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Indian travelers expected to spend $136 billion by 2021

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The Indian traveler 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.


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The momentum is expected to continue and the industry will grow at a 13 percent CAGR to $136 billion by 2021, according to a report, ‘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.

Deep diving into the $136 billion spends, the report cites a 12 percent growth in transportation ($50 billion), 13 percent growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13 percent ($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 travelers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 percent in 2018 to 35 percent in 2021.

Online is a significant source of research

Elucidating the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing. The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travelers 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 percent of travelers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 percent of customers book transport and lodging online, and over 50 percent share feedback online with social media being the dominant platform.

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Talking about the market opportunities for online travel players, 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 travelers 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.”

“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.” Arpan Sheth, partner Bain & Company said.

Decoding the Indian travelers

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

Frequent flyers: Nearly 70 percent of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.

Budget business traveler: 86 percent of them researched online whereas only 60 percent 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 traveler: Around 70 percent 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 traveler: 90 percent researched online and 55 percent 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 percent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.

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Visa waiver leads to spike in bookings to Brazil

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Brazil’s visa waiver policy announced in March is already generating positive results. Recent data from a study done by Amadeus Group shows a significant increase in the number of reservations made in the United States, as well as in Canada, Japan and Australia, the other three other countries benefiting from the new policy. Amadeus is one of the 10 largest technology companies in the world and one of the three largest in the travel segment.

In the United States, the increase was 53% in the number of trips confirmed for June and 97% in July compared to the same period of last year. In Canada, growth was 86% for June, 54% for July and, expressive, 135% for August this year.

“The numbers show that visa exemptions for strategic countries are a good measure, which generates jobs and income in Brazil. It is time for the country to take advantage of all its tourism potential”, said Marcelo Alvaro Antonio, the Brazilian Minister of Tourism.

Here are some suggestions of amazing destinations in Brazil for all tastes:

• Historic Cities: If you like your vacations with a heavy dose of culture, Brazil should definitely be on your list. We have several historic cities, with a heritage dating back to its colonial period. In Minas Gerais State, you can find cities like Ouro Preto and Diamantina – the center of gold mining in Brazil in the 18th century. In the Northeast state of Bahia, you will find Salvador, the first capital of Brazil, and a city that also has a rich history of its African heritage. A few miles from Salvador, in the State of Pernambuco, you will find the city of Olinda. Founded by the Portuguese in the 16th century, the city is linked to the sugar cane industry, with gorgeous Baroque churches, convents, and views to die for.

• Sun and Beach: With more than four thousand miles of coast, its exuberant nature bordering the beaches with coconut trees, and tropical forests, Brazil has options for all travelers looking to spend time outdoors. Most know the famous urban beaches of Rio de Janeiro, Florianópolis or Fortaleza, but there are also small beach towns like Trancoso, Boipeba, and Jericoacoara that can offer unique spots to get a tan. You can even find a stretch of sand in the Amazon, in the beaches near Manaus, along the Rio Negro.

• National Parks: Brazil’s natural beauties go beyond beaches and forests. The country is also blessed with great diversity, which includes waterfalls, canyons, wetlands and many different types of ecosystems throughout its many national parks. Think- Iguazu Falls, one of the most important forest reserves in South America. Another highlight is the Pantanal, in the central region of the country, home to hundreds of endangered species. And of course, the Amazon Rainforest.

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How does India travel? Let us count the 94 billion ways

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Bain & Company and Google India are together launching a report on “How Does India Travel.” According to the report, the Indian traveler has come of age, spending approximately $94 billion in 2018 on around 2 billion domestic and international trips. This has helped the Indian travel and tourism industry achieve unprecedented scale, and the momentum is expected to continue with the industry growing at a 13 percent CAGR to $136 billion by 2021, according to a report.

Fueled by digital, Indian travelers are expected to spend an additional $24 billion on online travel bookings over the next 3 years. The report outlines how India spends on travel, the influence of online channels in their purchase journey, and potential growth opportunities for travel businesses until 2021.

Deep diving into the $136 billion spends, the report cites a 12 percent growth in transportation ($50 billion), 13 percent growth in lodging ($21 billion) and consumption, which includes spends on shopping, recreation and food, to grow at 13 percent ($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 travelers will spend an additional $24 billion on online travel bookings over the next three years, a growth from 25 percent in 2018 to 35 percent in 2021.

Online is a significant source of research

Elucidating the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing.  The report states that during key research-heavy phase of interest, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travelers 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 percent of travelers being influenced by this platform. In the booking and sharing phase, the report states that nearly 60 percent of customers book transport and lodging online, and over 50 percent share feedback online with social media being the dominant platform.

