Online travel penetration (33%) - E

Report
Travel Industry: USD 36 bn, 7.5% expected CAGR over next 10 years
► Travel Industry*
is playing an increasingly
important role in India’s economy :
►
1.9% is the direct contribution of total Travel industry
to India’s GDP
►
5% contribution to total employment
►
3.8% of total exports was from Inbound tourism
(~USD 14.5 bn )
►
5.1% of total investment was in Travel(~USD 23 bn)
► Domestic Travel to be the primary growth driver:
~82% of Total Travel
► 74%
of Travel is Leisure travel, expected to grow
by 8.6% in 2012
► 26%
of Travel is Business Travel, expected to grow
by 4.1% in 2012
Source: India 2012 WTTC, IBEF
*WTCC definition of Travel includes: Domestic
expenditure +Inbound tourism + restaurant&
leisure industries+ govt. spending+ capital
investment
India is the second largest Travel Market globally after China, largest
contributor to employment
Source: India 2012 WTTC, IBEF
Travel: Poised to Sustain Growth Momentum
1
Demand Growth
► Increasing per capita income and a
rapidly growing middle class:
► 160 mn people expected to grow
to over 267 mn by 2016
► Favorable demographics: Over 50% of
the population under 25 years
► Domestic as well as outbound travel
2
3
Increasing Investment
► T&T attracted capital investment of
►
INR1,253.9bn in 2011 (~USD 23 bn)
► Expected to rise by 12.3% in 2012
(~USD 26 bn); ~5.3% of GDP
► Rise of 7.5% pa is projected over the
next ten years to INR2,903.9bn in
2022 (~USD 53 bn)
►
►
to increase due to:
► Increased affordability as a result
of increasing disposable income
► Availability of attractive tour
packages
► Increased affinity towards leisure
►
Policy Support
Innovative campaigns
launched to attract tourists:
Incredible India and Athithi
Devo Bhavah
100 % FDI allowed in hotel
and tourism sector
USD 648.5 mn sanctioned
during the 11th Five Year Plan
for 991 tourism infrastructure
projects
CAGR of 15.4% over 2005-11
in Govt. spending on T&T
(USD 1.6 bn in 2011)
travel
Source: India 2012 WTTC, IBEF
Favorable demand, improving infrastructure and investments to drive T&T growth
Retail Travel : 33% of Travel is Online, Online growing
much faster than offline
► Online
travel share has been steadily
increasing: 23% in 2009 to ~33%** in
2012
► Online travel penetration (33%) is
ahead of China and Japan;
comparable to US (38%)
► Online Travel market grew 3x
compared to the overall market in
2011 viz. 23% vs 8%
► 23%
growth projected during 2012-13
– USD 7.3 bn (‘12) to USD 9 bn (‘13)
► Online travel drives >85%
commerce in India
of e-
Travel Market Segmentation
Suppliers Website v/s OTA
Online Travel Future Growth Engine: Hotels, Bus, Car rentals
2012 Retail Travel Industry Split
USD Bn
2012 Total
2012
Online
Online
Penetration
Online
Split (%)
Air
9.3
3.9
42%
54%
Hotels
5.9
0.8
13%
11%
Rail
6.0
2.5
42%
34%
Car Rental
0.7
0.1
13%
1%
Total
21.8
7.3
33%
► Air ticketing
continues to be the
largest segment (54%) followed by rail
( 35%)
► Newer categories
like hotels, tour
packages, bus and cars have higher
margins, low online penetration and
are going to be the drivers for the next
phase of growth
► Supplier
Bus
8
0.2
2.9%
branded sites accounted for
64% of the total market led by Indian
railways and low cost carriers
► However, OTAs to
grow fast by
focusing on the new high growth
verticals
Source: Phocuswright; Internal intelligence
Turbulence in Travel Market: Driven by issues facing the domestic
airline industry
►
►
►
►
Air continues to be the largest travel category – both online and
offline
2011-12 has been a challenging year for air growth:
►
Passenger traffic declined by 0.9% from Jan - Sept 2011 to Jan - Sept
2012
►
Gross margin under pressure for travel companies because of increase
in monopoly of airlines
However online air growth has remained robust at 25% in 2011
and expected to be 22% in 2012 to USD 3.9 bn
USD Bn
Total
% Growth
Online
% Growth
Penetration
2009
6.3
1.8
29%
2010
7.8
23%
2.6
41%
33%
2011
8.4
8%
3.2
25%
38%
2012
9.3
11%
3.9
22%
42%
2013
10.5
13%
4.9
24%
46%
Domestic Air Passenger Traffic
Steady increase in online air penetration : from 38% in 2011 to 42%
in 2012 end
Challenges facing the airline industry
►
Air Market: Total & Online
(0.9%)
Supply constraint: Grounding of majority of Kingfisher’s fleet,
long duration strikes by the National carrier
►
Spiraling jet fuel prices and consequently hike in fares resulting in
stagnant /decline in passenger traffic growth
►
Rupee depreciation slowing outbound travel
►
High debt burden and operating losses for majority of the Indian
carriers
Source : Phocuswright, DGCA
Turbulence to be Overcome by policy changes and shifting focus
to new growth verticals
Revival of Domestic
Air
►
►
Incumbents to increase supply: from 385 to 522
aircrafts over the next few years; will ease out the
demand supply mismatch
►
49% FDI by foreign carriers approved, potential
funding for cash strapped airlines
►
Increased supply and competition from new
players will reduce monopoly of existing suppliers
►
ATF imports allowed, airline operating costs to
reduce
►
Opening of bilateral rights to all domestic carriers,
will lead to better seats utilization
►
New Verticals
Growth
Investments for up gradation / creation of new
airports
Source : Phocuswirght; KPMG Background Paper on Indian Aviation, news articles
Key Verticals to drive future growth
►
Hotels
►
Holidays / Packages
►
Bus
►
New verticals: Car rentals
►
Higher margin categories, focus area for all OTAs
►
Characterized by low online penetration,
increasing trend to move online: enough
headroom for growth
►
Categories like bus and hotels are highly scalable
and huge standalone verticals for growth
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