India’s $23 Billion Travel Shake-Up: Why Hotels Hold All the Cards

India’s online travel market, now valued at $23 billion, is undergoing its most significant transformation since digitalisation began. The sector has moved decisively beyond the growth-at-all-costs era into a phase where unit economics, not gross bookings, determine winners.

MakeMyTrip posted $44.9 million adjusted net profit in Q3 FY25 whilst EaseMyTrip’s bootstrapped model delivered 33% EBITDA margins—figures that would have seemed impossible five years ago. The critical question for hotel and travel professionals: which strategies are genuinely sustainable, and which represent temporary arbitrage?

This analysis examines six structural shifts reshaping Indian travel: the battle for profitability, B2B distribution dynamics, spiritual tourism’s emergence as a growth engine, fintech integration, regulatory headwinds, and the super app race. The findings suggest hotels operating in spiritual destinations face immediate supply-demand mismatches, whilst those dependent on outbound luxury segments face Tax Collected at Source (TCS) -driven headwinds.

The fundamental economics of Indian travel distribution have become stark. Hotels deliver 15-20% take rates versus just 2-6% for flights—a threefold difference that explains virtually every strategic decision major OTAs are making. MakeMyTrip’s hotels and packages segment generated $147 million revenue in Q3 FY25 with adjusted margins of 17.9%, whilst air ticketing contributed $61 million at just 6.1% margins.

This disparity shapes capital allocation across the industry. TBO Tek’s investor presentations reveal that hotels and ancillaries represent 64% of gross transaction value but contribute 87% of gross profit. The implied take rate differential is substantial: 7.59% for hotels versus 2.57% for air. For hotel operators, this means OTAs have powerful incentives to drive room nights—but commission negotiations will face resistance given how central hotel margins are to OTA profitability.

EaseMyTrip’s “no convenience fee” model warrants particular scrutiny. The company claims zero transaction fees on flights using promotional codes, compensating through airline commissions and volume incentives. The strategy delivered a 92-93% repeat transaction rate and consistent profitability for 13 years. However, Q1 FY26 saw profits collapse 98.7% to just ₹0.44 crore (approximately $48,895 USD) as diversification costs mounted. The model works when operating expenses remain disciplined; it breaks when capital is deployed into asset-heavy ventures.

Customer acquisition costs tell an encouraging story for incumbents. MakeMyTrip maintains marketing plus customer inducement costs at below 5% of gross bookings, with 77.6% of traffic arriving through unpaid channels (45% organic search, 32% direct). This organic foundation creates a structural advantage that newer entrants struggle to replicate.

TBO Tek’s post-IPO disclosures reveal the mechanics of B2B travel distribution with unusual clarity. The platform serves 185,000+ registered travel agents across 100+ countries, with 45,000 transacting annually. More striking is the retention data: of agents onboarded in FY2017, 32.6% still transacted in FY2024, with gross transaction value per retained buyer growing 6.63 times over seven years.

This stickiness stems from deliberate platform design. TBO Academy offers 710+ free courses educating agents on destinations and trends—creating skill investment that raises switching costs. The TBO+ rewards programme, multi-currency support across 55+ currencies and 11 languages, and dedicated key account managers compound these effects. For travel agents evaluating platforms, these features matter more than marginal commission differences.

Credit risk management remains the sector’s quiet vulnerability. TBO operates on weekly credit cycles with six-day payment deadlines, requiring bank guarantees or deposits for credit line eligibility. Screener data flags 853 days of debtors—suggesting stretched collections despite improved gearing ratios of 0.23x. TravClan, the primary Indian competitor, remains subscale at roughly 40 times smaller than TBO by transaction volume, limiting competitive pressure that might otherwise compress margins.

The geographic revenue shift deserves attention from hoteliers. International inventory now contributes 54.1% of TBO’s gross transaction value, reversing a mix that was 80%+ India just four years ago. Air ticketing remains 85% concentrated in India (lower margin, competitive), whilst international hotels drive the margin expansion. TBO’s $125 million acquisition of Classic Vacations in October 2025 reflects this strategy—adding 10,000 US luxury travel advisors and $111 million revenue at 10%+ EBITDA margins.

The numbers from religious destinations defy typical travel industry growth rates. Ayodhya recorded 135.5 million visitors in 2024 following the Ram Mandir inauguration. Varanasi saw 110 million tourists in 2024, up 18.7% year-on-year. Mahakumbh 2025 attracted 660 million attendees across 45 days—a congregation unprecedented in human history.

