The Indian travel and tourism industry has achieved scale. Indian travellers went on approximately 2 billion domestic and international trips in 2018, spending nearly $94 billion on transportation, lodging and consumption during their travels. As Internet penetration increases throughout the country, more travellers will book online—nearly 35% by 2021. To take advantage of rising online spending, companies need to facilitate new user adoption and increase penetration among existing travellers across the purchasing phases: interest, researching, booking, experiencing and post-trip sharing.  

Online channels now influence customers’ decisions as much as offline channels. More than 86% of consumers with Internet access were influenced by online channels in the research-heavy pre-booking and experiencing phases. Provider websites, price-comparison sites and search engines are the dominant online channels. Although offline channels have similar influence in those research-heavy phases, our research shows that online channels prevail in the critical booking and sharing phases. Nearly 60% of customers book transport and lodging online, and more than half of consumers share feedback online.

Business travellers spent $37 billion in 2018, and leisure travellers spent $57 billion. We placed travellers into five cohorts:  

• Frequent flyers spent $17 billion on travel in 2018, and nearly 70% book their travel online. They make their choices based on convenience (timing, location), availability and brand preference, and past experience. They value a hassle-free post-booking experience.
• Budget business travellers spent $20 billion in 2018, with 86% researching online and 60% booking online. They base their decisions on cost, availability and consultation within their personal business network.
• Experience-oriented travellers spent $22 billion on travel in 2018, and about 70% book online. They research extensively online and offline for authentic experiences and convenient options. They are highly loyal to their preferred airline and hotel brands, and they actively share their travel experiences.
• Budget group travellers spent $29 billion in 2018, with 90% researching online and 55% booking online. Multiple decision makers are typically involved in the research and booking processes, and they make the final decision based on cost. They actively share travel experiences via word of mouth and online channels.
• Occasional travellers visiting friends and relatives spent $6 billion in 2018. Most of them research online, but only around 60% book online. They prioritise convenience for the family and work within a budget. They believe online terms and conditions are restrictive. 

To meet the expectations of all travellers, companies must overcome some customers’ perception that online channels are geared toward the frequent flyer and experience-oriented traveller—the premium traveller cohorts. Meanwhile, the mass cohorts are underpenetrated: Of the 160 million non-transacting active Internet users in India, less than 5% of online travellers are from Tier-2 or Tier-3 cities. There is also opportunity among existing users who tend to distrust online channels when it comes to payment and terms at the booking stage. Their online engagement drops after the research phase, as many still prefer to book offline.

Adapting to the needs of online consumers will take time. Businesses can shift their approach to the market in the following ways:

• Improve the booking and payment experience to alleviate consumer concerns and increase trust and adoption.
• Address customer perception issues by expanding customisation beyond premium travellers into the mass segment.
• Use consumer tech to penetrate mass segments, reach non-transactors by building an offline presence and provide access to new users.
• Find innovative and economical ways to package the experience, to increase both adoption and retention.
• Create a robust digital back end to respond to customer needs across the purchase journey.