Talking about the market opportunities for online travel players, Vikas Agnihotri, Country Director – Sales, Google India said, “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travelers; and existing travelers 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 personalized 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.”

“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.” Arpan Sheth, partner Bain & Company said.

Decoding the Indian travelers

The report further identified the five cohorts of travelers in India, across business and leisure travel, and categorized each against their online research behavior:

  • Frequent flyers: Nearly 70 percent of them booked online, cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.
  • Budget business traveler: 86 percent of them researched online whereas only 60 percent 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 traveler: Around 70 percent 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 traveler: 90 percent researched online and 55 percent 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 percent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.

However, challenges remain in meeting the expectations of these travelers. Customers perceive online channels geared towards premium cohorts (frequent flyer and experience-oriented traveler), while mass cohorts, with $55 billion in spending, remain underpenetrated. There are about 160 million non-transacting active Internet users in India with only 5 percent of online travelers from Tier-2 or Tier-3 cities. There is a significant (20 percent) difference between the booking rates of premium cohorts and mass cohorts, the latter being also dissatisfied with online channels (~33 percent satisfied) vs. premium cohorts (~42 percent). The second challenge is in penetrating existing users who exhibit a marked distrust in use of online channels to make bookings, especially around payment and pricing terms and booking experience compared with offline channels. Consequently, their online usage drops between the research (>86 percent online influence) and booking phases (~40 percent offline bookings).

How travel businesses need to adapt to the needs of online consumers

The report cites five major shifts that marketers need to make to market to the online travelers – First, alleviate consumer concerns by improving the booking and payment experience to build a trusted brand and increase adoption. Second, they need to address the negative customer perception issues by mass customization to drive higher share in the segment. They also need to utilize consumer technology to penetrate mass segments (standardize, enable sharing), reach non-transactors (build offline presence), and create new user access.  Moreover, they need to find innovative and frugal ways to package the experience to increase both adoption and retention.  Finally, they need to create a robust digital backend to adapt to customer needs across the purchase journey.

“The contribution of travel and tourism’s spend in India has reached developed market levels, from 6.7percent of GDP in 2013 to 9.4 percent in 2018. This growth, combined with a rapidly growing internet user base and adoption of online bookings will lead to $24 billion in incremental revenues through online channels by 2021. In order to benefit from this trend, businesses need to actively increase new user adoption and increase penetration in the existing user base across the purchase journey.” Joydeep Bhattacharya, partner Bain & Company said.

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Brexit has not deterred business travelers in the UK

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UK’s 2018 Hotels Market Report shows that the UK regional capitals are performing strongly with overall room nights booked growing by 8% across the top 250 UK cities.

London continues to be business travelers’ favorite capital for work trips with 663,000 room nights booked in 2018, an increase of 5% when compared to 2017. But Edinburgh experienced the highest level of growth in 2018 with room nights booked increasing by 16%, Belfast was up 13% and Cardiff up 5%.

The 2018 Hotels Market Report analyses data from corporate hotel bookings made between January and December 2018 by Advantage’s TMC members, who represent around 40% of the UK business travel sector, highlighting business travel trends and booking behaviour.

The report also shows significant growth for cities in the Midlands and North East, with Derby seeing the highest growth with 31% more booked room nights compared to 2017, while York, Nottingham and Gateshead also saw double-digit percentage increases.

Top Ten UK Cities – Booked Room Night Percentage Increase (year-on-year), January – December 2018

1. Derby – 31%
2. York – 22%
3. Plymouth – 21%
4. Inverness – 20%
5. Nottingham – 18%
6. Edinburgh – 16%
7. Reading – 15%
8. Belfast – 13%
9. Norwich – 11%
10. Gateshead – 10%

Global Results

The business world continues to travel widely, with the 2018 Hotels Report recording that hotel demand remains strong in many international cities with New York, Auckland, Wellington, Houston, Paris and Sydney topping the Advantage Top Cities list. In total, worldwide volume grew by over 393,000 room nights, a total increase of 8.74% compared to 2017, indicating that SME (Small and Medium Enterprise) corporate accounts, in which Advantage TMCs specialise, continue to perform strongly.

The total number of bookings made by Advantage business travel members in 2018 saw similar growth – up 8.76% – while the average length of stay remained constant, at 1.87 nights. Increased demand and higher occupancy globally meant hotel rates have increased by US$2 to an average daily rate (ADR) of US$169.41.

