Travel Industry: USD 36 bn, 7.5% expected CAGR over next 10 years Source: India 2012 WTTC, IBEF ► Travel Industry* is playing an increasingly important role in India’s economy : ► 1.9% is the direct contribution of total Travel industry to India’s GDP ► 5% contribution to total employment ► 3.8% of total exports was from Inbound tourism (~USD 14.5 bn ) ► 5.1% of total investment was in Travel(~USD 23 bn) ► Domestic Travel to be the primary growth driver: ~82% of Total Travel ► 74% of Travel is Leisure travel, expected to grow by 8.6% in 2012 ► 26% of Travel is Business Travel, expected to grow by 4.1% in 2012 CAGR: 7.8% *WTCC definition of Travel includes: Domestic expenditure +Inbound tourism + restaurant& leisure industries+ govt. spending+ capital investment

India is the second largest Travel Market globally after China, largest contributor to employment Source: India 2012 WTTC, IBEF

Travel: Poised to Sustain Growth Momentum Favorable demand, improving infrastructure and investments to drive T&T growth Source: India 2012 WTTC, IBEF ► Increasing per capita income and a rapidly growing middle class: ► 160 mn people expected to grow to over 267 mn by 2016 ► Favorable demographics: Over 50% of the population under 25 years ► Domestic as well as outbound travel to increase due to: ► Increased affordability as a result of increasing disposable income ► Availability of attractive tour packages ► Increased affinity towards leisure travel Demand GrowthIncreasing InvestmentPolicy Support ► Innovative campaigns launched to attract tourists: Incredible India and Athithi Devo Bhavah ► 100 % FDI allowed in hotel and tourism sector ► USD mn sanctioned during the 11th Five Year Plan for 991 tourism infrastructure projects ► CAGR of 15.4% over in Govt. spending on T&T (USD 1.6 bn in 2011) ► T&T attracted capital investment of INR1,253.9bn in 2011 (~USD 23 bn) ► Expected to rise by 12.3% in 2012 (~USD 26 bn); ~5.3% of GDP ► Rise of 7.5% pa is projected over the next ten years to INR2,903.9bn in 2022 (~USD 53 bn) 1 23

Retail Travel : 33% of Travel is Online, Online growing much faster than offline ► Online travel share has been steadily increasing: 23% in 2009 to ~33%** in 2012 ► Online travel penetration (33%) is ahead of China and Japan; comparable to US (38%) ► Online Travel market grew 3x compared to the overall market in 2011 viz. 23% vs 8% ► 23% growth projected during – USD 7.3 bn (‘12) to USD 9 bn (‘13) ► Online travel drives >85% of e- commerce in India

Travel Market Segmentation

Suppliers Website v/s OTA

Online Travel Future Growth Engine: Hotels, Bus, Car rentals Source: Phocuswright; Internal intelligence 2012 Retail Travel Industry Split USD Bn2012 Total2012 Online Online Penetration Online Split (%) Air %54% Hotels %11% Rail %34% Car Rental %1% Total % Bus % ► Air ticketing continues to be the largest segment (54%) followed by rail ( 35%) ► Newer categories like hotels, tour packages, bus and cars have higher margins, low online penetration and are going to be the drivers for the next phase of growth ► Supplier branded sites accounted for 64% of the total market led by Indian railways and low cost carriers ► However, OTAs to grow fast by focusing on the new high growth verticals

Turbulence in Travel Market: Driven by issues facing the domestic airline industry Source : Phocuswright, DGCA ► Supply constraint: Grounding of majority of Kingfisher’s fleet, long duration strikes by the National carrier ► Spiraling jet fuel prices and consequently hike in fares resulting in stagnant /decline in passenger traffic growth ► Rupee depreciation slowing outbound travel ► High debt burden and operating losses for majority of the Indian carriers Air Market: Total & Online Challenges facing the airline industry ► Air continues to be the largest travel category – both online and offline ► has been a challenging year for air growth: ► Passenger traffic declined by 0.9% from Jan - Sept 2011 to Jan - Sept 2012 ► Gross margin under pressure for travel companies because of increase in monopoly of airlines ► However online air growth has remained robust at 25% in 2011 and expected to be 22% in 2012 to USD 3.9 bn ► Steady increase in online air penetration : from 38% in 2011 to 42% in 2012 end Domestic Air Passenger Traffic (0.9%)

Turbulence to be Overcome by policy changes and shifting focus to new growth verticals Source : Phocuswirght; KPMG Background Paper on Indian Aviation, news articles Revival of Domestic Air New Verticals Growth ► Incumbents to increase supply: from 385 to 522 aircrafts over the next few years; will ease out the demand supply mismatch ► 49% FDI by foreign carriers approved, potential funding for cash strapped airlines ► Increased supply and competition from new players will reduce monopoly of existing suppliers ► ATF imports allowed, airline operating costs to reduce ► Opening of bilateral rights to all domestic carriers, will lead to better seats utilization ► Investments for up gradation / creation of new airports ► Key Verticals to drive future growth ► Hotels ► Holidays / Packages ► Bus ► New verticals: Car rentals ► Higher margin categories, focus area for all OTAs ► Characterized by low online penetration, increasing trend to move online: enough headroom for growth ► Categories like bus and hotels are highly scalable and huge standalone verticals for growth

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