Shopping Festival for nine days from 18-26 April.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.