airplane

In our #Outlook16 series, we ask online travel companies – MakeMyTrip, ixigo, Oyo Rooms and Cleartrip about their focus areas for 2016 and the challenges that the online travel segment needs to address. Answers have been edited for brevity.

What were the top developments for the sector in 2015? How has the sector changed since 2014?

Deep Kalra, MakeMyTrip

We saw the tremendous impact of mobile internet penetration in terms of how online travelers accessed and made transactions. Traffic from mobile apps has grown 250-300% year- on-year in the past couple of years. Online hotel bookings also accelerated this year – these were largely driven by same-day or last-minute booking on mobile. Mobile contributed to about 50% of hotel bookings this year. For MakeMyTrip, 2015 has been a year of continued growth and investment in the mobile and hotels category.

Subramanya Sharma, Cleartrip

– Travelers have started to prefer unbundled itineraries more than pre-fixed, boxed itineraries.
– Localization is a key ask from travelers who are looking to indulge in more in-city local activities.
– Online hotel adoption has seen a considerable jump (from an almost sub 8% to marginally over 15%).
– There has been a definitive blurring of lines between the local and leisure consumer. Their trip durations have shrunk from taking just one long vacation a year, to enjoying 1 short vacation every quarter. Customers are also indulging heavily in in-city local activities that are opening up a wide array of experiences and unique things-to-do within city limits.

Abhinav Sinha

Abhinav Sinha

Abhinav Sinha, Oyo Rooms

Today, everyone recognizes the enormous opportunity presented by the unorganized hospitality sector in India. What’s interesting is that preference for modestly-priced good-quality hotel accommodation is no longer restricted to budget travellers or backpackers, with more and more business travellers and SMEs choosing to book with us.

Aloke Bajpai, ixigo

The rise of budget hotel aggregators definitely marks the biggest shift of 2015, though it remains to be seen how much they impact the distribution chain. A new category within travel – transportation  – also grew rapidly to create large companies in the taxi hailing, ride-sharing/car-pooling and self-drive cars spaces, supported by the growth of smartphones.

What were the biggest challenges for the sector during the year?

Deep Kalra, MakeMyTrip

Internet penetration with quality bandwidth reaching to smaller cities will have to pick up pace for e-commerce sector to realize its full potential.

Subramanya Sharma, Cleartrip

– A whole lot of new and emerging travel itinerary planners and budget accommodation aggregators have come to the fore. Each of them bringing in high discounting to the market, along with a promise of delivering the best possible and most customized travel plans.
– Retention of talent, given the valuation of new players in the private markets.
– Innovating, while being the incumbent (e.g. how do you innovate in travel on mobile) is the key challenges for businesses like ours.

Abhinav Sinha, Oyo Rooms

In India, the lack of quality talent and on-the-job training and skill-certification in the budget hospitality sector has been a long-standing concern.

Aloke Bajpai, ixigo

The challenge of moving small and medium travel businesses (hotels, activity providers, tour operators) online remains, since their customers have historically booked them over the phone or as walk-ins and they have been slow at tech adoption.

What were your key learnings in 2015?

Deep Kalra, MakeMyTrip

The year 2015 also saw the online hotel bookings market opening up due to smartphone penetration and better bandwidth. One of the important areas of growth was and will continue to be in the coming year: the budget hotel segment within the overall hotel category.

Subramanya Sharma, Cleartrip

– Transaction size is of no consequence on the mobile channel (people are very comfortable booking tickets that are upwards of Rs 20,000 as well – 40% of our transactions are average size of above Rs 10,000)
– Lower ticket sizes have very high correlation to quick adoption on mobile.
– Web is here to stay, and we need to give consumers the choice of their channel.
– Customer acquisition though indiscriminate discounting is a zero sum game – retention and engagement are poised to be a key part of the game

Aloke Bajpai, ixigo

At iXiGo, our biggest learning was to be nimbler in terms of responding to changing consumer demand and lifestyle. We also learnt the importance of focusing on revenue and not just products and users, with our monthly revenue growing nearly 4 fold in the last 12 months on a 2X user-base growth.

What trends that surprised you in 2015?

Deep Kalra

Deep Kalra

Deep Kalra, MakeMyTrip

– What surprised us was how customers embraced mobile services which further fueled our growth. We recently crossed over 12.5 million app downloads, adding nearly a million downloads every quarter. During the recent Great Indian Getaway, mobile apps drove almost 90% of the company’s hotel booking business and more than 50% of our flight bookings business during the week-long promotional event.

– Young Indian travel enthusiasts opting for non-traditional accommodation options whether through the new budget hotels now available online, or non-chain properties-hostels, homestays etc.

