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India accounted for 3.7% of global travel sales, says KPMG-FICCI report

According to the report, ‘Expedition 3.0: Travel and hospitality gone digital’, India is the third largest market by value in the APAC region when it comes to travel. The report says the travel and hospitality sector will adopt digital platforms and technologies to deliver enhanced and personalised customer experience

KPMG in India and FICCI released a report titled ‘Expedition 3.0: Travel and hospitality gone digital’ to portray an immersive view on the key trends, challenges and consequences of digital travel.

According to the report, travel and hospitality is one of the key sectors of the Indian economy, growing at a steady growth with 15.6% year-on-year (y-o-y) rise in foreign tourist arrivals (FTAs) and 20.8% y-o-y growth in foreign exchange earnings (FEEs) during 2017.

Estimated to directly contribute to 25.9 million jobs and Rs5141.1 billion ($75.8 billion) to the GDP of India, it is also one of the largest employment generators.

The study found that following the global scenario, the Indian players are also leveraging various tools, technologies and digital platforms; India was projected to have accounted for 3.7 per cent of the global digital travel sales – making it the third-largest market by value in the Asia-Pacific (APAC) region.

The online sale of travel booking is likely to increase at a compound annual growth rate (CAGR) of 14.8% during 2017-21. The report attempts to provide a quick look at the current pace of digital disruption, consumer trends and innovation and the path travel companies are taking to win the tech-friendly Indian traveller.

According to the report, the major developments fuelling the growth of the travel and hospitality sector include:

1. A fast growing, high-potential economy

2. Rising smartphone and internet penetration

3. Rising participation of millennial travellers in terms of numbers and expenditure, with 34% of millennials spending Rs 6,000 per night or more in the past year, as compared to 22% of those aged 55 plus

4. Leisure travel contributed nearly 95% of the direct travel and tourism spending in India

5. Rise in business travel. India has the potential to be the sixth-largest business travel market in the world by the end of 2019

6. Strong and consistent growth in domestic tourist visits with a significant 88% share of spending

“Digital revolution in the travel space is on. Brands are embracing technology to transform themselves into experience platforms while automating operations. Corporate and consumer travel boundaries are already blurred. Incumbents are adapting swiftly to the emerging bouquet of travel start-ups. Creative digital business models will continue to reshape the future of travel,” said Jaideep Ghosh, Partner and Head, Transport, Leisure and Sports, KPMG in India.

Commenting on the research, Rahul Chakravarty, Consultant, Tourism, FICCI, said, “We are in a digital era and travel & hospitality is not an exception. The rampant penetration of smartphone has transformed the travel consumption pattern of the end user. The knowledge paper highlights all these with pointers to the future of travel in India.”

The report enlists and expounds upon six key focus areas to win the tech-friendly traveller:

  • Marketing to the modern-day traveller through search engine marketing (SEM) and search engine optimisation (SEO), following a mobile-first approach, leveraging social media, providing personalised offers and utilising user generated content.
  • Personalising services, deemed as the future of travel, enabled by insights from analysis of big data analytics, AI and machine learning.
  • Pushing towards direct bookings: Direct bookings enable hotels and airlines to avoid commissions and build a direct connect with customers; this concept is likely to gain more emphasis going forward.
  • Automating operations for end-to-end applications across booking, customer service and even operational aspects of travel and hospitality businesses.
  • Leveraging UGC such as customer reviews and other earned media is considered more effective that owned media to help brands with identifying and resolving issues, while enabling them to build a direct connect with customers.
  • Partnering with the sharing-economy players has seen major positive strides with hotels, hotel aggregators and OTAs partnering with cab aggregators to leverage synergies.

The report throws light on online platforms that act as breweries of travel, encouraging people to travel more, shares details on government initiatives towards digitisation of travel and captures the way forward for travel and hospitality businesses. It underscores that India is ultimately moving towards becoming a digitally-enabled tourist destination, with changes brought forward by players across the value.

Click here for the full report.

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