MUMBAI: India’s domestic travel market will expand annually at 11% for half a decade, reaching the size of $48 billion by 2020, estimates a joint research report by Google and Boston Consulting Group.
“Air travel is expected to grow at 15% to $30 billion. Hotels will grow at 13% to $13 billion by 2020, while the railways will remain largely stagnant at $5 billion,” said the report, reports The Economic Times.
Customized local transport around tourism circuits is not included in these estimates.
Rising personal income levels, a growing economy, cheaper air tickets and deeper internet penetration have made the average Indian a more avid, prudent and adventurous traveler. India is one of the fastest growing aviation markets in the world, and the government is looking at promoting regional air connectivity with cheaper fares.
“The Indian consumer is rapidly going digital. Led by the prevalence of mobile internet, the country’s internet user base is projected to expand from 332 million users in 2016 to over 650 million users in 2020. By 2020, nearly half of all Indian urban consumers will be digitally influenced, i.e. use internet in their purchase process irrespective of whether they actually buy or not,” said the report.
And the shift will be the most significant among women and in tier II, tier III cities.
By 2020, the number of internet users will more than double, said the report. The profiles of internet users will undergo a fundamental shift. There will be a two and half times increase in women users of the internet. The number of middle aged and slightly older users will increase by 2.5 times. Tier 2 / 3 / 4 cities will comprise almost 80% of the internet user base by 2020.
As consumers shift toward higher income segments, annual average leisure hotel spend per household is expected to increase by 7% to $18 by 2020, said the report, compared to $13 in 2015.
Also, the number of foreign tourists visiting India is expected to increase significantly over the next 5 years, at over 7% to reach over 11 million by 2020. Relaxed policies on visa on arrival and increasing connectivity are factors that are expected to drive this increase in foreign tourist inflow.
Hotel spend by foreign tourists is consequently expected to grow by 13%, reaching $3.4 billion.
The hospitality space is expected to continue to accelerate from $7 billion worth of gross bookings in 2015 to $13 billion in 2020.