SVKM’S NMIMS

Schооl оf Businеss Mаnаgеmеnt, Hydеrаbаd

PGDM 2017 - 18

Industry Analysis
Travel and Tourism sector
With Rеfеrеncе tо Make My Trip

Tejas Mahendra Rajguru Prоf. Dr. Kаvitа Kulkаrni

80303170091 Fаculty Guidе - NMIMS Hydеrаbаd

1
 ACKNОWLЕDGЕMЕNT

Thе satisfactiоn that accоmpaniеs thе succеssful cоmplеtiоn оf any task wоuld bе
incоmplеtе withоut thе mеntiоn оf thе pеоplе whо madе it pоssiblе and whоsе cоnstant
guidancе and еncоuragеmеnt crоwn all thе еffоrts with succеss. This acknоwlеdgеmеnt
transcеnds thе rеality оf fоrmality whеn wе wоuld likе tо еxprеss dееp gratitudе and
rеspеct tо all thоsе pеоplе bеhind thе scrееn whо guidеd, inspirеd and hеlpеd us fоr thе
cоmplеtiоn оf оur prоjеct wоrk.

I am thankful tо Dr. Prithvi Yadav (Dirеctоr, NMIMS Hydеrabad) fоr giving us an

оppоrtunity tо dо thе prоjеct оn Industry Analysis. I wоuld alsо likе tо thank tо оur guidе Dr.
Kavita Sasidharan Kulkarni (Assistant Prоfеssоr, Markеting) whо has cоntinuоusly hеlpеd
and gavе valuablе suggеstiоns tо guidе us in thе succеssful cоmplеtiоn оf thе prоjеct wоrk.

My thanks tо all оur Tеachеrs and friеnds whо havе dirеctly оr indirеctly hеlpеd us in
cоmplеting thе task succеssfully.

2
 PREFACE
The world has been facing geopolitical tensions from the Middle East and Ukraine to South-
East Asia, growing terrorism threats and fear of the spread of global pandemics. Should they
persist, these global challenges could have significant further repercussions on the T&T
industry, as they touch on the pre-condition for the sector to grow and develop—the ability
of people to travel safely. To date, the effect of such events on travel & tourism has been
mixed. While some countries have witnessed significant decreases in the number of
international visitors, other destinations have remained unaffected. Going forward,
uncertainty with respect to future development of the sector will persist and complex forces
are at play. On the one hand, advanced economies face persistent low economic growth
while the growth of emerging markets is starting to decelerate. On the other hand, the
world continues to become more interconnected and globalized.

Tourism in India has seen exponential growth in the recent years. India is one of the most
preferred destinations for both overseas and domestic travellers. Tourism enables the
international traveller to understand and experience India's cultural diversity first hand.
According to official estimates the Indian tourism industry has outperformed the global
tourism industry in terms of growth in the volume of foreign tourists as well as in terms of
revenue.

The main reason for the growth in tourism in India is the tremendous progress made by the
Indian economy. Though it must be said that infrastructure is still a constraint. To sustain
the current growth the government should invest in infrastructure like transport,
accommodation, better roads, health and hygiene etc. To propel growth the industry has
invested in new technology like CRM tools and state of the art security systems.

In this rеpоrt an analysis is pеrfоrmеd оn Travel and Tourism Industry taking intо accоunt оf
variоus tооls and stratеgiеs, by dоing this I was ablе tо gеt thе insights abоut this industry
and camе tо knоw what factоrs affеct thе grоwth in this sеctоrs and hоw thе big playеrs arе
maintaining thеir lеgacy frоm a lоng timе.

3
 EXECUTIVE SUMMERY
The travel agency market is competitive, and technology, namely the Internet and
Computerized Reservation Systems (CRS), has changed the way travel agencies operate. The
Internet gives agencies and individuals the ability to perform travel related research.
Discount airfare broker shave taken advantage of the Internet by offering tickets online at
discounted rates. This has increased price competition. Computerized Reservation Systems
have increased the speed and efficiency of the agency-to-customer transaction. They have
also increased the start-up costs for travel agencies who wish to be competitive. One
notable trend in the travel industry is increased deregulation. Deregulation has increased
the need for differentiation and has, in many cases, lowered the prices of airfare and other
travel-related services. Additional trends include caps on agency commissions by many of
the larger airlines, increases in adventure travel, and reduction of profit margins.
Travel distribution, powered by advances in technology and the growth of e-commerce, is
changing in ways that none of the interested parties — legislators, regulators, travel
industry participants and consumers — can possibly predict with accuracy. That fact of
business life lies at the heart of the Commission's approach to its task, and has guided its
hearings, deliberations and conclusions.
The tourism industry has undergone rapid growth of unsurpassed nature over the last
several decades. This has mainly been due to the advent of a ‘borderless’ world and
increased information dissemination about the majestic sceneries throughout the world.

