Ixigo Targets Hotels to Become One of Its Biggest Businesses
Ixigo aims to scale hotel bookings into one of its top two business segments within 4-5 years, capitalizing on India's budget accommodation market.
Stock photo for illustration only, not from the actual event
- Ixigo expects hotels to become its largest or second-largest category in 4-5 years
- Hotel bookings currently account for just 2.1% of the company's total GTV
- Over 86% of recent hotel bookings come from existing train and bus platform users
- The company has partnered with over 12,000 properties across 1,100 towns in India
Online travel aggregator Ixigo is setting its sights on a major expansion into the hospitality sector, banking on budget-friendly accommodations to fuel its next wave of growth and potentially transform its overall revenue structure over the coming years.
Speaking during the company's earnings call on Monday, Aloke Bajpai, co-founder and group co-CEO of Ixigo, told investors that the hotel category could evolve into either the largest or second-largest segment of its business mix based on gross transaction value (GTV) within four to five years, despite currently accounting for a modest 2.1% of GTV.
Stock photo for illustration only, not from the actual event
The company's strategy is heavily anchored in leveraging its massive existing customer base. Approximately 94% of Ixigo's transactions involve travel to or from Tier-2 and Tier-3 cities, with nine in ten trips booked via train or bus. Crucially, more than 86% of its hotel bookings during the quarter came from travelers who were already utilizing its platform for transit, keeping customer acquisition costs remarkably low.
Ixigo is actively scaling its property network, securing partnerships with over 12,000 properties across roughly 1,100 towns, up from 10,000 in the previous quarter. The company allocated about 110 million rupees ($1.2 million) toward its hotel division during the quarter, primarily focusing on talent acquisition and technology infrastructure, with management anticipating this investment phase to last two to three years.
"There is no choice, we have to grow"
Aloke Bajpai
This strategic shift comes as Ixigo's core rail business matures. Train bookings have dropped from over half of total GTV down to the low 40s, a share management does not expect to recover. Simultaneously, the Indian flight market has faced headwinds, with overall volume shrinking and airfares climbing roughly 30% on several routes. Expanding into budget hotels under 2,000 rupees allows Ixigo to capture unorganized independent properties with low online penetration while diversifying its revenue streams.
Financially, Ixigo reported a 22% rise in second-quarter GTV to 53 billion rupees ($559 million), alongside a 13% increase in revenue to 3.2 billion rupees ($34 million), while post-tax profit reached an all-time high of 634 million rupees ($6.7 million).
Source: Skift
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