Subramanya Sharma, Cleartrip

– We have seen the convergence of the ‘local’ and ‘travel leisure’ consumer define itself at the fastest pace.
– The imminent rise of the ‘unbundling of the package’ has pleasantly surprised us, too.

Abhinav Sinha, Oyo Rooms

– We saw many use-cases for OYO Rooms that we had frankly not anticipated – from being used as a venue for friends to get together on match-days, to an option for office-goers who wanted to avoid a tiring commute at the end of a long day.

– The pace of adoption on mobile truly took us by surprise. We expected it to be the platform to substantially drive traffic, but today our app which is less than eight-month old drives 60% of our business. Majority of bookings, especially last-minute bookings have shifted to the app.

Aloke Bajpai, ixigo

– The pace at which smartphones were adopted in 2015 was mind-blowing. Most impressive was how the supply side has taken up smartphones to grow their business in categories such as hotels and cabs.
– Airlines becoming profitable.
– The e-visa policy announced by the government was a big surprise, though a positive one. It has definitely eased the process of getting an Indian Visa and has started showing up in improved FTA numbers.

What trends do you expect to see in 2016 and why?

Deep Kalra, MakeMyTrip

Some trends that will propel the travel industry in the coming years are:

Better air connectivity and cheap airfares: Over the last year we have seen the airline flash sales to have hit on a winning formula to energize the sector during peak travel months and will continue to do so in the coming year as well.

Mobile technologies are propelling ecommerce and travel buying experiences: Mobile will continue to drive the growth for the OTA industry. Mobile bookings will soon overtake bookings through other devices.

Personalization: Personalization will play in key role this year in all forms of travel whether business, leisure or activity oriented. The goal is to provide travel experiences and services that have a lifestyle appeal, not just specific functional benefits.

Experiential tourism: A number of people, especially evolved travelers are shifting towards experiential holidays. Travellers are venturing beyond the usual and looking for richer experiences that connect them with the culture of the destination. Hence, the demand for boutique properties and unique destinations will be on the rise.

Adventure tourism: We have witnessed a steady increase in adventure and activity-led holiday packages. This translates into taking a holiday in destinations that offer rich and varied experiences, adventure or culture.

More people will travel to eat: The ongoing obsession with authentic, regional cuisine is inspiring more travelers to undertake purely culinary vacations around the world.

Subramanya Sharma

Subramanya Sharma

Subramanya Sharma, Cleartrip

– Hyper-localization is the future and we feel it will be big in 2016.
– Automation will play an even bigger role in business execution.
– Rate of disruption will only increase, and disruptors can become incumbents in months, than years.

Abhinav Sinha, Oyo Rooms

– Hotel booking in India has really taken off on mobile platforms, and wearable tech is the next logical step in how brands can add value to customer-interactions.

– On-trip servicing, real-time or location-based suggestions and recommendations will drive higher customer-engagement for brands. Similarly, integrating technology in other aspects of the travel research, booking and experience process can actualize in different ways.

Aloke Bajpai, ixigo

We foresee three mega trends:

Personalization & localization: Apps will start showing more relevant content and customized user experiences for individual app users. We should also start seeing more localized content with Indic languages as well as nuances that solve for local tastes.

Intelligent assistants: We will see intelligent virtual assistants (whether powered by artificial intelligence or humans) emerge in the travel and hospitality sectors, with concierge services becoming more automated and apps solving for a lot of issues without requiring to speak to anyone on the phone.

Crowdsourcing & communities: As apps start to grow, we will see communities emerge within those apps’ ecosystems to help each other out with advice, interactions and ideas. These communities will crowdsource and curate the content of these apps to make it an even richer experience. Ride-sharing in cabs is a prime example of this.

What categories and sub-categories are likely to drive the growth for the sector in 2016? Why?

Deep Kalra, MakeMyTrip

We see tremendous potential in the budget hotels category, likely to drive growth in the coming years and will open up the online hotels segment. This is a good thing because there was a dearth of reliable indicators around budget hotels in the country. Within a short time, the new operators have expanded the market opportunity.

Subramanya Sharma, Cleartrip

– Mobile: hyper-local activities
– Accommodation: Budget hotels/accommodation
– B2B: Travel technology

Abhinav Sinha, Oyo Rooms

Unbranded or budget hotels are a huge growth area in India. HVS estimates that compared with 112,000 hotel rooms in “branded” hotels in India, there are 1.8 million rooms in “unbranded” hotels. Only about 2% of this has been tapped so far.

