Internet in India – Business Trends: Online Travel India: Size of business

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Following my earlier posts on online travel:

Crowded skies or crowded online travel space?
Action in Indian online Travel space

I have tried to calculate the size of India business of all the travel portals.

I estimate that close to 1,00,000 Air tickets are being sold every day in India. Out of this nearly 20,000 are being sold online. Online tickets are sold by Online Travel Portals / Agents & Directly by the Airlines Websites. Out of this 20,000 I believe that Online Travel portals are selling around 4-5000 tickets per day.

At an average ticket value of Rs. 3,000 the total revenue (Gross revenue) earned by Online Travel Portals from sale of Airline Tickets would be in the range of Rs 430-540 Crores. The portals would be getting a net commission ranging from 0.5% to 7.5% from various Airlines. At an average commission rate of 3-4%, the net revenue would be between Rs. 13-22 crores.

www.MakemyTrip.com has emerged as the clear leader enjoying more than 50-55% of the market share. Indiatimes travel and Yatra follow behind with close to 10-15% market share each. Other prominent players include Travelguru, Cleartrip , Xplorz etc.

The Air Tickets business would be forming almost 90% of the total revenues of the online travel portals. 10% revenues would be coming from Hotel bookings, Taxi rentals Packages etc. The margins on these products would be much higher going up to almost 20%. This would give them another Rs 10 crore in net revenues. This makes the total business size around 25-30 crores in net revenues.

What will be very interesting to see is how the market shares will pan out once the global biggies like Expedia & Travelocity come in (Both of them are going to soon launch their India business) as well as the larger brick & mortar players like SOTC/ Kuoni & Thomas Cook throw their hats into the ring.

However, one thing is very clear – the volumes of business being done by Online Travel Portals will continue growing exponentially over the next 2-3 years.



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