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India Sees a Surge in Travelers Booking Services Online

Tickets constitute the vast majority of purchases

September 1, 2017

India’s digital travel market is booming. According to recent data from the Internet & Mobile Association of India (IAMAI) and Kantar IMRB, consumers spent INR952.0 billion ($14.85 billion) on online travel in 2016, a year-over-year increase of 25%. IAMAI and Kantar IMRB also noted that online travel sales accounted for 56% of all digital commerce in the country.

eMarketer’s estimate for digital travel sales in 2016 was somewhat higher at $16.93 billion, with projections sending that figure to $22.52 billion in 2017. (eMarketer counts both leisure and unmanaged business travel sales booked through the internet via any device.)

Those making online travel purchases in India are largely buying tickets. IAMAI and Kantar IMRB found that domestic airline tickets made up the largest share of digital travel purchases at 40%, followed by railway tickets (26%) and international airline tickets (20%). Consumers spent a much smaller figure on hotel bookings, which accounted for just 9% of digital travel sales.

Digital Travel Sales in India, by Category, Dec 2016 (billions of Indian rupees and % of total)

India’s digital travel sector has been drawing attention from foreign investors and travel companies looking to gain entry to the market., India’s leading online travel agent (OTA), raised $330 million in May 2017 via equity investment from China-based OTA Ctrip, MIH Internet (a subsidiary of South Africa-based internet firm Naspers) and other undisclosed investors.

MakeMyTrip started operations in 2000, and has partnered with more than 40,000 hotels and some 13,500 alternative accommodation sites to allow customers to book their stays online. It also lets travelers book or purchase airline and railway tickets, tour packages and car hires, among other services. The company operates other OTA brands in India, including and

However, MakeMyTrip has also been courting customers by enticing them with heavy discounts. According to a note from business management consultancy Nomura Research, MakeMyTrip’s marketing and sales expenses exceeded its net revenues in Q2 2017. Nomura Research said heavy customer acquisition costs and brand advertising would likely keep MakeMyTrip in the red until at least 2020.

At the same time, domestic entities like MakeMyTrip are facing increased competition from foreign online travel businesses looking to make their mark in India. US-based home-sharing service Airbnb announced in June 2017 that it had partnered with the tourism ministry of Maharashtra state to become its official alternative accommodation service. That came after Airbnb brokered similar agreements in both Gujarat state and Andhra Pradesh state.

Rahul Chadha


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