indian ota market - docshare01.docshare.tipsdocshare01.docshare.tips/files/16827/168277643.pdfthree...
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![Page 1: Indian OTA Market - docshare01.docshare.tipsdocshare01.docshare.tips/files/16827/168277643.pdfThree major players account for 90% of Indian OTA market share, with Make My Trip as market](https://reader033.vdocument.in/reader033/viewer/2022041522/5e2f0406c0577556e1278ef6/html5/thumbnails/1.jpg)
www.redseerconsulting.com [email protected] © 2010 RedSeer Consulting Confidential `and Proprietary Information
Indian OTA Market Industry Overview
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India, which has the world’s second fastest growing GDP, will produce one of the world’s largest high income pool
Indian households with annual income >USD 50k
(2005-2015)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
2005 2007 2009 2011
Years
2013 2015
CAGR
10.6%
Nu
mb
er
of household
s (
in m
illio
ns)
1.0
1.5
2.0
2.5
3.0
3.5
2005 2006 2007 2008 2009 2010 2011 2012
Years
2013 2014 2015
China
India
Thailand
US
Germany
UK
Gro
wth
Ra
te (
Base=
20
05)
Real GDP Growth
(2005-2015)
Source: EIU, RedSeer Analysis, web search 2 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
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Indian upper and middle class is increasing which will give a boost to the travel sector
Household Income
Class
Annual
disposable
income (USD)
Segment Size (Households
MM- 2007) and % CAGR (2000-
2007)
Common Occupation Travel habits
‘Upper class’ >$25,000
‘Middle Class –
Tier-I’ $15,000-$25,000
‘Middle Class-
Tier-II’ $5000-$15,000
Lower class $500-$5000
23
2
2 9.7%
1.8
9.7%
1.7
18.7%
22.6
• Business owners in
small and medium
enterprises
• High level corporate/
Government employees
• Salaried Employees
• New service employees
(e.g. IT media)
• Shopkeepers
• Rich farmers
• Shopkeepers
• Non-urban small
business owners
• Lower level employees
23 0.7%
Source: EIU, RedSeer Analysis, web search 3 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
187 • Shopkeepers
• Non-urban small
business owners
• Lower level employees
• Minimum one foreign
leisure trip annually
• Multiple foreign business
trips
• Frequent domestic flyers
• Prefers luxury hotels (4-5
stars)
• Either a budget foreign trip
or a lavish domestic trip
annually
• 4-5 domestic round trips
annually
• Stays in 2-3 star hotels
• Travel by train-AC or low
cost carrier
• Prefers to stay in budget
hotels
• Travels in general train and
buses
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Indian travel and tourism market is 42 billion USD industry growing with a CAGR of 10.2% over the next 10 years
Indian Travel and Tourism Industry- Market Size
(2010-2020)
0.0
20.0
42
40.0
60.0
80.0
69.2
100.0
120.0
2010 2012 2014 2016
Years
2018 2020
CAGR
10.2%
Mark
et siz
e (
in U
SD
bill
ion)
55.6
82.8
96.4
111
Discussion
• Government’s boost to tourism,
rising middle class and
increasing aggregate disposable
income will lead to a significant
growth in travel and tourism
industry in India
• Indian middle class is expected
to increase by 10 times between
2005-2025
• The aggregate disposable
income from Indian households
is expected to increase with a
CAGR of 7% between 2005-25
Source: EIU, RedSeer Analysis, web search 4 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
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Changing dynamics of Indian travel industry
Source: EIU, RedSeer Analysis, web search
Changing Attitude of
Indian traveller
EARLIER
• Online research
• Social Media
New Information
sources
• Personal knowledge
• Word-of-mouth
NOW • Plan-it-yourself
flexible trips
Increased Flexibility
• Standard packages
• Lack of options
Unexplored
destinations
• Less frequent & long
trips to famous places
• Weekend getaways
• Explore the
unexplored
Since OTA’s provide increased flexibility, lower pricing
and more options in terms of destinations, it is being
increasingly adopted by new-age Indian traveller
5 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
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Indian online travel industry is growing with 49% CAGR; OTA’s account for 17.5% of total gross bookings
Indian Online Travel Gross bookings
(2007-2010)
1000
0
2000
3000
4000
5000
7000
6000
2007 2008 2009 2010
CAGR
49%
Years
Mark
et siz
e (
in U
SD
mill
ion
)
1750
2738
4041
5739
OTA-
17.5%
IRCTC
- 14%
68.5%,
Others
Indian Online Travel Gross bookings- Breakup
(2010)
1 billion
USD gross
bookings
Source: EIU, RedSeer Analysis, web search 6 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
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Three major players account for 90% of Indian OTA market share, with Make My Trip as market leader
18%,
Cleartrip
48%,
Make my Trip
24%,
Yatra
10%,
Others
OTA Market Share1- by Players
(2010) Discussion
• OTA industry is very competitive
with more than 30 players in the
market.
• The industry is very price-
sensitive especially in air-travel
segment, due to which Net
revenue margins are low.
• While global giants like
Travelocity and Expedia still have
to make a mark in the industry,
bigger Indian companies are
venturing out into countries with
high NRI population.
Notes:
1. Market share by gross bookings
Source: RedSeer Consulting 7 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
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The competition is shifting towards non-air travel segments like hotel bookings due to high margins
Net Revenue Margins
(2010)
16 14 12 10
8
6
4
2
0
Air ticket Hote & package tours
Discussion
• Air travel Net revenue margins
consist of commissions from
airlines, service fees from
customers and fees from Global
Distribution System (GDS)
partner.
