PhoCusWright FYI

In India?s Hot Market, An Online Corporate Travel Industry Emerges

By Ram Badrinathan

India is clearly an emerging leisure online travel market, attracting millions in start-up funding, according to PhoCusWright's The Emerging Online Travel Marketplace in India report. But is there an online corporate travel market to speak of? The answer is yes? and no.

Currently, India lags behind other Asia Pacific (APAC) markets in online corporate travel adoption, namely Australia, China and Hong Kong/Singapore. Some of the challenges associated with online corporate travel adoption in India include low labor costs (the cost of a telephone transaction is less expensive than an online transaction in India) and high infrastructure costs. But its accelerated economic growth offers India the potential to surpass even China in corporate online bookings in the near term, according to PhoCusWright's Corporate Travel Distribution: Key Markets.

Unlike in China, where only 3% of Web-initiated travel transactions were fulfilled online, 95% of such transactions will be fulfilled online as the Indian market develops. Thus, travel will emerge as a true e-commerce play, due largely to the fact that online travel has few legacy systems to transition, and thus the move online should be smoother.

India is also APAC's most dynamic online travel market from a competitive standpoint. Across the travel distribution value chain there is intense market activity, with low-cost carriers (LCCs) and Indian Railways pushing the intermediaries and consumers toward electronic fulfillment.

At present, most managed corporate travel in India is comprised of air because of the structure of air transport in the country. The major cities/hubs in India are connected by air, and while there are other thriving business centers (e.g., Bangalore, Mumbai, Chennai, New Delhi, Hyderabad) connected by India's high-speed rail, they do not yet represent large corporate travel markets. But they will.

One of the drivers of growing corporate travel is the rapid growth of the IT and IT Enabled Services industries in this country. Leading IT companies, like Infosys, TCS and Wipro, each manage travel spend of more than $80 billion. The travel-intensive nature of the business is driving global travel management companies (TMCs), such as Carlson Wagonlit Travel, to invest in India. So just as with the leisure market, money is being invested in online corporate travel. As online booking tool adoption spreads through the expansion of e-ticketing, credit card usage, increased air capacity and other factors, watch this market grow.

PhoCusWright's The Emerging Online Travel Marketplace in India (including segment and channel breakouts, penetration by supplier segment, and online travel agency trends) and Corporate Travel Distribution: Key Markets (focusing on the online and offline distribution of corporate travel and the most salient trends that will impact its growth and composition in the U.S., European Union and Asia Pacific regions) are available for purchase at www.store.phocuswright.com. These reports are also available on The PhoCusWright Channel for subscribers.

Copyright 2006 PhoCusWright Inc., Sherman, CT USA +1 860 350-4084
All rights reserved.