Indian online travel set for massive growth

The Indian online travel industry is set to see its value increase seven-fold over the next two years, boosted by the rise in low-cost carriers and an emerging middle class.

A paper produced by US travel analysts PhoCusWright revealed the massive surge in the market from a value of around $300 million in 2005 to an estimated $2 billion by 2008.

An influx of start-up online travel agencies is expected to have a major effect on existing travel agent businesses, which currently command a 98% share of the market.

The Indian travel market is currently estimated to be worth around $14 billion and is expected grow dramatically as the country’s population increases, with the free-spending middle class numbering 100 million by end of the decade.

Heavy investment in infrastructure, a renaissance in the banking sector to push online payments, and the early success of a website for mammoth Indian Railways system, was also a significant motivator for the market, the report said.

“The Indian travel market and Indian travelers have been underserved, receiving poor customer service and limited choice,” the report’s author, Ram Badrinathan, said.

“Online travel agencies will rapidly change the old paradigm, providing customers a sophisticated online retail and shopping experience, enabling access to a fragmented travel supply market, and consolidating Indian travel options with a pan-Indian approach.”

The growth of the Indian online travel sector is in “sharp contrast” to others in the Asia-Pacific region, the report said, most of which have been triggered by demand by consumers.

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