4
 TABLE OF CONTENT

1. Introduction: ..................................................................................................6
2. Market Size and characteristics:.....................................................................7
3. Market Trends: ............................................................................................ 13
4. Market Structure: ........................................................................................ 16
5. Characteristics of competitors: .................................................................... 20
6. Behavioural Traits of competitors: ............................................................... 21
7. Effect of Demonetization on travel Sector in Indian Market: ....................... 23
8. Effect of GST on travel Sector in Indian Market: .......................................... 25
9. Metrics of Travel Industry: ........................................................................... 26
10. Key Insights: ............................................................................................... 34
Bibliography ..................................................................................................... 35

5
1. Introduction:

Travel and tourism sector has been evolving since ages and it kept growing with the growth
in the transportation industry. As routes to distant locations opened up with cutting down
travelling time, number of tourists increased and with governments stepped up efforts in
providing for tourists with the best facilities and a market where tourist would feel safe and
would invest and spend to help the local economy.

This is an industry which comprises of exchanging tourists within countries and provides
them with all necessary facilities. The industry as a whole consists of travel sites, tourist
spots, and world heritage sites, travel modes like air, road and sea, travel infrastructure to
reach those destinations, immigration, staying facilities, like hotels guesthouses, motels, etc.
and the security and safety of tourists. The role of government in supporting the travel and
tourism sector is inevitable because this helps the government to earn foreign income in the
form of travellers spends when they visit country.

In 2017, the travel & tourism industry make a real difference to lives of millions of people by
driving growth, creating jobs, reducing poverty and fostering development. Industry growth
outperforms that of global economy for the sixth consecutive year and showcasing the
industry’s resilience in the face of global geopolitical uncertainty and economic volatility.

India in recent years has gained good exponential growth in tourism industry. Today India is
preferred destination for both overseas and domestic travellers. The tourism in India has
outperformed the global tourism industry in accordance with growth, volume of foreign
tourist arrivals and revenue generated though infrastructure is a constraint it sustains
current growth and government should improve transport, accommodation, health and
hygiene as for the growth of the industry has invested in new technology like CRM tools and
state of art security systems.

The online travel section involves around 61 for each penny of the web based business
industry in India, including travel and e-Ticketing sites. Ticketing accounts for biggest share
of the online travel showcase, with residential air ticketing driving growth.

Make My trip is one of the online travel booking solution provider which was founded in
2000 by Deep Kalra. Make my trip offers airline tickets, hotel bookings, domestic and
foreign packaged tours, bus tickets, corporate travel services, visa assistance, foreign
exchange and travel insurance .

Tourism in India has significant potential considering the rich cultural and historical heritage,
variety in ecology, terrains and places of natural beauty spread across the country. Tourism
is also a potentially large employment generator besides being a significant source of foreign
exchange for the country.

6
2. Market Size and characteristics:
India is a tremendous Travel & Tourism economy and contribution of travel sector GDP is
growing. India has a huge potential to increase its international visitors and, in doing so, it
can create more jobs and drive economic growth. Indian government should focus on to
continue to adopt policies that encourage travellers, such as the new visa regime, enable
investment in vital infrastructure, and allow companies to do business. India is a beautiful
and diverse tourism destination, with the right policies in place it will no doubt continue to
grow towards ranking even higher in terms of its tourism economy.

The industry contributed US $7.6 trillion to the global economy i.e. 10.2 % of global
economy and generated 292 million jobs which is approximately 1 in 10 jobs on planet in
2016. International arrivals leap from 46 million in 2015 to 1.2 billion in 2016.

For every 30 new tourists to a destination one new job is created; and already today, the
travel and tourism industry has almost twice as many women employers as other sectors.
Accounting for 30% of world services exports, and the largest export category in many
developing countries, the industry is a tremendous employment generator. Yet research
suggests that the industry’s potential could be hindered and 14 million jobs could be at risk
if governments and the private sector do not address the talent shortage in the industry. If
properly managed, the T&T sector can continue to be a contributor to inclusive growth.

7
 Europe and Eurasia are the region with strongest overall travel and tourism
competitiveness performance with six economies in top ten, because of its cultural
richness and excellent tourism service infrastructure, perceived safety despite
declining security perceptions in western and southern Europe.

 America is major region which is playing important role with improved performance
at aggregate level, with united states (6th), Canada (9th), Mexico (22nd), and Brazil
(27th) all ranking in top 30. All the countries rely on rich natural resources and vast
differences across the regions. If North America enhances its price competitiveness,
Environmental sustainability and infrastructure; and if central and south American
nations continue improving their safety and security, develop environment for
business opportunities and infrastructure to enhance connectivity will contribute
more to world economy.

