Travel portals see 30-50% increase in revenues

Keeping pace with a boom in the aviation sector and cheaper airfares, more disposable income and the increasing appetite of Indians to travel abroad, coupled with the rising temperatures and a rising rupee, the revenues of Indian online travel websites have increased by nearly 30-50 per cent during these summer vacations.

The travel website travelguru.com clocked peak monthly revenues of Rs 22 crore this season compared with Rs 9 crore last year, a rise of 144 per cent year-on-year.

As the monthly revenues have been around Rs 15 crore this year, the revenues of Rs 22 crore this summer imply an almost 50 per cent rise during this season.

Another popular travel website makemytrip.com is hoping to increase its revenues to Rs 1,200 crore this year as compared with Rs 550 crore last year, an increase of 118 per cent. Yatra.com, which was launched last year, has also seen 40 per cent rise around the summer holidays.

The online travel industry, which is at an inflection point, is attracting a lot of new players including global giants such as Expedia and Travelocity.

Online travel has been the fastest growing segment in the e-commerce story. The Internet and Mobile Association of India (IAMAI) estimates that the average number of online travel transactions has increased nearly four-fold, from 207,000 a month in 2003-04 to 795,000 in 2005-06.

The domestic online travel industry is roughly about $800 million (around Rs 3,100 crore) and would include suppliers such as carriers, hotels and online travel agents (OTAs) and IRCTC.

Comprising only 2.2 per cent of the domestic travel market, the online travel industry is projected to grow to $2 billion (around Rs 8,200 crore) by 2008, according to a report by PhoCusWright.

These figures are expected to rise further with the immense growth in the online consumer market.

Ashwin Damera, founder and CEO of Travelguru.com attributes his success to "greater awareness about the advantages of booking online - choice, transparency and better deals".

"Also, as a company, we have managed to establish a leadership position on the hotels side with more than 3,000 hotels being offered to customers at guaranteed lowest prices, making us India's largest hotels network."

Travel portals have also increased their ad spends by anywhere between 20 and 50 per cent and have added value packages and special holiday discounts.

Sivaramakrishnan, executive director, Price Waterhouse Cooper (PWC), said, "The rise in the travel website industry is due to three factors: travelling has become cheaper and faster due to the boom in the aviation sector, as the cheap airfares are enabling the consumers to plan cost-effective trips; As the rise in the salary levels cuts through the class barriers in travel, travelling is becoming possible for all; and with the rise in salaries, people now have more disposable income to spend on travel."

He, however, notes India has a very small percentage of leisure travellers as compared with the global standards. However, the numbers are rising. This growth is expected to continue for atleast another 5 years. This spells good news for the portals.