The report finds that the Indian travel market is still dominated by travel agents whose role has significantly increased in Covid times.
Bengaluru, india - According to the latest report ‘Travel market in India’ released by RedCore – RedSeer’s arm which focuses on early-stage companies, the travel market in India was ~$75 billion in FY20, and is expected to cross $125 billion by FY27. The travel market represents both domestic travel, inbound and outbound travel made by Indians.
Noting the Covid impact, the report finds that the travel market shrunk significantly in FY21 but the recovery is expected to continue in FY22, and also expects to see a spike in the later years due to pent-up demand.
The Indian travel market is dominated by ~300,000 travel agents who represent the largest share by booking channel of ~52% and the role of agents significantly increased in Covid times.
Holiday packages - $17 billion, standalone flights - $10 billion and standalone hotels ~$5 billion constitute the majority of the agent booking market while cab, intercity bus and railways contribute the remaining ~$6 billion. The report finds that there is a lack of players operating in the packages segment, who could curate the package according to customer requirements. At present most of the agents develop packages on their own in partnership with tour operators & destination management companies.
While B2B flight booking is dominated by large B2B portals like TBO, Akbar, Riya etc., there is a trend of new-age tech platforms that are building for travel agents and helping them generate demand while providing B2B booking options. Agents are expected to cater to the $65+ billion travel market by FY27. Given the immense potential, the agent market has garnered renewed investor attention with companies like TravClan, Pathfinder raising funds to help travel agents and travel planners rebuild their business post the pandemic.
“Travel in India is still heavily dependent on Agents. Agents not just offer convenience and trust but are also price competitive to direct booking. They represent 50%+ of the travel market share and are expected to maintain this share in coming years,” said Anuj Kumar, Director at RedCore.
The airline travel market in India was valued at ~$20 Bn (domestic + international) in FY20, expected to double in size by FY 27. This growth will be driven by improving airport infrastructure and increasing access to passports.
~65% of the air travel by value is booked by agents while the rest is B2C Online channel. During Covid, the uncertainties related to travel including tests, change of travel date, delay in travel due to restrictions motivated travellers to take the agent route for making the ticket booking.
By FY27, the agent share is expected to be ~60%.
Further, the hotel market size in India including domestic, inbound and outbound was ~$32 billion in FY20 and is set to grow to reach ~$52 billion by FY27. Agents again dominate with ~45% share by channel which is expected to sustain by FY27.
RedCore estimates there are ~300,000 plus travel agents in India. Top 750 agents doing INR 3-4 cr of business per month capture ~12% of the agent travel market. These agents largely focus on air travel and have corporate tie-ups.
These are followed by ~60,000 agents who are of medium size and do a business of ~INR 20 lakh per month. They focus on selling holiday packages. These agents capture 50%+ agent market share. The remaining ~35% travel agent market share is captured by a long chain of ~250,000 small agents.
Customers prefer to make travel bookings through agents as the complexity of travel increases. 80% of international air travel and international leisure travel is booked through agents. Agents are expected to cater to a $65+ billion market by FY2027
International Travel Market
The report also talks about the travel market of SEA (South East Asia) and GCC (Middle East).
SEA - Travel market for FY 20 was estimated to be ~$ 80 Bn expected to grow to $ 105 Bn by FY 27. Indonesia, Singapore, Thailand and Malaysia are the key markets driving the tourism flow in the region. Travel bookings in the region are dominated by agents.
GCC - Travel market for FY 20 was estimated to be ~$ 70 Bn expected to grow to ~$ 90 Bn by FY 27. UAE and KSA together represent 70%+ of this market. Travel bookings in the region are dominated by agents. KSA vision 2030, Dubai Expo and Football world cup in Qatar to drive the future travel market growth.