Editor's Blog

Why the inexperienced traveller doesn’t trust online bookings
Sun 23 Jun, 2019 at 12:00 am

India’s travel spend is expected to grow 13 per cent to US$136 billion by 2021, a study by Google India has reported. Indians will spend an additional US$24 billion on online travel bookings over the next three years.

The Indian traveller has raised the bar, spending approximately US$94 billion in 2018, on around two billion domestic and international trips, helping the Indian travel and tourism industry achieve unprecedented levels of growth.

Elucidating the planning journey of Indian travellers, 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, research and experience, digital plays a pivotal role with over 86 percent of consumers being influenced by online channels. During this phase, travellers spend their maximum time on search, travel tour provider websites, price comparison websites and travel articles. Online video, too, plays a significant role with 21 per cent of travellers being influenced by this platform.

Vikas Agnihotri, country director of sales at Google India, said: “New users perceive that online channels are geared towards the more frequent flyers and experience-oriented travellers and existing travellers research online but the lack of trust in payments and booking experience make them end up booking offline.”

The report further identified the five cohorts of travellers in India, across business and leisure travel, and categorised each against their online research behaviour:

  • Frequent flyers: nearly 70 per cent of them book online; cumulatively spending US$17 billion in 2018. They make their choices based on convenience, availability, brand preference and past experiences.
  • Budget business travellers: 86 per cent of them researched online whereas only 60 per cent booked online, cumulatively spent US$ 20 billion in 2018. This cohort makes their decisions based on cost of travel, availability and consultation amongst their personal business network.
  • Experience-oriented traveller: around 70 per cent of their bookings were done online. They cumulatively spent US$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 travellers: 90 per cent researched online, 55 per cent booked online and cumulatively spent US$29 billion in 2018. They make 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 per cent booked online, spending US$6 billion in 2018. They maximise family convenience within a budget and believe online terms and conditions are restrictive.

Travellers perceive online channels geared towards premium cohorts (frequent flyer and experience-oriented traveller), while mass cohorts, with US$55 billion in expenditure, remain underpenetrated. There are about 160 million non-transacting active internet users in India with only five per cent of online travellers from Tier II or III cities.

Businesses need to pay heed and correct the path of penetration to the core market segment.  First, they need to 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 customisation to drive higher share in the segment. They also need to utilise consumer technology to penetrate mass segments and create new user access.  Moreover, they need to find innovative and frugal ways to package the experience to increase both adoption and retention.  Finally, they need to create a robust digital back end to adapt to customer needs across the purchase journey.

Travel and tourism’s spend in India has improved from 6.7 per cent of GDP in 2013 to 9.4 per cent in 2018. This growth, combined with a rapidly growing internet user base and adoption of online bookings, will lead to US$24 billion in incremental revenues through online channels by 2021. In order to benefit from this trend, businesses need to actively increase new user adoption and increase penetration in the existing user base across the purchase journey.

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