India’s travel spends expected to grow at 13% to $136 billion by 2021: Google and Bain & Company report

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The momentum is expected to continue, and the industry will grow at a 13% CAGR to $136 billion by 2021, according to the report titled ‘How Does India Travel’.

The Indian traveller has come of age, spending approximately $94 billion in 2018, on around 2 billion domestic and international trips, helping the Indian travel and tourism industry achieve unprecedented scale, as per a report released by Google and Bain & Company recently.

The momentum is expected to continue, and the industry will grow at a 13% CAGR to $136 billion by 2021, according to the report titled ‘How Does India Travel’. The report outlines how India spends on travel, the influence of online channels in their purchase journey and potential growth opportunities for travel businesses till 2021.

The report cites a 12% growth in transportation ($50 billion), 13% growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13% ($65 billion) over the next three years.

Additionally, as more people come online, smartphone penetration improves and use of digital payments goes up, the report estimates that Indian travellers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25% in 2018 to 35% in 2021.

Vikas Agnihotri, country director, sales, Google India said: “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travellers; and existing travellers research online but the lack of trust in payments and booking experience make them end up booking offline.

If travel players tap these online users through personalised marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”

Arpan Sheth, partner Bain & Company added: “There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.”

The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86% of consumers being influenced by online channels. During this phase, travellers spend their maximum time on search, travel tour provider websites, price comparison websites, and travel articles. Online video too plays a significant role with 21% of travellers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60% o ..

The report further identified the five cohorts of travellers in India, across business and leisure travel, and categorised each against their online research behaviour:

Frequent flyers: Nearly 70% of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experience. Budget business traveller: 86% of them researched online whereas only 60% book online, cumulatively spent $20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.

Experience-oriented traveller: Around 70% of their bookings were done online. and cumulatively spent $22 billion in 2018.

They extensively research both online and offline for ‘authentic’ experiences and convenience of options; display high loyalty towards preferred brand of airlines or hotels and actively share experiences. Budget group traveller: 90% researched online and 55% booked online, cumulatively spent $29 billion in 2018.

They make multiple decision-makers in the process and take the final decisions based on minimal cost. Occasional travel visiting friends/relatives: 92% researched online but only 60% booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.