For OTAs, these flows translate directly to booking surges. MakeMyTrip reported 4x booking increases for Ayodhya year-on-year, with Ixigo seeing 14x increases in flight and bus searches for Prayagraj during Mahakumbh. OYO documented 350% increases in Ayodhya searches, surpassing even Goa’s seasonal demand.

The inventory challenge facing these destinations is acute. Varanasi currently has fewer than 15 branded hotels, with 95%+ of accommodation remaining unbranded guesthouses. The supply-demand mismatch pushed Ayodhya hotel prices to ₹70,000 per night (~90 INR to 1 USD) during peak periods. OYO has announced 500 hotels across major religious centres for 2025, including 150+ in Ayodhya alone, partnering directly with state tourism authorities.

Booking behaviour in spiritual travel differs materially from leisure patterns. MakeMyTrip data shows 52% of pilgrimage bookings are dedicated pilgrimage-only packages, whilst 63% of bookings occur within six days of departure. Single-night stays dominate at 53% (versus 45% for leisure), and group travel represents 47% of trips. These patterns require different inventory management approaches—shorter booking windows, higher turnover expectations, and group-friendly configurations.

The margin opportunity in spiritual packages is substantial. MakeMyTrip reports spiritual destinations represent 4% of listed cities but 12% of transactions, with the spiritual category growing 35% in just over a year. Premium room bookings above ₹10,000 per night are growing at 23-24%, suggesting premiumisation even within pilgrimage travel.

Ixigo’s positioning as the “next billion users” platform reflects a calculated bet on smaller cities. The data supports this focus: 94% of Ixigo transactions involve non-Tier 1 city origins or destinations, with 60% of traffic and 50% of transactions from Tier 2/3 markets specifically.

The vernacular strategy underpinning this reach includes apps in eight regional languages (Hindi, Marathi, Gujarati, Bengali, Telugu, Tamil, Kannada, English), with voice-based features across platforms. Their AI-driven travel assistant, TARA, won Phocuswright’s People’s Choice Award for its multilingual voice capabilities.

Smaller city growth rates will define the next decade of Indian aviation. FICCI projects Tier 3 airport passenger traffic to grow 354% through 2033—the highest growth rate among all airport categories. The UDAN scheme has expanded operational airports from 74 in 2014 to 157 in 2024, with 120 new destinations announced in Budget 2025-26 targeting 4 crore passengers over ten years.

For hotel operators, this means preparing properties in secondary markets for first-time travellers who may graduate from rail to air. Ixigo’s journey proves the model works: flight revenues more than doubled to ₹103 crore (approximately 11.45 million USD) in recent quarters as rail-first users converted to higher-margin segments. All three of Ixigo’s verticals—trains, buses, and flights—have now turned profitable.

Buy Now Pay Later has become a meaningful conversion driver. MakeMyTrip reported 60% quarter-on-quarter growth in BNPL transactions, with 75% of BNPL users selecting no-cost EMIs (repaid within three months). The arrangement favours OTAs: default risk sits entirely with BNPL providers, whilst merchants receive full payment upfront. This risk transfer costs merchants 4-7% per transaction versus 2% for credit cards—a premium most OTAs appear willing to pay for conversion improvement.

The BNPL sector faces its own challenges. ZestMoney, Goldman Sachs-backed and a partner for multiple OTAs, is shutting down in 2024 due to high defaults and operational inefficiencies. The India BNPL market nonetheless projects growth from $22.75 billion (FY2024) to $96.27 billion by FY2032.

Co-branded credit cards represent the deeper loyalty play. The MakeMyTrip ICICI Bank card launched in October 2024 offers 6% myCash on hotel bookings and 3% on flights, with rewards redeemable only on MakeMyTrip—creating genuine ecosystem lock-in. The 0.99% forex markup (industry-leading) and complimentary MMT Black Gold membership add tangible value. Notably, the Yatra SBI Card was discontinued in March 2025, suggesting not all co-brand partnerships deliver sustainable economics.

