Ixigo Targets Budget Hotels as a Top-Two Business Within Five Years

Ixigo, India's leading train-ticketing OTA, is betting on budget hotels as its next big category, a move aimed at independent properties with low online penetration.

Co-founder and group co-CEO Aloke Bajpai said on the second-quarter earnings call that hotels could be "if not the largest, maybe the second largest" category by gross transaction value within four to five years. Hotels are currently 2.1% of GTV. "There is no choice, we have to grow."

The target segment

Ixigo is targeting rooms under INR 2,000 ($21), roughly 60% of Indian hotel room nights, many at independents. More than 86% of hotel bookings in the quarter came from existing platform users. It works with more than 12,000 properties in about 1,100 towns, up from 10,000 last quarter. Hotel spending was about INR 110 million ($1.2 million), mostly on people and technology, and Bajpai expects the investment phase to last two to three years.

Quarterly results

GTV rose 22% to INR 53 billion ($559 million), revenue grew 13% to INR 3.2 billion ($34 million), and profit after tax hit a record INR 634 million ($6.7 million). Ixigo holds about 64% of the online rail market, though trains fell from more than half of GTV to the low 40s. Domestic flight volume shrank as fares rose around 30% on several routes.