Online travel companies to clock bookings worth $10 billion in FY19

In the first half of FY19 (April-September) the segment players including Paytm, EaseMyTrip and Ixigo are estimated to have clocked total travel bookings of about $5 billion

In a sign of rising popularity of online travel bookings, top online travel agencies (OTAs) including MakeMyTrip, Yatra and Cleartrip are set to cross a milestone of $10 billion (over Rs 720 billion at current exchange rate) in total bookings for the first time, in FY19. Every player in the segment is growing at a minimum 20 per cent and some are claiming a three-digit growth as well.

In the first half of FY19 (April-September), segment players including Paytm, EaseMyTrip and Ixigo are estimated to have clocked total travel bookings of about $5 billion (Rs 360 billion) as the demand on flights and hotels and packages remains strong. The second half of the year (October-March) is a stronger travel season owing to festivals and New Year holidays, etc. The OTAs could, therefore, end the year with a total booking of over $10 billion.

Nasdaq-listed MakeMyTrip, the largest player in the segment (which also owns the Ibibo brand) alone has clocked bookings of $2.66 billion in the first half of the year, growing over 27 per cent YoY. “The growth is essentially coming from a significant increase in internet access. The highly under-penetrated hotels market is opening up and we continue to push for category expansion. This growth is highly sustainable and will continue to grow at similar pace with the expansion of the industry the reach of internet,” said a company spokesperson. 

Yatra, the second biggest segment player is growing at an impressive pace of 30 per cent this year. In H1, the Nasdaq-listed company clocked travel bookings worth $0.81 billion. The company said growth is coming from the consumer booking business as well as the strong demand for corporate travel where it claims to be the market leader.

Aditya Agarwal, head of corporate strategy at Cleartrip, said the smartphones are bringing more and more people online. “India is also seeing a change in its travel behaviour with masses taking up air travel and staying in hotels like never before. In general, we see more and more people wanting convenience in their travel bookings,” he said. The average Indian traveller, he said, takes two trips a year whereas in developed countries this average is close to six trips a year, adding that growth is expected to continue. Ixigo said it will end FY19 with bookings worth $250 million against just $100 million last year.

The OTAs have made attempts to reach out to the masses in smaller towns and rural areas with multiple regional languages in recent years. Companies have also brought on board popular Bollywood actors in promotional advertisements to connect with the population. With less than one-fifth of the hotel bookings coming from the online platform, there is scope for a substantial growth. In air ticketing, the share of online is 50 per cent but continues to expand.

Paytm, one of the recent entrants in online travel space said it is expecting to double the value of bookings in FY19 after a three-fold increase in FY18. It, however, declined to share the value of bookings. It claimed its travel segment’s user base has more than doubled to 11 million in the last twelve months.

“A majority of our newly acquired customers have never booked their travel online. Our deep penetration in tier II and tier III cities is helping users transition from offline to online. Paytm’s rapid adoption rates and the current small share of online bookings for categories like hotels and bus tickets leads us to believe there is tremendous room for growth in the online travel segment,” said Abhishek Rajan, vice president at Paytm.

Nishant Pitti, chief executive officer at EaseMyTrip, said the main factors driving online travel booking in India are 24x7 availability of booking with complete service support, easy comparison of the price and accessibility of reviews through social networking sites and TripAdvisor.

The increase in bookings has also meant a significant reduction in overall costs for the OTAs and a consequent reduction in losses. Yatra said it is hopeful of a break even by the first quarter (April-June) of FY20.  It has trimmed its adjusted EBITDA loss by 19 per cent to $3.2 million in the quarter ended September 30, 2018 on improved efficiency in marketing spend. MakeMyTrip is also swiftly narrowing its losses this year and the stock has recently attracted a rating upgrade by Goldman Sachs along with an increase in target price by almost 20 per cent to $40

Online Travel Firm	Value of travel bookings done in H1, FY19	% change YoY
MakeMyTrip	$2.66 bln (Rs 182.3 bln)	27.4
Yatra	$0.81 bln  (Rs 55.5  bln)	30.3
Cleartrip *	$0.54 bln  (Rs 37     bln)	30
EaseMyTrip	$0.12 bln  (Rs 8.5    bln)	21.4
ixigo	$0.10 bln  (Rs 6.85  bln)	150
Total	$4.23 bln  (Rs 290   bln)	23

Total excludes GMV of Paytm (travel), Via, TUI, BigBreaks who together may do well over $1 billion in GMV in FY19. 

USD-ING exchange rate of Rs 68.52 considered for H1 business, H2 is a stronger period for travel business 

*: excludes MENA business