Online travel aggregators (OTAs), who have been in the eye of the storm owing to the pandemic, have reported no business for almost a quarter. With the resumption of economic activity and easing of air travel restrictions, OTAs are trying to tap the pent-up demand for travel, with a focus on domestic offerings like ‘staycations’ and ‘workations’.
“People have been holed up for a long time; we have seen pent-up travel demand in the last six-eight weeks. However, keeping safety in view, consumers are increasingly opting to travel to nearby areas within driving distance,” says Sameer Wadhwa, partner, Deloitte India.
Flight booking volumes on platforms like MakeMyTrip and Goibibo are only 15-20% of pre-Covid times. Accommodation bookings, on the other hand, are below 10% for most players in the segment. OTAs get a major share of their business, about 85%, from flight and hotel bookings.
According to experts, the travel booking market in India — in which OTAs have a 40-45% share — had been growing at a CAGR of 10-12% for the past eight years, and was estimated to be worth $45-50 billion by 2021. Owing to the current downturn, they say, the industry would reach this estimated size only by 2023.
Changed itinerary
Most OTAs have reported an uptick in enquiries for localised and regional travel, as also for ‘workations’, which basically means stays for longer durations, from working professionals. “On MakeMyTrip, we recently launched an inventory of more than 4,000 short-term holidays covering over 700 destinations to help travellers choose from a variety of drivable options,” says Vipul Prakash, COO, MakeMyTrip. The company has seen a spike in staycation searches to destinations located within 300 km from metro cities, such as Himachal Pradesh, Uttarakhand, Rajasthan and Goa.
Booking.com has reported a similar trend. “Globally, our domestic accommodation bookings represented approximately 45% of the total global business, which increased to approximately 70% in April. We are seeing a similar trend in India,” says Ritu Mehrotra, country manager – India, Sri Lanka, and The Maldives, Booking.com.
The focus on domestic options apart, MakeMyTrip is offering e-pass assistance service for inter-city cab travel, while Goibibo has seen a 10% recovery in its cab vertical, compared to the pre-Covid period. To lure customers, these players are offering flexible booking and check-in policies, and discounts.
“Many of our accommodation partners are offering deals, but we have realised that customers are not travelling due to safety reasons. So, we have introduced a future travel voucher for our customers, using which they can lock in these great prices and travel within the next six to nine months,” says Sunil Suresh, CMO, Goibibo.
MakeMyTrip, too, has introduced a ‘Book Now, Pay Later’ option, which allows customers the flexibility to book a holiday for Rs 1,000 and make modifications to the travel plan 72 hours before the travel date, without any liability.
Long layover
The setback is severe, and industry watchers say recovery in the near term is a bleak prospect.
“The impact of COVID-19 has been immense on this sector and we do not see it recovering to pre-COVID-19 for years, if not months,” says Mehrotra of Booking.com.
OTAs, experts say, will emerge out of this crisis if they strategise by identifying the areas from where demand is being generated. “They will need to create the right packages and tailor their communication and marketing messages to capture this demand quickly,” says Wadhwa of Deloitte India.
There is also a need for these aggregators to work with their hotel partners and help them adapt to digital methods for efficiency, moving over traditional models of operating.
According to Ankur Pahwa, partner and national leader – e-commerce and consumer internet, EY India, these companies will have to create a good inventory of houses, villas, etc, to be able to offer a variety of experiences to consumers. “With social distancing being the norm, these companies will not be able to offer experiences like before. Hence, they need to figure out ways in which to bring a unique flavour to the accommodation and make it an experiential holiday,” he adds.
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