Indian hotel industry to touch $1.8 bn mark by 2016: ICRA

The domestic hotel industry is estimated to touch USD 1.8 billion by 2016, from USD 0.8 billion presently, buoyed by a rise in online bookings, an ICRA report has said. An estimated 8.4 million Indians are likely to book hotels online by 2016, up from 3.5 million in 2014, the report said."The deepening penetration of Internet usage and smart phones in India has lead to increased booking of hotels through online portals and applications in recent times," it said.

The report further pointed out that hotel bookings are one of the least penetrated segments within the travel categories in India and online bookings account for 16 percent of the hotel bookings currently. This is expected to grow to 25 percent in 2016, the report said. In comparison, in Europe, 70 percent of the hotel rooms are booked through online booking portals while it stands between 35-40 percent in USA, the report noted.

With increasing online competition, popular models that have come up include online travel agents (OTAs) offering a single marketplace for all travel-related needs, and meta search engines like Tripadvisor and Kayak, that operate like travel discovery platforms. Among the key OTAs, Makemytrip holds 47 percent market share, while Cleartrip and Yatra hold a 20 percent share each, followed by Goibibo, the report said. Further, online accommodation reservation services like Oyo Rooms, Stayzilla are gaining popularity, it added.

Apart from this, branded hotels operate direct bookings through their websites offering customers with loyalty benefits. However, OTAs and online accommodation booking services have also started loyalty schemes of late, the report said. The report cited that the gain in popularity of these channels meant that the number of bookings routed through OTAs increased, thus impacting hotel revenues.

Therefore, to promote choice and avoid unfair competition, from 2002-03 onwards, majority of global hospitality majors started implementing strict rate parity rules regardless of distribution channel, the report said.