The report also looks at trends on bookings and ADR for cities and locations around the world, with New York once again topping the list as the highest volume worldwide city outside the UK, with 90,799 room nights booked at an average rate of US$395.97 per night. Increases were also seen in Bangalore (up 54%), Kuala Lumpur (up 36%) and Boston (up 27%).

The corporate hotel sector continues to grow, with another significant increase in bookings year-on-year, made by independent TMCs. Despite continued uncertainty in both the global and UK economies including Brexit, hotel room night demand is at record levels in many destinations. Although not all destinations in Britain saw an increase in room nights booked, ADR remained strong.

The report is representative of hotel bookings made across most of the major international and independent hotel groups including: Accor, Apex Hotels, Choice Hotels, Citadines, Clayton Hotels, Design Hotels, The Doyle Collection, Edwardian Hotels, glh Hotels, Hallmark Hotels, Hilton, HotelREZ, Hyatt, House of Daniel Thwaites, IHG, Jurys Inn & Leonardo Hotels, Loews Hotels, Macdonald Hotels, Maldron Hotels, Melia Hotels International, Millennium Hotels & Resorts, The Montcalm Hotels, NH Hotels, O’Callaghan Collection, Omni, Park Plaza, Pegasus, QHotels, Quest, Rotana, Radisson Hotel Group, Sabre Hospitality, Small Luxury Hotels, TravelClick, Travelodge, Village Hotels Club, WorldHotels Collection and Wyndham Hotel Group.

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GCC produces 1.8 million overnight stays in Germany during 2018

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The German National Tourist Board (GNTB) has announced that it will be showcasing a range of key destinations at Arabian Travel Market (ATM) 2019, which takes place at the Dubai World Trade Centre from 28th April to 1st May.

Participants from Germany partnering with the GNTB this year include the ‘Hotel Palace Berlin’; ‘Frankfurt Tourist and Congress Board’; ‘Baden-Baden Tourism Board’; ‘OUTLETCITY METZINGEN’, the State Tourist Board SouthWest-Germany (Baden-Württemberg Tourismus) and the Black Forest Highlands (Hochschwarzwald Tourismus).

The GNTB’s tourism partners covering local tourist boards, luxury hotels, hospitality, retail, spas and theme parks, each has its own unique proposition, whether spring, summer, autumn or winter, emphasising that Germany is a diverse and unique all year-round travel destination.

Underscoring the relevance of ATM to ‘Destination Germany’, Sigrid de Mazieres, Director for the Gulf countries at the German National Tourist Office (GNTO), an affiliate of the German National Tourist Board (GNTB), commented:

“ATM presents us with an ideal opportunity to showcase our wide-ranging tourism offering from dynamic cities to breathtaking countryside with fairytale castles, lush forests and mountains. In addition, there are great family attractions, excellent shopping centres and superb sightseeing opportunities – visitors will be fascinated by the incredible diversity that Germany has to offer.”

The GCC market is Germany’s third-largest non-European source market behind China and the US and is important for Germany. GCC travellers tend to stay an average of 11 nights and spend on average $5,300 per person per trip, significantly more than other international travellers.

According to the latest forecast from the GNTB, GCC nationals visiting Germany are expected to grow to 3.6 million overnight stays by 2030, compared with 1.8 million guest nights from Gulf nationals recorded in 2018, with key markets being UAE, Saudi Arabia and Kuwait.

The forecast increase is being attributed to the collective efforts of all German Tourism stakeholders identifying and accommodating the travel requirements of GCC nationals, not to mention the excellent connectivity provided through flights from the GCC to Frankfurt, Munich, Dusseldorf, Hamburg and Berlin. In Germany’s hospitality and retail sectors, it is common to meet Arabic speaking staff, familiar with Islamic culture and tradition. Hotels offer copies of the Quran and prayer mats on demand, connecting family rooms, plus restaurants serving halal food are easy to find.

Germany’s attraction as a destination of choice for tourists, is further illustrated by the number of visitors recorded in 2018. Last year, Germany’s inbound tourism figures reached record levels for the ninth year in a row. According to the German Federal Statistical Office, there were 88 million international overnight stays recorded (in accommodation establishments with at least ten beds) – an increase of 5% compared with 2017.

According to IPK World Travel Monitor’s annual survey, in 2017, Germany was the top ranked country among European tourists for cultural trips and with 13.1 million inbound business travellers from Europe, it ranked number one as a business destination in 2018.

The German National Tourist Board (GNTB) will be at ATM 2019 stand no. EU5930.

 

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