Aloke Bajpai

Aloke Bajpai

Aloke Bajpai, ixigo

– Mobile apps and mobile web will drive much of the growth in 2016. Meta-search will emerge from being a niche business model to a sizeable chunk of business for many online and offline players.
– Budget hotels will be at the forefront of growth in hotels. We expect the short tours, experiences & activities space to start seeing some consolidation and focus from OTAs and meta-searches in 2016, as it is still a nascent category.
– 2016 would also be a year where independent hotels, independent activity providers and tour operators will finally be able to tap into the exploding smartphone market.

What was the split for transactions and traffic for mobile, mobile web and web in 2015?

Deep Kalra, MakeMyTrip

– Mobile bookings contribute to about 30% of domestic flights-bookings, and nearly 50% of total online domestic hotel transactions.
– In June 2015, hotel bookings on app (53%) overtook the desktop bookings.
– Unique visitors from mobile apps stood at 20% in 2013, 33% in 2014, and will soon reach the half-way mark.

Subramanya Sharma, Cleartrip

– 60% of our total traffic came from mobile channels, overtaking our desktop channel for the first time ever.
– Of this 60%, almost 47% came from the mobile web and the rest from Cleartrip’s apps.
– Over 75% of our mobile customers are now using mobile as their only channel of transaction.

Abhinav Sinha, Oyo Rooms

60% of our transactions come exclusively from the three mobile apps (android, iOS and windows) and 20% from websites (mobile and desktop).

Aloke Bajpai, ixigo

Mobile: 78% (mobile app: 70% mobile web: 30%)
Web: 22%

How do you think the relationship between travel websites and budget hotel booking websites will evolve in 2016?

Subramanya Sharma, Cleartrip

While industry players like us (Cleartrip) will continue to aggregate every hotel available in the country (from whatever source that comes from), others will try to own the end-to-end guest experience, hence resulting in competition across these brands.

Abhinav Sinha, Oyo Rooms

We have strong direct channels such as our app and are no longer dependent on external channels which form less than 10% of our business.

Aloke Bajpai, ixigo

Most OTAs are investing in creating their own curated budget hotel marketplaces and hence not working with these players any more. It’s hard to tell what will happen in 2016, but it is clear that budget hotel aggregators will need to rely more on direct distribution, meta-searches and traditional intermediaries (travel agents, corporate travel) to grow their business.

How many hotel bookings do you service on an average in a month? How has this changed since 2014? How do you expect things to change in 2016?

Deep Kalra, MakeMyTrip

– In Q2 2016, the company’s India standalone online hotels transactions grew by 168%.
– Mobile orders share in Q2 was 54% for standalone India hotel bookings. We have now initiated an increase in our transaction guidance for the remainder of the fiscal year – India standalone transaction growth of 175%—200%, up from 75%—100% previously.

Subramanya Sharma, Cleartrip

We expect more than 200% growth in transactions next year as well (repeating the same growth this year).

Abhinav Sinha, Oyo Rooms

We process over 250,000 booked room-nights every week. This has grown over 40x since 2014.

Aloke Bajpai, ixigo

We have seen our weekly hotel bookings double in the last one year, and we expect it to double again in 2016 since most of the growth is being driven by mobile app based bookings.

Which category of hotels drove the growth of hotel bookings in 2015? How has it changed from 2014 and what are your expectations for 2016?

Deep Kalra, MakeMyTrip

While budget hotel category was the key growth driver for the overall segment this year, the online hotel booking segment has just opened up in India. In Q2 2016, the company’s India standalone online hotels transactions grew by 168%.

Subramanya Sharma, Cleartrip

We suspect the budget accommodation segment to be around 40% of the total market (based on the GMV), but definitely the faster growing one, as we see a tremendous growth potential in this segment with the changing demographics and changing travel habits.

Aloke Bajpai, ixigo

Budget hotels saw a significant growth in bookings in 2015, especially the curated, standardized and branded set of budget hotels.

What are the challenges in the segment that would need to be addressed in 2016?

Deep Kalra, MakeMyTrip

Bringing the next set of travelers online, or on mobile – building robust and easy transactions spread across online and offline channels for an easy access. There are challenges in vernacularizing content for online travel services due to lack of infrastructure and the sheer diversity of dialects and scripts.

Subramanya Sharma, Cleartrip

– Deeper and richer content.
– Automation of the content acquisition/updation and booking fulfillment process.
– As the average tickets size shall continue to come down; pressure on driving higher marketing
and operational efficiencies.

Aloke Bajpai, ixigo

With the tourism friendly policies of the new government, we hope to see more airports and better connectivity of smaller towns leading to even faster growth in the flights business. On the hotels and packages side, a lot of accommodations in India still remain offline and not bookable in real time.

Image SourceKuster & Wildhaber Photography under CC BY ND 2.0