Boom time for online travel in India

With low-fare airlines, improving infrastructure and higher disposable incomes, the Indian travel industry is booming like never before. More and more Indians are using the Internet to plan their travel, where travelling for business is the most frequent bookings online as leisure travel is still a fairly small but fast growing segment.

"Making travel arrangements online is becoming a habit with the emerging middle class, who would grow to become 400 million-strong by 2009, and would generate an income of around $420 billion dollars," said Mr Ashwin Damera, founder and chief executive officer, Travelguru.

According to the PhoCusWright study, the online travel industry grew at 126 per cent from a base of $295m in 2005 to $796m in 2006. In 2007, it is expected to record a 66 per cent growth to become a $1,325million industry and by 2008, it will grow at 51 per cent to be a $2,004 million industry.

"At Rs 62,436 crores, India’s travel and tourism industry currently accounts for 5.83 per cent of India’s GDP and represents 4.59 per cent of all employment, with encouraging growth projections," said Mr Stuart Crighton, founder-director, business development, Cleartrip.

But, inspite of the boom in the online travel market there are still a few challenges faced by the industry. The majority of the customers are not yet very comfortable with transacting online, as they are not at ease when it comes to providing their personal information or their credit card details on the net, industry sources said. Also, it is observed that when transaction values are higher in sum, customers prefer interacting directly with agents rather than dealing through the Internet. Moreover, customers are faced with slow Internet connectivity, thus making it tedious to book online. "However, with the technology rapidly changing face to accommodate safer and faster Internet connections, these challenges will soon be overcome. With growing online user base and growth in the overall travel industry, there is room for more players in the short run, and in the long run we expect only 4-5 serious players to co-exist," said Mr Damera.