Ixigo Bets Hotels Can Be Its Second Pillar Within Five Years

Ixigo expects hotels to become its largest or second-largest business by gross transaction value (GTV, the total value of bookings processed) within four to five years, up from 2.1% today, co-founder and group co-CEO Aloke Bajpai told investors on the company's earnings call Monday.

The target marks a sharp redistribution of the Indian online travel company's revenue base. Trains, where Ixigo holds about 64% of the OTA (online travel agency) rail market, have slipped from more than half of GTV to the low 40s, and Bajpai said he does not expect that share to recover. "There is no choice, we have to grow," he said.

Why hotels, and why now?

Ixigo's hotel strategy starts with its customer profile. Around 94% of its transactions involve travel to or from Tier-2 and Tier-3 cities, and nine in 10 trips it sells are by train or bus. "Many travelers looking for an affordable room are already booking their journey with us," Bajpai said.

That funnel keeps acquisition costs low. More than 86% of hotel bookings in the quarter came from customers already on Ixigo's platforms. The company's stated ambition is "to become the largest player serving this part of the hotel market" — rooms priced under INR 2,000 ($21), a segment that accounts for roughly 60% of Indian hotel room nights and is dominated by independent properties with low online penetration.

Supply is scaling. Ixigo is contracting with more than 12,000 properties across about 1,100 towns, up from 10,000 last quarter. It spent around INR 110 million ($1.2 million) on hotels in the quarter, mostly on people and technology, and Bajpai said the investment phase should last two to three years.

What do the quarterly numbers show?

Second-quarter GTV rose 22% year over year to INR 53 billion ($559 million). Revenue grew 13% to INR 3.2 billion ($34 million), and profit after tax hit an all-time high of INR 634 million ($6.7 million).

The mix behind those figures is shifting. Buses are the company's second-fastest growing line. Flights are under pressure: the overall Indian flight market shrank in volume, fares rose around 30% on several routes, and Ixigo funded more discounts to keep price-sensitive travelers flying. October festive demand came in softer than expected, and management declined to guide to a rebound.

What stands between Ixigo and the hotel goal?

The company has product and a steady stream of customers. The hard part, as management framed it, is convincing budget travelers that the room they book online is the room they will get — a trust problem in a fragmented independent-property market where photos and standards are inconsistent.

The five-year hotel ambition remains a projection, not a measured result. Hotels at 2.1% of GTV must overtake categories that each command low-40s or larger shares of a INR 53 billion quarterly book. The two-to-three-year investment window, funded at roughly INR 110 million per quarter so far, signals management expects losses in the category before the mix shift delivers.

If trains continue to erode and air stays squeezed by fares and soft demand, the hotel build-out becomes less a growth story than a necessity — which is exactly how Bajpai framed it.