8
 Asia-Pacific has taken a leap in recent years wherein japan placed at 4 th and India is
at 40th position in travel and tourism competitive index with respect to other
countries. East Asia is the most ICT ready economies globally and relatively less price
competitive than other areas in region, while south-east Asian and south Asian
nations are more competitive destinations, Infrastructure and ICT readiness lags.
Asia Pacific region improving regional visa policies to enhance travel and tourism.

 Despite significant headwinds, the Middle East and North Africa, led by United Arab
Emirates (29th) has improved its competitive index of travel and tourism sector.
Better information and communication technology, Lower prices and partial
improvement in international openness and progress in nurturing cultural heritage
have created better conditions to develop travel sector. Still, Natural and cultural
resources remain mostly underexploited, international openness is still holding back
and security perceptions remains the biggest hurdle for middle east and north Africa
countries.

9
  Air connectivity and travel costs remain challenges as well as visa policies and
infrastructure.

Tourism is mainly driven by natural tourism, there is significant space for protecting, valuing
and communicating cultural richness.

India’s Travel & Tourism sector ranks 7th in the world in terms of its total contribution to the
country’s GDP, shows a new report by the World Travel & Tourism Council (WTTC).

According to the survey, Travel & Tourism generated INR 14.1 trillion (USD208.9 billion) in
2016, which is the world’s 7th largest in terms of absolute size, the sum is equivalent to
9.6% of India’s GDP. Additionally, the sector supported 40.3 million jobs in 2016, which
ranks India 2nd in the world in terms of total employment supported by Travel & Tourism.
The sector accounts for 9.3% of the country’s total jobs. India’s Travel & Tourism sector was

10
 also the fastest growing amongst the G20 countries, growing by 8.5% in 2016. A further
6.7% growth is forecast for 2017.

India’s strong Travel & Tourism figures are predominantly generated by domestic travel,
which accounts for 88% of the sector’s contribution to GDP in 2016. Visitor exports, money
spent by foreign travellers in India, only represents 12% of tourism revenues and in 2016
totalled INR1.5 trillion (USD22.8bn). This is 5.4% of the country’s total exports, compared to
a global average of 6.6%. Data from the UN World Tourism Organisation (UNWTO) report
shows that India received only 8.8 million international arrivals in 2016, placing it 40th in the
world, and a tenth of those received by top-ranking France.

However, there is a lot of potential for India to grow their visitor exports. Over the past few
months India has already starting to address this gap and made significant changes to visa
facilitation, which will help to boost international arrivals. WTTC data depicts that visitor
exports grew up by 5.4% in 2017.

 Tourism in India accounts for 9.6 per cent of the GDP and is the 3rd largest foreign exchange
revenue generator for the country

 The tourism and hospitality sector’s direct contribution to GDP in 2016, was US $ 71.53
billion

 During 2006–17, direct contribution of tourism and hospitality to GDP is expected to
register a CAGR of 14.05 per cent.

 The direct contribution of travel and tourism to GDP is expected to reach US$ 147.96

billion by 2027.
 In 2016, foreign tourist arrival in India stood at 8.8 million.

 By 2025, foreign tourist arrivals in India is expected to reach 15.3 million, according to
the World Tourism Organisation

11
 In December 2016, over 1,62,250 foreign tourists arrived on e-Tourist Visa, in comparison
with 103,617 foreign tourists in December 2015, registering a growth of 56.6 per cent over
the previous year.

 As of December 2016, 8.8 million tourists have visited India, mostly from UK, US and
Bangladesh. This has been due to flexible government policies, developed rail and road
infrastructure, ease in availability of e-visas to foreign tourists.

 The numbers of Foreign Tourist Arrivals (FTAs) in April 2017 were 7.40 lakh as compared to
FTAs of 5.99 lakh in April 2016 and 5.42 lakh in April, 2015.

 Domestic tourist visits to states or union territories grew up by 15.5 per cent to 1.65
billion in 2016 which is approximately 84.2 % to total number of DTVs.

 Foreign tourist arrivals increased by 18 % to reach 723000 in September 2017 also e-Tourist

visa in India increased 71% to 118000 in September 2017.
 India’s Foreign exchange earnings (FEEs) increased 16.1% to US $2.176 in august 2017.

Make My trip states that 59% flights are booked by mobile, 79% hotels are booked by
mobile, 74% bus tickets are booked through mobile application.
In 2017, make my trip claim of $2.2 billion total gross bookings. 18.4% growth in flight
bookings which was around 15.6 million in 2017. 10.9 million hotels booked by make my trip
in 2017 which is increased by 32.5%. 19.3 million bus tickets booked by make my trip.

