Online Travel Trade in India: Challenges and Opportunities

Online Travel Trade in India: Challenges and Opportunities

S.K. Gupta, Vijay Prakash Bhatt, Abhishek Vaishnava
DOI: 10.4018/978-1-5225-8434-6.ch008
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India, as the second largest internet population after China with 330-370 million users which is expected to grow by at least 50 million yearly until 2020, is at the cusp of a digital revolution. Various reports show that India's revenue in the online travel booking segment amount to 569 million USD in 2018 and is expected to show an annual growth rate of 14.6% resulting in a market volume of 9,594 million USD in 2022. This article emphasizes the opportunities and challenges of online travel agencies (OTAs) particularly in India. For the success of e-tourism in India, it is essential to increase the operational efficiency of the staff and attitude/ behavior of the staff, delivery of services as committed, provision of customer data management and insurance coverage services. All of these are the keys for an excellent and prompt service delivery system and which effects the success of the online travel provider. A large youth population, changing lifestyle, plethora of travel deals and authenticated travel related information are some of the major opportunities and challenges for e-travel commerce in India. This article summarizes information on the challenges and opportunities of Indian online travel agencies, with a conviction that India will make a huge break through and be a success story particularly in online travel retail. This study will give insight to the industry players to understand the opportunities and challenges and develop strategies for retaining more satisfied users and increasing the number of repeat customers accordingly.
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Planning and preparing for travel can be stressful and overwhelming due to the preparations needed in selecting and scheduling flights, arranging transfers, booking appropriate hotels, organizing other requirements at destination which requires consultation and assistance from an expert travel service provider/intermediary.But from the end of twentith century, internet has paved the way for rapid growth of digital/electronic business phenomenon across the world and made travel planning more convinient and less time consuming. Internet has created a dynamic competitive revolution in the way consumer shops or buys today. E-commerce became widespread and the most preferred mode of business transactions. E-commerce (electronic commerce) is often simply refer to buying and selling using the internet. People immediately think of consumer retail purchases from companies such as eBay, Amazon, MakeMyTrip, etc. But, e-commerce involves much more than just buying and selling online between organizations and customers and should be considered as all electronically facilitated transactions between an organization and any third party it deals with. Non-financial and other intangible transactions such as customer requirements for further information, violation of terms and conditions by other party etc., would also be considered as a part of e-commerce. A report published by Statista in 2017 cited that retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are anticipated to grow to 4.88 trillion US dollars in 2021.

It is a well known fact that tourism has influenced the world economy to a large extent and tourism development is always seen as a basic instrument in economic development, alleviating poverty and advancing food security (Čačić, 2013; Richardson, 2010). Tourism industry creates a vibrant fragment of the economy of any nation and generates remarkable financial, social and political impacts, thus acquiring a significant role in the general worldwide economic and social development (Ma & Hassink, 2013; Temirbulatova & Borza, 2015; Wang et al., 2012; Weaver & Lawton, 2010). Holloway et al., 2009 characterizes tourism as the absolutely most imperative economic activity on the planet. It brings numerous advantages, particularly in terms of job creation and employment of individuals who provide tourism services (Pender & Sharpley, 2005; Webster & Ivanov, 2014) hence contributes directly and indirectly to the Gross Domestic Product (GDP) (Unković & Zečević, 2014). As stated by Taušer et al. (2015), GDP has critical impact on the buying force of consumers and in this way influences the economic development and the local economies. Universally, tourism has endowed the GDP overflow from the most developed economic states to those with lower Gross Domestic Product (Sekulović, 2012; Blanke & Chiesa, 2013).

Table 1.
Current and projected contributionof travel and tourism to GDP
Worldwide in total GDPIndia in total GDP
1.Direct contribution, 2017USD 2,570.1bn (3.2%)INR5,943.3bn (USD91.3bn) (3.7%)
Forecast to rise in 20184.0%7.6%
Rise by 20283.8% pa from 2018-2028, USD3, 890.0bn (3.6%)7.1% pa from 2018-2028, to INR12,677.9bn(USD194.7bn), (3.9%)
2.Total contribution to GDP, 2017USD8, 272.3bn (10.4%)INR15, 239.6bn (USD234.0bn), (9.4%)
Forecast to rise, 20184.0%7.5%
Rise by, 20283.8% pa to USD12, 450.1bn (11.7% of GDP)6.9% pa to INR32, 053.3bn (USD492.2bn), (9.9%)

(Source: WTTC Annual report, 2018)

Key Terms in this Chapter

E-Commerce: Any business activity that can be conducted over the web.

Online Travel Agencies: Online travel agency may be defined as business providers who specialize in offering comprehensive travel-related services and/or products online.

SWOT Analysis: A SWOT analysis is a simple but powerful tool for understanding an organization’s resource capabilities and deficiencies, its market opportunities, and the external threats to its future. SWOT analysis has been used by academics and organizations not only for identification of the key issues concerning a strategy formulation, but also for its execution.

E-Tourism: The way tourism organizations conduct their business and, in particular, the way organizations distribute their tourism products in the online marketplace.

Tour Operator: A tour operator typically combines a tour and travel components to create a holiday. While considering tourism business information and technology, the tour operators examines bookings such as transportation, sightseeing, accommodation, etc., planned in advance.

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