Expedia wants a larger pie in India's growing OTA market

American based online travel booking site, Expedia, is serious about India. Here are the company's strategic steps to expand operations in the region.

There are a lot of Indians. And they travel. The British left us with an amazingly complex and highly useful rail network, several years on, it has only improved. Unlike Amtrak in the US, trains in India are a lot cheaper than air travel. The railway services in India are decent and the connectivity has grown. (Indian Rail had ~$16B revenues compared to Amtrak's ~2.7B). Airline travel in India has been increasing despite the industry being in constant financial turmoil. Low-cost airlines brought a huge boom to India's air travel industry but as the economics stopped making sense to the airlines and the industry consolidated, air travel has been stressful. The bus travel industry has sustained itself with commerical hubs in satellite towns near major cities, much like Greyhound.

With Internet connectivity improving and as the convenience of booking tickets online catches on, Online Travel Agencies have a huge market in India. Though this market is limited by access to Internet, two different data points suggest the growing popularity of OTA:

  • IRCTC's monthly online transactions
  • Online air travel booking reports

According to stats from IRCTC, there were 10 Million successful transactions in June 2012 for IRCTC, 9.8M in May. A study from Vizisense in 2010 found that the OTA industry grew by 55%; according to Vizisense, Makemytrip, Cleartrip and Yatra were India's top three OTA portals. Dataswell had the same conclusion in November 2011 claiming Makemytrip, Cleartrip and Yatra had 64% of the OTA market amongst themselves. A Live Mint report puts the OTA industry at $2.1 Billion.

These are varying data points all hinting at one thing: India's traveling population is looking at online services to book their itinerary, and Expedia wants in. Despite being in the space since 2008, Expedia hasn't been able to make a mark. The company also had to rely on Cleartrip for low cost airline inventory. The company has been steadily taking steps to become a major player. The turnaround started showing results earlier this year with the company announcing:

Better product offerings are just part of Expedia's India plans. The other and probably more significant step in Expedia's India growth is their plan to setup an R&D facility in Gurgaon, India. (FWIW, it's a satellite town near Delhi.) Their largest R&D center in Asia, Expedia is looking at a headcount of 300. Expedia CTO Edmond Mesrobian spoke to Business Standard's Ruchika Chitravanshi and said,

It is a strategic investment which will help us grow our business in India. We are investing millions of dollars into this venture. We believe that to be a great global company, we have to be a great local company. For our technology centre in India, we will be hiring Indian talent, from senior leadership team to the engineers.

(Image courtesy: Expedia India blog)