12
3. Market Trends:
Infrastructure Development:

 More than half of the Ministry of Tourism’s Plan budget is channelized for funding the
development of destinations, circuits, mega projects as well as rural tourism infrastructure
projects.
Growing demand:
 Domestic expenditure on tourism is expected to rise due to the growing income of
households

 A number of niche offerings such as medical tourism and eco-tourism are expected to create
more demand

 Hospitality majors are entering into tie ups to penetrate deeper into the market, such as
Taj and Shangri-La entered into a strategic alliance to improve their reach and market share
by launching loyalty programme aimed at integrating rewarded customers of both hotels.

 International hotel brands are targeting India. e.g. Carlson group is aiming to increase the
number of its hotels in India to 170 by 2020.
Rising foreign direct investment:
 100 per cent FDI is allowed under the automatic route in tourism and hospitality, subject to
applicable regulations and laws

 100 per cent FDI allowed in tourism construction projects, including the development of
hotels, resorts and recreational facilities

 Tourism and hospitality will be having a cumulative FDI inflows of USD 12.7 billion in FY16
and FY17
Government initiatives:
1. Incredible India and Athithi Devo Bhava Campaigns: to harness the tourism
industry’s potential. Foreign tourist arrivals increased at a CAGR of 7.1 per cent
during 2005-25E to 15.3 million by the end of 2025. In 2013, the Ministry of Tourism
had welcomed the launch of a campaign ‘777 days of the Indian Himalayas’ as a step
to promote the Himalayan states as well as the gateway cities which are entry points
for domestic and international tourists

2. Swadesh Darshan: Based on specific themes, government had identified five circuits
which includes Krishna Circuit, Buddhist Circuit, Himalayan Circuit, North East Circuit
and Coastal Circuit. US $98.3 million has been allocated for Swadesh Darshan under
the Union Budget 2015 – 16.

3. Pilgrimage Rejuvenation and Spiritual Augmentation Drive (PRASAD): National

Mission on Pilgrimage Rejuvenation and Spiritual Augmentation was implemented
by the Ministry for enhancing the facilities provided and infrastructure at pilgrimage
centres of all cities. During the Union Budget 2015 – 16, an investment of USD16.4
million was allocated.

13
 4. National Tourism Policy 2015: Formulation of National Tourism Policy 2015 that
would encourage the citizens of India to explore their own country as well as
position the country as a ‘Must See’ destination for global travellers.

5. Tourism Projects: In FY15, USD1.13 million has been sanctioned to Kerala for
development of tourism in the state. In October 2015, Andhra Pradesh government
signed memorandum of Understandings for 8 tourism projects worth USD203.1
million. As per Budget 2016-17, the Ministry of Tourism has been allocated an
amount of USD229.15 million for the development of tourism sector in the country.
Under budget allotted for tourism industry, the government allocated USD15.25
million for development of “Umiam Lake-Ulum Sohpetbneng-Mawdiangdiang”
under North East Circuit of Swadesh Darshan Scheme, and USD11.53 million for
development of Buddhist sites of Madhya Pradesh (Mandsaur- Dhar- Sanchi- Satna-
Rewa).

There are different types of tourism:

1. Medical tourism
2. Adventure tourism
3. Rural tourism
4. Pilgrimage tourism
5. Eco-tourism
6. Luxury tourism
7. Heritage Tourism

14
 New trends in market using technology:
  MOBILE USER EXPERIENCE:
Over the next 4 years, another 1 billion people globally will be coming online in emerging
markets; for the vast majority of these people, a mobile device will be their only computing
device. A burgeoning population of mobile users, however, remains starkly in contrast to the
slow pace of mobile development that we see across travel companies at large.

  IMMERSIVE CONNECTIVITY:
New ways of interacting with computing also accelerate this trend. Progress in natural
language processing means we will use fewer keyboards; for the global traveller, being able
to converse, without stopping to type, will be transformational. Virtual reality (fully
immersive digital worlds) can deliver travel experiences independent of location. Augmented
reality (digital objects presented in the physical world) enables an entirely new layer of
interaction with one’s surroundings.

  MACHINE LEARNING:
Though travel, as an industry, is still playing catch-up in terms of mobile adoption, broader
technological shifts are already driving us all to consider machine learning. A Google recently
partnered with leading data analytics company SOASTA to use machine learning to
determine the biggest drivers of mobile bounce rate and conversion rate to understand
market trend.

15
4. Market Structure:
Make My trip is Affiliated with large number of tourism entities leading to easier bookings
and effective online booking portal.

STP of Make My Trip

Segmentation Internet users looking for travel booking

Targeting Travellers who use internet for online transactions

Positioning Positioned as a trusted online booking portal as well as travelling consultant

The Make My trip’s revenues totalled USD138 million in FY15 and reached USD169 million in
FY16. company’s revenues expanded at a CAGR of over 12.1 per cent in 2016.Make My Trip
Ltd. has agreed to acquire travel business of Ibibio Group India, at an estimated cost of USD
720 million.

