Indian online travel agency market to reach Rs 3,835 billion by FY28, outpacing global growth: Motilal Oswal
New Delhi, June 18
India's online travel agency market is expected to grow to Rs 3,835 billion by FY28, expanding at a compound annual growth rate of around 13 per cent, according to a report by Motilal Oswal.
The report said this growth is significantly higher than the projected 6.1 per cent CAGR for the global OTA market, driven by strong domestic travel demand, rising digital adoption, and an underpenetrated online travel ecosystem.
The share of online travel bookings in India is expected to increase to 65 per cent by FY28 from the current 54 per cent, reflecting the growing shift toward digital platforms.
Globally, the travel and tourism industry is also witnessing strong growth and is expected to record an 8.2 per cent CAGR during CY23-27E. The report noted that global outbound departures reached a record 963 million in CY22, up 111 per cent year-on-year.
According to the report, online travel agencies are likely to gain market share faster than direct suppliers and IRCTC because they offer a wider range of inventory, easier price comparisons, bundled services, and stronger customer loyalty programmes.
"OTAs are expected to gain market share faster than direct suppliers and IRCTC as they aggregate more inventory in one place, enable easier comparison, bundle ancillaries, and offer better and stronger loyalty and retention funnels," the report said.
The report highlighted how India's travel booking industry has evolved over the past two decades. Between 2000 and 2010, the market was largely fragmented and dominated by offline travel agents. However, from 2010 to 2020, online travel agencies transformed the sector by improving travel discovery, aggregation, and price transparency.
During the post-pandemic period, these platforms expanded further through super-app integrations, offering users a seamless travel experience that combines bookings, payments, and local services on a single platform.
Looking ahead, the sector is entering a new phase driven by artificial intelligence.
"The OTAs are now entering an AI-driven phase, evolving into intelligent platforms that offer hyper-personalized, real-time planning, dynamic packaging, and assisted decision-making," the report stated.
The report said successful OTA businesses depend on factors such as technology infrastructure, supplier networks, customer acquisition capabilities, automation, and the ability to offer additional services that increase revenue per user.
It also noted that mergers and acquisitions remain an important growth strategy for both global and Indian online travel companies.
"These acquisitions typically aim to strengthen technological capabilities, expand supply inventory, increase customer reach, and enable cross-selling across various travel segments," the report added.
The report said Indian online travel companies are well placed for long-term growth, supported by rising disposable incomes, increasing travel demand, rapid digital adoption in Tier-II and Tier-III cities, and the country's still-low online travel penetration compared with global markets.
— ANI
Reader Comments
Finally, some good news for the travel sector! After COVID, everyone's desperate to travel, and these OTAs make it so easy. But I'm a bit skeptical about the "AI-driven hyper-personalized planning" thing—last time I trusted an algorithm with my itinerary, I ended up at a '5-star' hotel that was a total dump. Hope they improve on that!
Great analysis, but let's not overlook the real pain points. OTAs charge hefty cancellation fees and sometimes their 'best price' isn't even cheaper than booking directly. Also, for Tier-2 and Tier-3 cities, digital literacy and internet reliability are still issues. The growth is exciting, but the industry needs to address these ground realities.
I'm all for digital adoption, but I still miss the personal touch of old-school travel agents! 😅 My local agent knew my family's preferences perfectly. Now it's just endless scrolling through options. That said, the super-app concept is a game-changer for last-minute trips. Keep it up, India!
Focus on IRCTC losing share to private OTAs is interesting. IRCTC has the monopoly on train bookings, but for flights and hotels, these platforms are king. The loyalty programs are the secret sauce—I've saved thousands with points. Just wish they'd treat their customer support better; long hold times are the worst!
Live in the UK but book trips to India frequently. The OTA growth there is palpable—prices are competitive and
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