• Margin on Hotel & package tour
bookings come from mark-up on
services.
• Hotels and package tour services
also give OTAs an opportunity to
differentiate themselves in the
industry
Ne
t re
venue m
arg
in (%
)
Notes:
1. Market share by gross bookings
Source: RedSeer Analysis, MMYT Investor presentation 8 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
14%
7.6%
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Recent Trends In OTA Industry
Consolidation
amongst players
Description
• Major companies are acquiring smaller companies to expand their services
• Makemytrip acquired Ticketvala.com, Travelocity acquired Travelguru and
Yatra acquired Ticket services International
• For the industry leader Make My Trip, while gross bookings for Air-travel and
tours grew by 45%1 each (2008-10), net revenue grew by 49% and 84%,
respectively
Trends
Focus on hotels
and tours
Notes: 1. 2008-2010
Source: RedSeer Analysis 9 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
One-stop
solution mantra
Merging online
and offline
Creating online
ecosystem
Global expansion
of players
• Most OTAs have partnered with IRCTC for rail bookings to generate traffic
• OTAs are also partnering with bus ticketing websites and car rental
companies to become one-stop solution for travel needs
• Yatra has started 50 lounges across India while Make my trip has an agent
network across 450+ cities
• Yatra has also partnered with Reliance World (120 centers across India)
where customers can book tickets and hotels
• Makemytrip has created online communities of tourists through
offisialatyachaar.com and oktatabyebye.com while Cleartrip has associated
with Tripadvisor.com
• OTAs are expanding globally in countries with high NRI population.
• Makemytrip started trading on Nasdaq to raise money for global operations
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Enablers for industry growth
Emergence of new online
segments like car rentals
• OTAs are integrating their portals with online bus and train ticketing services and car rental services
Growth in Civil
Aviation market
Increasing internet
and credit card
penetration • Internet users in India
grew 2.5 times from 2006-2010
Growth in tourism
• Number of credit cards in
India grew by 3 times
between 2006-2010
• Airline industry in India has grown by 400% (2004-2010).
• By 2020, India will be
third largest aviation
market after US and
China
• Indian OTA industry has a
high potential, and
opportunity for growth.
• Government’s boost to
travel and tourism,
combined with increased e-
commerce penetration, will
help OTA industry’s growth
• OTAs are increasingly
integrating services like
rail, bus and car rentals to
generate higher number of
transactions
Discussion
NRHM :National Rural Healthcare Mission, SEZ: Special Economic Zones
Source: RedSeer Consulting 10 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
• International tourist
arrivals in India has
increased by 8% CAGR
(2004-09), compared to
world average of 3%
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Enabler: Growing internet and credit card penetration
0.0
50.0
100.0
150.0
200.0
250.0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Years
Credit card
Internet
Discussion
NRHM :National Rural Healthcare Mission, SEZ: Special Economic Zones
Source: RedSeer Consulting 11 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
• Internet penetration in India
is 7% (compared to 31% in
China) is set to increase
drastically
• Indian Government has
allocated 10 billion USD for
Bharat Nirman, a project to
extend internet in rural areas
• Increasing urbanization in
India will also lead to
increased internet and credit
card penetration
Credit cards and Internet users- India
(2006-20141)
Nu
mb
er
of cre
dit c
ard
s a
nd in
tern
et users
(in
mill
ion)
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Challenges faced by Indian OTA industry
Challenges
faced by OTA
Industry
Low
operating
margins
Non-
reliability of
offline
partners
Limited
reach in
tier-II and
tier-III cities
Payment
processing
issues
Discussion
NRHM :National Rural Healthcare Mission, SEZ: Special Economic Zones
Source: RedSeer Consulting 12 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
• OTA industry is low-
margin, high volume. Due
to low internet penetration
in India, their reach to tier-
II and tier-III cities is limited
which affects the volumes
• Incompetence of hotels
and tour operators reflects
badly on OTA for
consumers who book
through them. Controlling
their quality is a major
challenge
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Major Industry Players
Make my trip
• Established: 2000
• Gross bookings: 480 million USD (2010)
• Largest market share in Indian OTA industry
• First Indian OTA to be traded on NASDAQ
• Sister websites: Offisialatyachaar.com,
oktatabyebye.com
• Global presence: US, Canada, UAE
• Covers 450+ cities in India through travel agent
partners
• Investors: SAIF, Helion, Sierra
13 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
Yatra
• Established: 2006
• Gross bookings: 240 million USD (2010)
• Partnered with Reliance World for ticket
distribution
• Started ‘Holiday Lounges’ in 50 major cities in
India
• Global presence: US, UK
• Investors: Reliance, TV18, Norwest, Intel
Capital
Cleartrip
• Established- 2006
• Gross bookings: 180 million USD (2010)
• Partnered with Tripadvisor.com and Lonely
Planet
• Global presence: Middle East (UAE, Oman,
Qatar, Bahrain, Kuwait)
• Investors: KPCB, Sherpalo ventures, DAG
Ventures, DFJ
Travelocity
• Established- 1996 (US); 2007 (India)
• Gross bookings: Global- 10 billion USD (2007)
• Acquired Travelguru, India based OTA with
focus on hotel bookings, in 2009
• Owned by: Sabre Holdings • Global acquisitions: site59.com,
lastminute.com • Global presence: US, Canada, Germany
France, Scandinavian countries, UK and Mexico
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RedSeer Consulting 14 © 2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.
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