Corporate travel represents the highest-value segment. Yatra serves 1,300+ large corporate clients and 58,000 SMEs, claiming India’s largest corporate travel services provider position. Their Q3 FY25 saw 50 new corporate accounts with ₹2,804 million (approximately $31.16 million USD) billing potential—record performance. MakeMyTrip’s MyBiz platform now serves 55,000-59,000 organisations, having captured significant SME market share within just four years of launch. The India corporate travel market projects growth from $10.6 billion (2024) to $20 billion by 2030

Tax Collected at Source (TCS) on overseas travel creates friction for outbound packages. Current rates impose 5% TCS up to ₹10 lakh and 20% above for tour packages. A ₹12 lakh European family holiday now carries ₹90,000 TCS—refundable at tax filing but creating upfront liquidity burdens. Budget 2025 raised thresholds from ₹7 lakh to ₹10 lakh, providing relief for moderate spenders.

OTAs are responding with structural changes: unbundling packages so customers book flights, hotels, and activities separately (individual bookings avoid package TCS), marketing packages below threshold amounts, and highlighting that international credit card spending overseas remains exempt. CRISIL analysis suggests 80%+ of tour packages fall below the threshold—but high-ticket luxury destinations bear concentrated impact.

Airline collapse exposure remains elevated following Go First’s May 2023 insolvency. SpiceJet’s financial position warrants monitoring: fleet reduced from 74 aircraft (2019) to roughly 20 operational, market share collapsed from 17.4% to 3.2%, with multiple insolvency petitions totalling hundreds of crores in unpaid dues. DGCA placed SpiceJet under “enhanced surveillance” in August 2024. No formal escrow arrangements exist for airline advance bookings in India—a gap that leaves both OTAs and consumers exposed during insolvency proceedings.

Commission cap risk receives explicit mention in MakeMyTrip’s SEC filings: airlines have “reduced the base commissions paid to travel agencies” over recent years. The Competition Commission’s October 2022 sanctions against MakeMyTrip-Goibibo for excessive hotel commissions (22-40% from standalone properties) establishes regulatory precedent that could extend to airline relationships

Cross-selling hotels to flight customers—the industry’s “holy grail” metric—shows encouraging progress for leaders. MakeMyTrip sold 15.1 million flight segments alongside 8.5 million packaged hotel room nights and 7 million standalone hotel room nights in Q2 FY25. The revenue split tells the story: hotels and packages generate 57% of revenue despite air accounting for over half of gross bookings—demonstrating successful monetisation of attached bookings.

Homestays have emerged as the fastest-growing accommodation category. MakeMyTrip expanded to 100,000+ rooms across 20,000-25,000 properties, adding 49,000 rooms in Q2 FY25 alone (35% year-on-year growth). Homestays now represent 10% of hotel room nights sold on the platform. Commission rates of 18-20% (versus 12-14% for traditional hotels) make this strategically attractive. Airbnb India maintains 54,000+ listings across 100 cities with 70% growth—suggesting the category has room for multiple winners.

Player strategies have diverged meaningfully. MakeMyTrip pursues category dominance across flights, hotels, and ground transport with 54-55% overall market share and $8 billion gross bookings. EaseMyTrip’s diversification into e-bus manufacturing (₹200 crore investment), medical tourism, and hospitality ownership represents a departure from asset-light principles that built initial profitability—an approach that investors are questioning given recent profit compression.

Ixigo’s “ground-first” strategy offers an alternative path: dominant positions in rail (51-53% OTA market share) and bus (11.5%) provide entry points to lower-income, smaller-city users who graduate to flights over time. Their IPO delivered 112% listing gains and strong subsequent performance, validating investor confidence in the conversion thesis.

Cleartrip’s integration into Flipkart’s ecosystem creates unique advantages: 1.5 billion SuperCoins issued monthly across the platform, with cross-redemption between shopping and travel driving 74% increase in SuperCoin redemptions year-on-year. Access to 400 million+ Flipkart users provides distribution that standalone OTAs cannot replicate.

The data points toward several actionable conclusions. Hotels in spiritual destinations face immediate supply-demand gaps that will persist for years—properties positioned in Ayodhya, Varanasi, Prayagraj, and circuit destinations warrant development attention. OTA commission negotiations should recognise that hotels represent the majority of platform profitability, providing leverage that properties may underestimate.

Inventory digitisation remains incomplete. OYO’s accelerator programme running 1,000 hotels under first-generation hoteliers suggests unbranded properties can access professional distribution—a pathway independent operators should evaluate. Properties in Tier 2/3 markets should prioritise visibility on rail-dominant platforms like Ixigo, whose users demonstrate conversion behaviour toward higher-margin travel.

