An Exclusive Overview Of The Indian Travel Industry
This is a re-post of an original blog post on PayUmoney blog.
Ladies & gentlemen, please fasten your seat belts as you might experience some factful turbulence ahead!
We all travel at some point in time. Travel ties a unique sense of wanderlust, a sense of purpose, fear, excitement and happiness among a gazillion other emotions put together! Whatever your reason to travel may be, it always beholds a pre-commencement journey — from feeling the need-to-take a break to planning a super itinerary. Today, travelers are spoilt of choices as online and offline aggregators compete strongly to score well via packages and discounts they have in store. This competition prompts travelers skim, scan and compare 50+ sites to get the best deal!
The Indian travel industry has seen an uprising wavelength in its evolution so far. The concept of wholesale aggregators persists in the travel industry as well. It all began with the local travel agents booking travel for you and now the online aggregators or agents claiming to provide best packages at reasonable costs. In the current scenario, travel websites are a marketplace filled with aggregators selling services forming unique combinations: flight + hotel bookings, travel discounts, etc.
PayU Zooms In
With its deep penetration in the industry, PayU has a wealth of insights into how travelers behave when it comes to booking their travel.
Insights represented below are an attempt to unravel how India travels. It covers data across major travel aggregators and the most popular standalone vendor websites.
The trend in both amount spent on bookings and the number of transactions increases as the year progresses. Despite all our planning and plotting, it ultimately boils down to the fact that, Indians are last-minute planners!
Our study shows that travel bookings spike in the last 2 quarters (Q2). This is when the holiday season picks up the pace, with Diwali, Christmas and the New Year and long weekends hanging around the corner. Also, in this quarter the booking rate is high due to summer holidays and business travels once the new financial year begins. A stark example which supports our study is the month of August, which welcomes a couple of festivals and Independence Day.
People traveling through flights/airlines are more likely to book ticket on an immediate basis (previous or next day). For non-airline travelers, in case of festivals at least this duration increases to 2 days.
The non-airline bookings also rise in the last quarter. This is because last mile connectivity becomes important as Indians who want to be home during festivals. However, the first quarter sees a dip in bookings because of no major holidays, exams and end of financial year.
This indicates 2 things:
- Travelers book their own tickets during their office hours (during the daytime)
- Travel agents still act as aggregators and book tickets for customers.
The trend seems to be intact irrespective of airline or non-airline bookings. How does this trend play out over the week? Majority bookings take place in the middle of the week and gently fade away as the weekends’ takeover. Some very astonishing trends surfaced once we explored the Indian traveler payment data:
Airline Bookings
- Indians mostly pay using a credit card (CC). This is not a surprising element, given the high number of exclusive tie-ups airlines have with card issuers (co-branding). Most CC transactions are incentivized by linking purchases to miles collected on select airlines. But it also shows that Indians are not shying away from traveling on credit.
- Debit card (DC) transactions offer an interesting mix! In terms of volume processed using debit cards, it actually outstrips credit card usage in terms of the number of transactions.
- Net banking(NB) is the third highest but the number of transactions processed closely mirror the amount spent overall.
- Another trend is the low ASV on debit cards as compared to credit cards across airlines and non-airlines bookings. It is less compared to the average trend in ASV for all transactions.
Non-Airline Bookings
- Across non-airlines bookings, the trend for bookings made via credit cards remains high but debit card emerges as the clear winner. The eco-system of rewards built around credit pushes travelers to use the payment method for bookings.
- The fact that ASV for credit cards is the highest even for non-airline bookings despite low penetration exists in that segment. This is a clear sign that credit as an option to pay is something travelers see as a value proposition.
Summary
A few points come up to the surface very clearly when it comes to Indian payments industry and travel:
- Bookings made via Credit/debit cards, net-banking hold a significant share of the market.
- Credit card has the maximum users in the Q1 (46.77%) when it comes to the number of transactions and actual volume spent through PayU.
- Q3 has the lowest share for credit cards but a remarkable use of debit cards for bookings (non-airline bookings).
- In the haste of being home during festivals in the Q3, hence low-cost transactions shoot up thus increasing debit card and net-banking use.
- Indians are averse to credit. However, they require more faith building and education.
- Conventional habits of booking tickets during the weekdays at a specific time are preferred to get the best rates.
Foreseeing the surge of new payment instruments such as UPI evidently making their presence felt brings in a further dash of interest in the system. Also, the traveler behavior seems to be transforming with new offers and players entering the online travel booking space. Not missing out on the obvious: Does convenience fee play a crucial role in these choices and behavior? Well, only time can tell as it moves on its steady march. But we will be here looking at the trends as the weeks and months pass by, so stay tuned!
Take a glance at the excerpts of this article covered by leading Indian news dailies.
