Online hotel booking space hots up

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The $800-million online hotel booking space in India is getting filled up by a host of aggregators, catching the attention of not just the netizens who are on the move but also venture funds as more people board to the travel bandwagon seeking comforts within a budget.

In the process, these aggregators are also demanding certain standards from the hotels in their drop-down — complimentary breakfast, free wi-fi, spotless linen, air-conditioning, television with cable, hygenic rooms and bathrooms, safety and security.

According to a report by ratings agency ICRA, it is estimated that 8.4 million Indians are likely to book hotels online by 2016 up from 3.5 million in 2014. It also said the online hotel industry was expected to grow to $1.8 billion by 2016 from the current $0.8 billion.

A host of players have also cropped up seeing the potential growth — OYO Rooms, Vista Rooms, Zo Rooms, Treebo, Zip Rooms, RedDoorz and WudStay, to name a just few among a host of others that are mushrooming by the day.

According to a report by the global investment banking firm Jefferies, online budget hotel aggregators like SoftBank-funded OYO Rooms have also emerged as “a major disruptive force in the online hotel booking space in India.”

“Based on room-nights booked, OYO Rooms is already much ahead of online travel agencies (OTAs)like Makemytrip, though average transaction size is lower. With 20 percent of sales closing through OTAs, these could drive significant traffic to OTAs in the near-term but may capture the lower end of the market in the long run,” it said.

The OTAs are agents selling travel products and services like airlines, car rental, cruise lines, hotels, railways and vacation packages on behalf of suppliers.

The report also said, OYO Rooms leads the race having already raised over $126 million in funding from SoftBank, Sequoia Capital and Light speed Ventures amongst others and reported to have been valued at $400 million in the latest round.

“We have around 3,000 hotels and 30,000 rooms across 124 cities in India in our portfolio. We do half a million bookings per month,” Kavikrut, chief growth officer at OYO Rooms told IANS.

Asked what is the edge of booking through OYO Rooms over other direct online hotel bookings, Kavikrut said: “It is the predictability that we offer. Customers get what is promised to them.”

Ritesh Agarwal founded Oravel Stays in February 2012. In May 2013, Oravel transformed from a discovery marketplace to a managed marketplace for standardized hotels by launching OYO Rooms.

The ICRA report said, travellers are increasingly using the internet to research and book flight tickets and hotel accommodation, swapping traditional travel agents for OTAs.

“The deepening penetration of internet usage and smart phones in India has lead to increased booking of hotels through online portals and applications in recent times,” it added.

“We wanted to redefine the way hotel industry is perceived to be. We wanted to make things more predictable for the customers,” Ankita Sheth, co-founder (with two other) and head of partnerships, Vista Rooms told IANS.

Vista Rooms, is a new startup marking its entry as an online branded accommodation aggregator, targeting tier II and III cities of India. It has a network of around 480 properties in 55 plus cities.

The online startup has already raised an undisclosed amount of funding to expand its network of branded stays, bolster its technology and hire new talent.

The average prices of the hotels vary between Rs.1,500-2,000 per night, Sheth said, adding: “Hotels are our partners, we will help improvise better model.”

According to Jones Lang LaSalle Incorporated (JLL), a professional services and investment management company specializing in real estate, since aggregators do not make capital investments in land & building, but only provide a booking engine for by renting unused accommodation their model is comparatively easier to sustain.

“Aggregators are merely technology platforms that provide bookings to economy & budget accommodations while charging their booking fees,” Mandeep Lamba, managing director – hotels, JLL India told IANS.

“The differentiation is purely to attract different segments of travellers who are seeking alternate to hotel accommodation at a comparatively lower price point.”

Aparajita Gupta / IANS

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