India’s travel and tourism industry is growing rapidly, but global tensions and rising costs are now affecting major online travel companies. Even though travel demand inside India remains strong, companies like Yatra Online and MakeMyTrip are facing pressure on profits because of weaker international travel demand and rising competition.
India has become one of the world’s fastest-growing travel markets. In 2024, the country overtook China, Japan, and South Korea to become Asia’s largest source of outbound travellers. Experts say India’s travel market was worth around $56 billion in FY24 and could reach over $78 billion by FY27.
Online travel bookings are also increasing quickly, especially in Tier-2 and Tier-3 cities. More people are now using smartphones to book flights, hotels, and holiday packages. Better roads, airports, and digital payment systems are helping the sector grow even faster.
However, the industry is also facing major challenges. The ongoing conflict in West Asia has disrupted international flight routes. Airlines are now taking longer routes, which has increased fuel costs and travel time. Since aviation fuel is already one of the biggest expenses for airlines, the situation is putting pressure on the entire sector.
Because of this, many Indian travellers are choosing nearby countries like Thailand, Vietnam, and Singapore instead of long international trips. Foreign tourist arrivals in India have also slowed down in recent months.
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Yatra’s Q4 Numbers Show Pressure on Business
In the middle of these challenges, Yatra Online reported weak results for the fourth quarter of FY26. The company’s net profit dropped 46.12% year-on-year to ₹8.20 crore. Revenue from operations also fell nearly 14% to ₹189.01 crore during the quarter.
Still, the company had a strong full financial year overall. Yatra’s annual revenue grew more than 27% to ₹1,006.51 crore, while yearly net profit increased 28% to ₹46.81 crore.
Experts have pointed out concerns about the company’s quarterly earnings. A large part of Yatra’s Q4 profit reportedly came from “other income” instead of its main travel business. This means the company’s core operations remained under pressure during the quarter.
The company also saw a sharp fall in EBITDA margins because of rising competition and pricing pressure in the online travel market. Yatra said that international uncertainty and lower corporate travel demand affected its business, especially in the MICE segment.
Domestic airline disruptions also created problems. Flight cancellations and operational issues linked to pilot duty rules affected business travel bookings during the quarter. The company also faced extra expenses due to the implementation of new labour regulations.
Corporate Travel Becoming the Biggest Opportunity
Even with short-term challenges, corporate travel is becoming one of the most important growth areas for online travel companies in India. Industry reports suggest the corporate travel market could grow from $14.8 billion in FY24 to over $20 billion by FY27.
A large part of India’s corporate travel sector is still managed offline, which gives online travel companies a big opportunity to expand through technology-based solutions.
Yatra is focusing strongly on this segment. The company recently acquired Globe All India Services Limited, also known as Globe Travels, for ₹128 crore. This deal is expected to add around 360 corporate clients and strengthen Yatra’s presence in the high-margin MICE business.
At the same time, MakeMyTrip is also increasing its focus on corporate travel, hotel bookings, and fintech services. The company crossed $10.4 billion in annual gross bookings in FY26, although its quarterly profit declined because of global uncertainties and higher taxes.
Travel companies are now slowly moving away from low-margin flight bookings and focusing more on hotels, holiday packages, and business travel services. Industry experts say flight bookings usually offer margins of only 2% to 6%, while hotels and holiday packages can generate margins of up to 20%.
AI Is Changing the Online Travel Industry
Artificial intelligence is also becoming an important part of the travel industry. Online travel companies are using AI tools to improve customer support, reduce costs, and attract users from smaller cities.
Yatra recently launched “DIYA,” an AI-powered travel assistant that supports more than 100 Indian languages. The tool helps users plan trips, book tickets and hotels, and even handle cancellations through voice and text.
Similarly, MakeMyTrip’s AI assistant “Myra 2.0” is now handling millions of customer queries every quarter. A large number of users are coming from smaller cities across India.
Yatra has also partnered with Google Cloud to improve its AI-powered corporate expense management tools using Gemini and Vertex AI technology.
India’s online travel industry is now entering a new phase where profitability, technology, and corporate travel services are becoming more important than simply increasing bookings. While long-term growth opportunities remain strong, recent results from Yatra show that global tensions and rising costs are still creating major challenges for the sector.