The travel industry in India is expanding in conjunction with its swiftly growing economy.
In 2023, the travel sector represented over $221 billion of India’s gross domestic product, indicating a nearly 10% increase from 2019, as per the World Travel and Tourism Council. The WTTC has projected that this contribution will rise to nearly $500 billion by 2034, provided there is adequate government backing.
Some analysts speculate its growth trajectory resembles China’s trend from over a decade ago — when numerous brands like Trip.com and Fliggy attained industry leadership.
“Examining the development of the Indian market regarding GDP per capita or online travel penetration [or] discretionary spending — a considerable amount reflects China’s position roughly 12 to 14 years back,” stated Aloke Bajpai, the managing director and group CEO of Ixigo, an online travel platform in India that launched its initial public offering last year.
With statistics showcasing India’s advancement, the nation is undoubtedly on the brink of a travel surge, with ongoing momentum anticipated as per the most recent forecast from Phocuswright.
Despite a lower income per capita since approximately half of India’s populace is under the age of 25, Phocuswright‘s research manager Coney Dongre remarked that people still aspire to travel.
“The Indian travel sector is poised for robust advancement in the next five years,” remarked Dongre. “The online travel sector is projected to surpass overall industry growth, significantly enhancing the market by offering various travel options to individuals who previously had limited opportunities.”
As the nation’s purchasing power increases, travel is becoming a “crucial component,” concerning lifestyle, she mentioned, predicting that travel providers across all sectors would benefit.
India’s growth compared to China’s
With India’s economy projected to keep advancing, Bajpai indicated that domestic and international travel expenditures could begin to increase disproportionately faster.
He noted that currently, the overall travel market is growing at approximately 9%, while online travel markets (including direct online and B2B2C online) are expanding at 12% or 13%, and the B2C online travel agency sector is growing at a rate nearing 18% year after year. Bajpai believes that the growth could speed up due to the increase in GDP and online penetration, mirroring what happened in China, he stated.
In China, companies began to expand rapidly, eventually becoming “titans” over a span of around a decade, he explained.
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Bajpai anticipates seeing similar growth for a select few companies in India as well.
“We’re still growing at a much faster rate than the overall online travel market, for a specific reason, correct?” he commented regarding Ixigo. “Because we are addressing challenges that Indian travelers encounter.”
Dongre mentioned she has encountered the India versus China discussion in various contexts.
“Should India follow China’s trajectory, we could witness millions of new travelers exploring both domestic and international locales,” Dongre stated.
However, not everyone concurs with the notion that India is on a path akin to China’s several years ago.
“This comparison was more frequently noted a few years prior than it is now, particularly concerning the digital landscape,” stated Rajesh Magow, co-founder and group CEO of India-based online travel agency MakeMyTrip. “The present reality of the digital arena and online travel is distinct.”
“India’s digital domain has advanced swiftly over the past decade, supported by a top-tier digital infrastructure, including unified payment interfaces, unique identification digits, 5G, and mobile connectivity.” He cited that “Today, internet users in India are nearly 900 million, fostering e-commerce growth in the nation.”
Additional distinctions also exist, according to Dongre, highlighting the current technology environment, a lower GDP in India, and India’s inclination towards a more open marketplace which invites international competitors as examples.
Regardless of whether India shares the same path as China did some years ago, travel brands in India can gather insights by examining the advancements of their Chinese counterparts.
“There’s no requirement to reinvent the wheel,” Dongre advised. “Instead, they could adapt these insights to fit the distinctive dynamics of the Indian market.”
The development of India’s travel sector
Amid rising average incomes and population growth, disposable income allocated for travel is expected to be substantial, Dongre noted.
“It’s an enormous opportunity, not only for domestic firms in India but also for external entities, as both the local market and outbound market are flourishing,” she remarked.
Magow stated the foundation for the travel sector’s expansion is robust, particularly as the population is increasingly investing more in experiences.
“India’s youthful demographic exhibits a strong preference for exploration, enhancing both domestic and international travel,” Magow articulated. “While internet access is extensive, with over 900 million users connected, e-commerce, particularly in travel, is advancing swiftly, yet the gap between these two metrics remains significant, indicating considerable growth potential for online platforms.”
While India’s young, connected populace is propelling the travel sector, various factors have also influenced its growth.
Dongre first highlighted technology, mentioning the period 10 to 15 years ago when smartphone usage surged in India. Bajpai concurred that the adoption of technology occurred exceedingly rapidly.
Dongre characterized a “leapfrog” moment that took place when India’s population quickly adapted to mobile technology due to limited access to laptops and computers.
“That was when everything began to evolve… e-commerce expanded… gaining significant traction,” she explained.
At that moment, online travel gained popularity and new categories and players entered the market.
Following that, Dongre remarked that the affordability of internet access in India has played a role in this expansion.to that digital travel expansion, as has the introduction of convenient online payment mechanisms such as Unified Payments Interface (UPI), an element both Magesh and Bajpai indicated as well.
Moreover, India’s enhanced infrastructure has simplified the process for individuals to travel physically.
“The country’s infrastructure has seen substantial enhancements,” Dongre remarked. “Over the past 10 to 12 years, the quantity of airports has increased significantly, which is quite remarkable, you know. I mean, we had around 70 to 75 airports since independence over a span of 70 years. But in just 10 years, that figure has doubled. The government is aiming to establish many more airports.”
Dongre noted that the highway infrastructure has experienced astounding advancements with India constructing extensive stretches of highways. Railways and tourist destinations have also prioritized infrastructure development, she mentioned. Additionally, there are projects where smart cities are being developed, she stated. Furthermore, the government is concentrating on revitalizing places suitable for tourism, such as temples.
A rising population, increased discretionary spending, and a desire to travel contribute to a promising outlook for the travel sector within India.
“On the domestic front, travel is thriving, supported by state-level tourism initiatives and an expanding appreciation for discovering India’s rich cultural tapestry,” Magow commented. “On an international scale, outbound travel has exceeded pre-pandemic figures, again fueled by a strong inclination towards experiential travel and a growing list of visa-free or e-visa locations for Indian passport holders.”
With all that in mind, Magow highlighted that inbound travel is “on the mend” but presents significant potential in the long run, particularly as India strives to bolster its standing as a travel destination.