Fig.Make my trip income statement stated in NASDAQ

16
Fig. Make My trip assets stated in Balance sheet by NASDAQ

Fig. Growth in online flight booking by Make My Trip

17
 Fig. Growth in online booking of hotels by make my trip

Fig. Growth in online booking of tours by make my trip

SWOT Analysis of Make My Trip

1.One of the earliest market entrants

2. Presence in the international business scenario
3. Secure and trusted channel for facilitating payments
4. Attractive brand name and convenient website navigation
5. It offers services like International and Domestic Air Tickets, Holiday
Packages and Hotels, Domestic Bus and Rail Tickets, Private Car and Taxi
Strengths Rentals, B2B and Affiliate Services

1.General Reluctance in customers to use internet for financial transactions

Weaknesses like booking tickets online

18
 1.Customers currently using traditional methods of bookings
2.Offer better travel packages in line with customer expectation
Opportunities 3.Untapped sections of international tourism market

1. Possible lack of co-ordination with tourism entities

2.Present competitors having substantial market share
Threats 3. Newly emerging online booking portals with better offerings

19
5. Characteristics of competitors:

Competitors of make my trip on E-commerce Platform:

1.Yatra
2.Clear trip
3.Travel guru
4.travelocity
5. Ixigo

Currently the three major Indian online travel agencies (OTA) in the market –
MakeMyTrip.com, Yatra.com and Cleartrip together hold 85 per cent of the online consumer
travel market, providing ample choices for the consumer. MakeMyTrip has already gone
public in 2010 while Yatra is expected to go for an IPO next year. Many new players like
Goibibo and Ezeego1, some of the legacy players such as ‘Akbar travels’ planning for growth
and disruptive new startups such as ‘Airbnb’ have also entered this space in the recent past.
The industry is struggling with undifferentiated offerings and in a bid to create unique
positioning in the minds of consumers, the leading players are focusing on providing
convenience and full spectrum services.

Global Country Category

Sr. No. Company
Rank Rank Rank
1 Make My Trip 1492 76 7
2 Clear Trip 3356 164 18
3 Yatra 6389 313 NA
4 Travelguru 120325 7096 954
5 Travelochacha 3867166 210455 36671
6 Ixigo 20427 1044 NA

20
6. Behavioural Traits of competitors:
Analysis of Clear Trip as it is major competitor of Make My Trip on E-commerce platform for
online ticket booking:

 In 2007 Yatra and Hughes, the global leader in providing broadband satellite
networks announced an alliance that allowed Yatra.com to offer its travel related
services to customers in Tier B and C cities through select HughesNet Fusion centers

in the country
 In 2009 Tata Sons, the holding company of the Tata Group firms, won a case at the
World Intellectual Property Organisation (WIPO) against MakeMyTrip, which had

been using the term 'tata' in one of its websites, 'oktatabyebye.com'.
 In 2010, Yatra tied up with ebay India to promote the products of Yatra.com across

eBay India
 In 2011, Cleartrip announced Strategic Investment and Alliance with Concur, one of
the leading travel expense software companies. Concur made an investment of $40
million in 2011 and then increased its stake to close to 25% in April 2014. 

21
  In 2012, MakeMyTrip acquired an effective majority equity interest in a group of
companies known as the International Tour Center, a well-established hotel
aggregator and tour operator for Thailand. The acquisition helped MakeMyTrip
further expand its presence in Thailand. MakeMyTrip also acquired HotelTravel.com

for $25 million
 In 2012, Yatra announced 100% stake acquisition in Travelguru & Buzzintown, both
providing travel and activity related content
 In 2014, Makemytrip acquires EasyToBook.com Group.

22
7. Effect of Demonetization on travel Sector in Indian Market:
On 8 November, 2016, Prime Minister Narendra Modi shocked the country by withdrawing
high denomination notes INR 500 and INR 1000 as legal tenders. The move was made with
intention to unearth the black money stashed by tax evaders, drugs, traffickers and other
illegal entities. New INR 500 and INR 2000 were introduced but move has caused much pain
to common man and a number of sectors in the country have been affected by the failure to
replace the old currencies inadequate measure. It seemed obvious the real estate and retail
business would be affected in the short term. The fall out of the demonetisation now looks
to have spilled over into the tourism business as well.

Demonetisation has shed its gloomy shadow on the booming tourism and hospitality
industry in India. The winter travel season has been stymied by the unexpected storm of
demonetisation in the month of November. People curtailed overseas travel and instead
explored various local tourist destinations. Getting money from banks and ATMs continued
to be a hassle with no respite in sight.

The travel and hospitality industries faced a tough time. Many foreign trips sponsored by big
brands largely done through cash transactions negatively affected tourism industry and
revenues due to the cash crunch. India’s hospitality industry has been severely affected as
the hotels lost a large number of pay-in-cash-only clientele due to demonetization. Around
60 % drop in hotel bookings has been reported.