The fintech layer matters for conversion. BNPL availability demonstrably increases average order values; hotels benefit from ensuring OTA partners offer these options. Corporate travel platforms—MyBiz, Yatra—represent high-value, repeat-booking channels that properties should actively pursue.

Regulatory positioning requires attention. TCS impacts on luxury outbound travel suggest domestic positioning may offer relative advantage. Airline exposure diversification—avoiding over-reliance on financially stressed carriers—protects against Go First-style disruptions.

The market structure suggests continued consolidation around three to four major players plus niche specialists. For properties seeking distribution, relationships with MakeMyTrip (market leader), Ixigo (Tier 2/3 dominance), Yatra (corporate), and Cleartrip (Flipkart ecosystem) cover the material booking sources. TBO Tek serves the B2B channel reaching 185,000+ agents—a distribution pathway that complements direct OTA relationships.

India’s travel market has matured beyond hypergrowth into sustainable profit generation. The winners will be those—OTAs and properties alike—who understand that unit economics, not gross volume, now determine success.

Sources:

Company Financial Reports & Investor Relations

MakeMyTrip:

• Q3 FY25 Earnings: https://investors.mmtcdn.com/MMYT_Earning_release_Q3_25_707205d48e.pdf
• FY2024 Annual Report: https://investors.mmtcdn.com/MMYT_20_F_FY_2024_b435dcd2f9.pdf

EaseMyTrip:

• Q3 FY2025 Results: https://nsearchives.nseindia.com/corporate/EASEMYTRIP_14022025162416_Press_Release__3_.pdf

TBO Tek:

• Investor Presentation Feb 2025: https://tbo-static-files.s3.eu-west-1.amazonaws.com/tbo-investor-relations/Stock-Exchange/2025/Presentation18Feb25.pdf

Yatra:

• Q3 FY25 Presentation: https://s22.q4cdn.com/850749348/files/doc_presentations/2025/Feb/11/Yatra-Online-Inc-Earnings-Presentation-Q3-FY25-V8.pdf

Industry Research & Market Sizing

• Mordor Intelligence (India Online Travel Market): https://www.mordorintelligence.com/industry-reports/online-travel-market-in-india
• VIDEC India Travel Market Study FY20-FY26: https://videc.co/wp-content/uploads/2024/04/VIDECs-India-Travel-Market-Sizing-OTA-Benchmarking-Study-FY20-FY26.pdf
• CARE Ratings (TBO Tek Credit Analysis): https://www.careratings.com/upload/CompanyFiles/PR/202509120941_TBO_Tek_Limited.pdf

Regulatory & Government Sources

• Competition Commission of India (MakeMyTrip-OYO Case): https://www.cci.gov.in/images/antitrustorder/en/odrer1666182873.pdf
• Press Information Bureau (CCI Sanctions): https://www.pib.gov.in/PressReleasePage.aspx?PRID=1869330
• Invest India (Tier 2/3 Cities Growth): https://www.investindia.gov.in/team-india-blogs/rise-indias-tier-2-and-3-cities-investment-hubs

Travel Industry Publications

• Skift (Ixigo Spiritual Tourism): https://skift.com/2025/01/28/ixigo-makes-quarterly-gains-in-flights-and-spiritual-tourism/
• Skift (India Corporate Travel): https://skift.com/2024/10/23/tapping-indias-20-billion-corporate-travel-opportunity/
• WiT (Alternate Accommodations Growth): https://www.webintravel.com/alternate-accommodations-category-on-steroids-as-india-ota-market-poised-for-17-5-cagr/

Business News & Analysis

• Business Standard (Temple Tourism): https://www.business-standard.com/industry/news/temple-fever-grips-indians-lifts-travel-demand-and-hotel-bookings-124011800974_1.html
• Business Standard (TCS Impact on Outbound): https://www.business-standard.com/finance/personal-finance/revised-tcs-on-overseas-tours-to-have-only-material-impact-on-demand-crisil-123121100424_1.html
• Inc42 (OYO Turnaround): https://inc42.com/features/how-oyo-turned-around-its-fortunes-in-2024/

Tax & Regulatory Compliance (TCS)

• Wise (TCS Guide with Budget 2025 Updates): https://wise.com/in/blog/tcs-foreign-remittance-travel
• ClearTax (TCS Rules & Exemptions): https://cleartax.in/s/tcs-on-overseas-tour-package