The Indian tour and travel industry has more than come of age, with consumers having spent approximately $94 billion in 2018, on around 2 billion domestic and international trips, helping the industry in India achieve unprecedented scale. The momentum is expected to continue and the industry will grow at a 13 per cent (compound annual growth rate) to $136 billion by 2021,
The economy of India, along with the volume of trips—both international and domestic—taken by Indians has more than reached developed levels, and it is time, a new report by Bain and Company and Google India declares, for travel businesses to adapt to the challenges of an economic activity that is expecting such exponential growth.
Released last week, the report, “How Does India Travel,” outlines how Indians spend their money for travel, the influence of online channels in their purchase journey and potential growth opportunities for travel businesses till 2021.
The report frames the report’s discussion by identifying the five “cohorts” of travelers in India, across business and leisure travel, and categorized each against their online research behavior. There are:
- Frequent flyers:Nearly 70 per cent of them booked online cumulatively spent $17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.
- Budget business traveler:86 per cent of them researched online whereas only 60 percent book online, cumulatively spent $20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.
- Experience-oriented traveler:Around 70 per cent of their bookings were done online. And cumulatively spent $22 billion in 2018. They extensively research both online and offline for ‘authentic’ experiences and convenience of options; display high loyalty towards preferred brand of airlines or hotels and actively share experiences.
- Budget group traveler:90 per cent researched online and 55 per cent booked online, cumulatively spent $29 billion in 2018. There are multiple decision-makers in the process and take the final decisions based on minimal cost.
- Occasional travel visiting friends/relatives:92 per cent researched online but only 60 percent booked online, spent $6 billion in 2018. They maximize family convenience within a budget and believe online terms and conditions are restrictive.
A Problem of Trust and Stepping Back at the Point of Purchase: In explaining the planning journey of Indian travelers, both for business and leisure, the report calls out five phases of a customer journey – Interest, Research, Booking, Experience and Sharing. The report states that
—During key research-heavy phase of interest digital plays a pivotal role with over 86 per cent of consumers being influenced by online channels. During this phase, travelers spend their maximum time on searching for travel tour provider websites, price comparison websites, and travel articles. Online video too plays a significant role with 21 per cent of travelers being influenced by this platform.
—In the booking and sharing phase, the report states that nearly 60 per cent of customers’ book transport and lodging online, and over 50 per cent share feedback online with social media being the dominant platform.
However, according to Arpan Sheth, partner Bain & Company, “There is a perception amongst consumers that online channels are geared towards premium customers, along with a marked distrust around payment and pricing terms. It is imperative for businesses to address these concerns in order to effectively tap into the growing base of users.”
Seeming to reinforce the point, Vikas Agnihotri, country director – sales, Google India said, “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travelers; and existing travelers research online but the lack of trust in payments and booking experience make them end up booking offline.” If travel players tap these online users through personalized marketing, messaging and travel plans, they can further augment online travel bookings. This can be done by adopting digital technologies to influence customers early in the journey and moving from one-time engagement to ongoing relationships to have a positive impact.”
So, travel marketers face a challenge of penetrating existing users who exhibit a marked distrust in use of online channels to make bookings, especially around payment and pricing terms and booking experience compared with offline channels. Consequently, their online usage drops between the research (86 per cent online influence) and booking phases (40 per cent offline bookings).
The Google/Bain and Company report cites the following major shifts that marketers need to make to market to the online travelers:
—First, alleviate consumer concerns by improving the booking and payment experience to build a trusted brand and increase adoption.
—Second, they need to address the negative customer perception issues by mass customization to drive higher share in the segment.
—They also need to utilize consumer technology to penetrate mass segments (standardize, enable sharing), reach non-transactors (build offline presence), and create new user access.
—Moreover, they need to find innovative and frugal ways to package the experience to increase both adoption and retention.
A note on methodology: The How Does India Travel report was commissioned by Google India. Bain and Company conducted the overall research and analysis, interviewed industry experts for qualitative inputs and authored the report. The quantitative survey and primary interviews with customers and offline travel agents were conducted by Kantar IMRB.