The wealthy and luxury-driven travellers shifted their plans and in some cases cancelled
holidays completely. When the rich and exclusive clientele from Delhi and Mumbai shift
their birthday / anniversary extravaganzas to Goa instead of Prague or London, it was clear
that demonetisation trimmed expenditure budgets simply because of unavailability of
money. It has resulted in a drastic transformation that has veered ‘from International
tourism to Domestic tourism’.

The industry's corporate clientele though was hit; the leisure segment was hit the hardest.
Among the latter, the international leisure segment had been hit severely.

Impulse travelling too came to a sudden halt. Visiting places like Dubai and Singapore as
weekend trips got suspended. Business or work-related trips are something that cannot be
overlooked or avoided are being delayed and only the most unavoidable trip were taken up.

23
The accommodation section of hotels was much affected, but leisure segments like hotel
banquets and high-end restaurants were feeling the pinch as weddings were being called off
and many pre-bookings for different wedding ceremonies are also being cancelled. In
addition to this, high-end restaurants are too facing drastic change as people started
replacing fine-dining with pocket-friendly eateries.

The hospitality industry is the most dynamic industry, especially when it comes to pricing
and demand.

Tourist who usually looks to spend their vacation in Uttarakhand, Madhya Pradesh and
kerala decided to stay back at home instead of taking their annual break. Following travel
advisory issued by most countries following the demonetisation, international travel to India
has dropped by 45%. November through January months witness the maximum inflow of
international tourist to India. Cash crunch has adversely affected the liquidity of currency
exchanges in the country lead to such situation.

Airlines have seen as much as a 35% decline in average domestic fares in the three months
through January, as demonetisation took away their pricing power at a time when they were
also adding capacity.

Notably, the number of air passengers grew in double digits despite the note ban, by
22.45% and 23.91% in November and December because of the low fares, respectively.

24
8. Effect of GST on travel Sector in Indian Market:

The cost of travel for economy class passengers remained same. Economy class air travel
become cheaper with tax rate fixed at 5% against the existing 6%, under the upcoming
goods and services tax (GST) regime from 1 July. However, for those travelling business
classes, tickets will become dearer as the tax will go up from 9% to 12%.In the current
competitive scenario, the airlines are not expected to pass on increased tax burden to
passengers as it might affect their occupancy rates

The proposed slab is steeper than the current tax rates with items of mass consumption
such as food grains will be taxed at 5% as opposed to the current 6%, while processed food
will be charged at 12% as opposed to the current 15%

Detailed analysis of impact of GST on hotel business and restaurants:

1. Restaurants with a turnover of less than Rs 50 lakhs: tax rate of 5%.

2. Non-ac restaurants: 12% tax.
3. AC restaurants: 18% tax.
4. Five-star restaurants: luxury tax of 28%.
5. Hotels, lodges with tariffs less than Rs 1,000: 5% tax.
6. Hotels, lodges with tariffs between Rs 1,000- Rs 2,500: 12% tax.
7. Hotels, lodges with tariffs between Rs 2,500- Rs 5,000: 18% tax

The hospitality industry, like every other sector in the Indian economy, pays multiple taxes
(VAT, luxury tax, and service tax) in the existing indirect tax regime. A hotel where the room
tariff exceeds Rs 1,000 is liable for service tax at 15 per cent. An abatement of 40% is
allowed on the tariff value bringing the effective rate of service tax down to 9%. The Value
Added Tax (ranging between 12 percent to 14.5 percent) and luxury tax will still apply.

25
9. Metrics of Travel Industry:
In many parts of the world travel season is in full swing, which means that tourism boards,
ancillaries, and intermediary sectors are working around the clock to make sure their clients
are prepared to enjoy their dream vacations.

This sector of the travel industry has the exciting job of driving interest and destination
awareness. Destination Marketing Organizations (DMOs) not only inspire travellers to visit,
but also provide invaluable economic benefits to their respective areas.

Not surprisingly though, like most marketers, DMOs are under pressure to prove their
performance.

DMOs define their objectives around their top priorities: awareness and economic impact, if
they are a tourism board, and revenue if they are a paid attraction. Depending on which
objectives are most crucial to their business success.

Key Performance indicator:

9.1 Awareness
If the objective is to inform potential visitors by providing information and content, to
measure awareness through branded traffic and engagement.

Branded Traffic shows us how many of those who access our site are fully aware of our
brand. As they have entered directly by using our URL, or searched for accurate branded
keywords, they have clearly already been exposed to us. This may be a reflection of how
well our ads are reaching and being received by our prospects.

Engagement represents social media health by measuring how often and how well our
audience is engaging with our content through likes, shares, or comments. By measuring
engagement we can fine tune content and explore our audience demographic to make sure
our message is constructed with them in mind.

