Booking.com changes tack in India, bets on payments to tap 60% offline accommodation market

For more than a decade, Booking.com has largely left the payment transaction between Indian travellers and hotels to the two parties. That is now changing. The global online travel company is moving towards collecting payments directly from customers in India, a shift that it believes will help reduce booking cancellations, secure hotel inventory and give it greater room to compete in one of its most important growth markets.

The move to the merchant model, from its traditional agency-led approach, marks a significant change in Booking.com's India strategy. The company has begun rolling out payments in the country and is gradually expanding adoption across its accommodation partners. The transition is expected to continue over the next few quarters, as Booking.com steps up localisation, marketing investments and partnerships to strengthen its presence.

"This year, I would define it a little bit as the breakout year for us in India," says Santosh Kumar, regional manager, South Asia, Booking.com. He says the company's global board has backed additional investment in India, with a sharper focus on adapting its products to local consumer and partner requirements.

Under the agency model, travellers typically book accommodation on Booking.com but pay the hotel directly. The platform acts as an intermediary and is not part of the payment transaction. Under the merchant model, Booking.com processes the payment from the traveller and subsequently settles it with the accommodation provider.

For hotels, the change offers greater certainty around bookings, particularly in a market where cancellations and no-shows can leave rooms vacant. Prepaid bookings help properties secure inventory and reduce the risk of customers not turning up. Booking.com, in turn, expects the model to improve net conversions.

"It works in a great way for our accommodation partners because it helps them secure their inventory. It controls fraud to a large extent. It results in better conversions, because on the agency model, the cancellation rates are fairly high. The no-show rates are fairly high," Kumar says.

The change also gives Booking.com greater flexibility to offer discounts, run local marketing campaigns and build third-party partnerships. That is particularly relevant in India, where consumers are known to compare prices across platforms and respond to offers and promotions.

The company, which historically operated through the agency model in India, says both models have their advantages. But the merchant model is now becoming an important foundation for its next phase of growth in the country.

Betting on India's offline opportunity

The larger opportunity, however, lies in the size of India's accommodation market and its relatively low online penetration. Booking.com estimates that only around 35% to 40% of accommodation bookings in India currently happen online, leaving nearly 60% of the market offline.

For the company, this represents room to grow beyond competing for customers already booking through online travel agencies. It also means tapping travellers who continue to make reservations directly with hotels or through traditional offline channels.

"There's enough room for us in that 40% and also in that 60%," Kumar says, adding that the opportunity is not just about acquiring existing online customers but also generating incremental demand for accommodation partners.

Given the competitive landscape, Booking.com needs to step up its India game. MakeMyTrip remains the clear market leader, with ixigo emerging as a stronger challenger, particularly in rail and intercity travel. According to travel research firm VIDEC's FY26 estimates, MakeMyTrip continues to command more than 50% of India's online travel agency (OTA) market by gross booking value (GBV), while ixigo has increased its share to 11%, up from 9.9% in FY25. Its GBV grew 25% to ₹18,690 crore in FY26.

Can India's unsold hotel rooms become growth opportunities?

The supply side presents another opportunity. According to Kumar, occupancy across India's accommodation sector is roughly 60%, which means around 40 out of every 100 rooms remain unsold. Booking.com wants to help hotels fill some of this unoccupied inventory by bringing them additional customers through its platform.

The opportunity is being supported by changing travel habits. Indians are now taking anywhere between four and five trips annually, compared with fewer trips before the pandemic, although these journeys may be shorter. At the same time, new destinations are emerging as infrastructure improves and travellers venture beyond traditional tourist centres.

Kumar also sees alternative accommodation gaining ground because supply in this segment can potentially be added faster than traditional hotel capacity, particularly in newer destinations. This could open up more travel options while helping address the gap between rising demand and available accommodation.

Booking.com's India push is extending beyond leisure travel. The company has stepped up digital and performance marketing investments and entered partnerships with Air India and Thomas Cook SOTC. Through its Air India partnership, Booking.com powers the accommodation inventory offered on the airline's platform.

It has also launched Booking.com for Business in India, a free-to-use corporate travel tool aimed at startups and small and medium enterprises with around 10 to 100 employees. The platform allows companies to set accommodation spending limits, track travel expenses and monitor budgets across departments. It has been localised for India with GST capabilities.

For Booking.com, India is now its top priority in the Asia-Pacific region, although the company does not disclose country-specific revenue or investment figures. Its Bengaluru centre of excellence has around 1,200 to 1,300 employees working on products and technology for India and global markets.

The company is also piloting WhatsApp as a customer communication channel in India, its first such initiative globally.

Kumar says the strategy will be implemented in phases, with the immediate priority being to get the fundamentals right before expanding into newer travel categories and building its connected-trip offering.

In a market where most accommodation bookings still happen offline, Booking.com wants to establish itself not just as a place to find a hotel, but as a platform that handles more of the booking journey.