E-commerce firms are venturing into the online hotel bookings business to diversify revenue in India

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The online travel and hospitality industry recorded a strong rebound in 2022 after the slump caused by the global pandemic outbreak in 2020 and 2021. The pent-up travel demand in the sector has resulted in strong booking volume for online travel platforms in India. This has made the online travel and hospitality industry attractive for leading e-commerce firms. For instance,

• In September 2022, Flipkart, one of the leading players in the B2C e-commerce sector, announced that the firm is foraying into the online hotel booking business with the launch of a new feature, Flipkart Hotels. Termed as a budget-friendly service, Flipkart Hotels is backed by Cleartrip, the online travel aggregator which Flipkart acquired in 2021.
• Flipkart will deploy Cleartrip’s API, thereby allowing users to book rooms across 300,000 domestic and international hotels. With Cleartrip’s deep understanding of travel customers and sector, Flipkart is expected to benefit from the launch of Flipkart Hotels from the short to medium-term perspective. Notably, the pent-up travel demand and the upcoming festive and holiday season should also assist the firm in gaining traction for its hotel booking business.

Before entering the online hotel booking space, Flipkart also ventured into the online flight booking sector through the launch of the Flipkart Flights feature. Notably, Flipkart Flights have been on a steady path of growth ever since the firm entered the space, and with the launch of Flipkart Hotels, Flipkart is further strengthening its commitment to offer travelers a superior experience across India.

To make the Flipkart Hotels service more attractive to travelers in the country, the firm also aims to offer flexible payment options such as EMI payments. This strategy is similar to the one adopted by its competitors, such as Oyo, which offers Pay at Hotel option for its users in India.

In the online hotel bookings space, Flipkart Hotels is competing with domestic players such as MakeMyTrip, Oyo, Trivago, and Treebo, as well as with international firms like Airbnb, Booking.com, and Agoda. With new travel trends - like exploring lesser-known destinations, long stays, workations, and vacation rentals - becoming more mainstream, Flipkart intends to drive incremental revenue through the launch of Flipkart Hotels in India.

The presence of Flipkart in the space is expected to make the sector more competitive going forward. As a result of this increased competition, along with the expected surge in hotel booking volume in H2 2022, firms are also looking to add more rooms to their online hotel booking platforms. For instance,

• In September 2022, Oyo, one of the leading online hotel booking platforms, announced that the firm plans to add 600 new properties from South India to its platform by the end of 2022. Currently, the firm has 1,350 properties in states such as Karnataka, Andhra Pradesh, and Tami Nadu, among others.

Over the last two years, demand for luxury properties has also surged among Indians as travelers started to seek elite travel experiences during the global pandemic period. With the surge in booking volumes for super-luxury and premium hotels, online hotel booking platforms are also launching a collection of luxury properties to leverage the growing trend in India. For instance,

• MakeMyTrip, another leading player in the online travel and hotel booking sector, launched a thematic collection of nearly 300 luxury and premium properties onto its platform. Termed Luxe Selection, the properties are targeted toward travelers seeking elite travel experiences.
• Similar to Flipkart and Oyo, which offer flexible payment options to travelers, MakeMyTrip also launched travel now pay later payment option for its customers in India. Launched in May 2022, the payment option aims to drive more travelers to its platform.

While the growth potential of the online hotel booking sector remains high in India from the short to medium-term perspective, the entry of Flipkart into the space is projected to drive further competition in the market over the next three to four years. As a result, PayNXT360 expects more firms to adopt similar growth strategies, such as offering flexible payment options and adding more inventory to their collection from the short to medium-term perspective.

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