9.2 Economic Impact

Are your awareness efforts successfully driving visitors to visit and spend money? We can
measure this by monitoring economic impact a few different ways. If we create content such
as specialized itineraries we can monitor the downloads, by including additionals offers we
can also track the number of clicks. In this case a KPI like Itineraries/Deals Downloaded
would suffice.

26
9.3 Revenue
Both paid attractions and tourism boards need to monitor revenue in order to be able to
justify the success of their marketing campaigns. Average Night Stay is a good indicator of
revenue for tourism boards as they typically earn revenue from city taxes associated with
hotel night stays. Paid attractions might want to measure their performance in additional

Key performance Indicator :

Indicates the overall financial health and viability of your

Operating profit business
% increase in planned % increase in the planned sales in the previous period
sales shows the efficiency of travel consultants.
Shows the rate at which planned sales convert to actual
Actual sales step-up sales. This enabling you to address weaknesses in the sales
ratio cycles and improve results
Indicates whether your cost of doing business is rising and
% increase in travel highlights the rate of sales increase required to maintain
and entertainment operating profit.
Most travel agents need to keep the right balance of
Domestic to overseas domestic and overseas sales to ride out currency
booking ratio fluctuations and better distribute and manage risk.

Booking Ratio = [(number of bookings) / (number of bookings) + (lost opportunities)] to

monitor conversion rate and its success.

If Organisation know the majority of target audience is landing in an airport nearby, DMO
can use display ad placement or keywords to strategically reach out to audience based on
their arrival destination.

27
Online travel in India continues to dominate the country’s travel market. The industry is
expected to grow by 17.8% during 2013–2018E, outperforming the overall travel market by
6.0% points. Online penetration in travel and tourism bookings is estimated to increase from
41% in 2014 to 46% in 2017.

While air and rail make up the vast majority of India’s online travel market, the country’s
fragmented hotel landscape holds the greatest promise.
28
Several tailwinds are anticipated to bolster this growth —such as an increasing number of
budget hotels in Tier-1 and Tier-2 cities; the entry of new airlines, given the government’s
“Open skies Policy”; the government initiative to build 150 new airports by 2020; and India’s
love for travel. These factors could contribute to a robust, long-term growth outlook for
India’s travel market in the future.

The Indian travel and tourism industry, set to grow at 12% CAGR over the next three years,
is the second fastest growing market, following China, which is growing at 16%. In contrast,
while the US market is growing at 6%, the worldwide market is clocking just 4% over the
same time frame.

Strong surge in domestic tourism is driven by the following factors:

  Rapidly increasing purchasing power of the middle class

 the Internet and smartphones, coupled with increasing e-Commerce
Prolific use of
penetration
 
 Better air and rail connectivity between Tier-1 and Tier-2 cities
 
Evolving and improving lifestyles

An ever-increasing number of international travellers visit India as well, spurred on by:

 
 Relatively economical vacations
 
 Evolving business and pleasure destinations in India
 
 Reforms in the aviation sector boosting international air connectivity
 
Larger sections of the economy opening up to private and foreign investment

29
  
 Government initiatives in states such as Kerala, Rajasthan and Gujarat to promote tourism

 of international campaigns such as “Incredible India”, “Clean India”, and many
The success
more

Online travel (online gross bookings) now constitutes an estimated 41% of the overall Indian
travel market (2014). The high degree of convenience, increasing e-Commerce penetration,
rapidly increasing Internet and mobile penetration, and a growing middle-class population
are some of the factors boosting online travel bookings. The online travel market in India,
estimated at $9.1 bn (2014), comprised air travel ($5.1 bn), rail travel ($3.1 bn), hotels ($0.8
bn), and others ($0.1 bn). Online penetration in travel and tourism bookings is estimated to
increase from 41% in 2014 to 46% in 2017.

India is home to the third largest Internet user-base worldwide. However, its Internet
penetration rate at 17% is much lower than the average of 34% across several aspiring
countries. According to a report by Boston Consulting Group BCG, the number of Internet
users in India is estimated to reach 580 mn in 2018 from 205 mn in 2014, primarily led by
affordable access and improved awareness. This indicates significant potential for growth
over the next few years. Mobile Internet usage has been growing rapidly over the past few
years and continues to present huge opportunities.

30
Driven by the availability of cheap smartphones and affordable Internet data plans, the
number of mobile Internet users in India is expected to reach 213 mn by June 2015. With
41% of travel gross bookings taking place online, the increasing Internet and mobile Internet
penetration rates could play a vital role in the Indian online travel market growth story.
India’s middle-class population of nearly 50 mn, or 5% of the overall population (2015
estimated), is expected to grow steadily over the next decade to 200 mn by 2020 and 475
mn by 2030. With better means comes a growing awareness and demand for better work-
life balance in the private sector.

The increasing disposable income of a growing middleclass has led to more families and
individuals planning both domestic and international vacations, at least once a year.

The middle-class population grows, the volume of domestic tourists will also increase, thus
aiding the online travel and tourism industry in the country.

Growing Credit/Debit Card Penetration Boosts The Adoption Of Online Platforms

The number of credit cards in circulation in India has been stagnant since 2008, while the
number of debit cards continues to rise. Although the use of credit and debit cards has
increased over the past decade, card penetration rates remains low, with debit cards at 32%
(about 400 mn) and credit cards at 2% (about 20 mn). This clearly indicates that card use in
India has a long way to go.

The Government’s Conscious Efforts To Boost Tourism

Credit card penetration rate in India Debit card penetration rate in India

31
The Indian government has implemented several initiatives, at both central and state levels,
to stimulate growth in the Indian travel and tourism sector
• Visa on arrival – also called e-Visa facility – has been extended to 150 countries in a
phased manner
• The government has made efforts to increase the safety and security of tourists in India
• Recognizing the need to upgrade tourism infrastructure in India, it has proposed an outlay
of INR152 bn for the tourism sector
• The government allows 100% foreign investment under the automatic route to upgrade
hospitality and tourism related industries

Improving Online Penetration for hotels

Hotel supply in India remains upbeat. While the rapid increase in supply has affected
average daily room rates and occupancy figures, India’s tourism department has referred to
a shortage of around 150,000 rooms in the budget, economy, and mid-market segments.
However, according to STR Global, there are 50,000 rooms in the pipeline.

Moreover, a number of local and global brands – including Accor, Berggruen Hotels, Carlson
Rezi-dor, The Gateway, Ginger Hotels, InterContinental Hotels Group, Lemon Tree, and
Starwoods – are adding inventory in the economy and mid-scale categories in an effort to
attract a wider pool of domestic travellers.

32
However, the online hotel segment in India is rather under penetrated, with only 10% of
hotels accepting bookings online, while the overall user-base of people seeking information
on hotels online was very high. As per a TNS/Google survey, conversions still take place
offline. As more consumers become familiar with e-Commerce, the percentage of online
hotel bookings in India should increase.

33
10. Key Insights:

After doing thorough research on travel and tourism industry I got exposure to
understand following points:
1. OTA is playing major role in travel sector for the online bookings of the public
transport and hotel bookings. Growth for travel websites has been driven by
bookings moving from offline to online. The shift is largely complete, with internet
penetrations high in the richest economies, and 53% of all travel being booked
online.
2. DMO being user friendly will increase revenue for online travel agents. Price parity
agreements that prevent travel providers, such as hotels, from offering lower rates
on their own websites then the travel portals may be removed increasing
competition and weighing on profits.
3. Travel service providers such as hoteliers and airlines are encouraging customers to
book directly on their platforms to avoid paying fees and commissions to the OTAs.
4. Employment is increased because of the travel sector in India.
5. Global crises are weighing on the travel market, and present multiyear risks. Europe
is a major travel market, and has been hit by terrorism and the flood of migrants.
The structural economic problems in Europe have not been resolved. Travel is
sensitive to geopolitical and macroeconomic risks.
6. Earning through exports from international visitors and tourism goods will reach
around 50 USD approximately. In the larger economies, internet access has been
high for many years and conversion from offline to online has largely played itself
out. There is also increased pressure from smaller players who in the high end travel
market offering concierge-style booking of luxury travel. The increased competition
from travel services providers is also likely to harm the OTAs, since the providers are
absolutely necessary for the OTAs but the service providers have their own in-house
substitutes for the OTAs.
7. With increase in internet usage through smartphone will help to generate revenue
for OTA.
8. Make My trip will get listed for BSE/NSE as currently they are generating funds
through NASDAQ as currently stock price of MMYT is $32 and Priceline stock price is
$2301 to compete with Priceline and Expedia business MMYT will have to raise fund
for reinventing business model.

34
Bibliography

1. http://mitchellwilson.com.au/five-important-kpi%E2%80%99s-for-travel-agents-and-what-
they-help-you-measure.html
2. https://www.bcg.com/en-in/industries/transportation-travel-tourism/insights.aspx
3. http://www.visitsingapore.com/content/dam/MICE/Global/bulletin-board/travel-
rave-reports/Navigating-the-next-wave-of-Asias-Tourism.pdf
4. http://reports.weforum.org/travel-and-tourism-competitiveness-report-2015/preface/
5. http://www.tradechakra.com/indian-economy/service-sector/tourism-industry.html
6. https://www.nasdaq.com/symbol/mmyt/financials?query=balance-sheet
7. https://www.makemytrip.com/
8. http://www3.weforum.org/docs/TT15/WEF_Global_Travel&Tourism_Report_2015.pdf
9. https://www.weforum.org/reports/the-travel-tourism-competitiveness-report-2017
10. http://www.travelmarketreport.com/

35