Can Hotels Become ixigo’s Fourth Growth Engine?

Travel tech company ixigo is betting on hotels as its fourth growth engine alongside trains, flights, and buses, as further market share gains become harder in rail bookings and high airfares and capacity constraints weigh on flights.

The company began reporting hotels as a separate operating segment in Q2 FY27, breaking it out from ‘Others’. The revenue of the hotel segment grew more than sixfold to ₹8.1 Cr, accounting for 2.5% of ixigo’s ₹321 Cr operating revenue in the September quarter.

Its gross transaction value (GTV) reached ₹111.3 Cr, or 2.6X the year-ago figure, making it ixigo’s fastest-growing business line by this measure.

“Hotels took a great leap forward, getting to a critical mark that makes it large enough to start disclosing (separately),” ixigo group CEO Alok Bajpai said during the earnings call.

The segment’s contribution loss widened to ₹1.2 Cr from ₹71 Lakh in Q2 FY26. However, the contribution margin improved to -15% from -55%, as revenue growth outpaced the increase in direct costs.

This loss captures only part of the investment. Much of ixigo’s hotel-related technology, product, and employee spending sits within group costs. Management attributed around ₹10 Cr of the approximately ₹20 Cr increase in group costs, excluding ESOP expenses, to building and scaling hotels.

Its train, flight, and bus businesses generated around ₹126 Cr in contribution profit during the quarter, helping fund the expansion. 

As Inc42’s earlier business model analysis examined, ixigo is reinvesting operating leverage from its established businesses into hotels, AI, and brand building. The latest results show how it is pursuing hotel growth through existing customers and direct property partnerships.

ixigo’s Hotel Blueprint

ixigo is targeting budget and mid-market accommodation, particularly independent hotels, to serve travellers who already book journeys through its platforms but may use offline channels or other services for accommodation.

“The opportunity is particularly compelling in the budget, mid-market, and independent hotels, where online penetration is low, and travellers need greater reliability and peace of mind,” Bajpai said during the earnings call.

Industry estimates cited by the company’s management put India’s hotel market at ₹1.57 Lakh Cr in FY26, projected to reach ₹1.94 Lakh Cr by FY28. Hotel bookings through OTAs are expected to rise from ₹40,200 Cr to ₹57,000 Cr over the same period.

About 60% of hotel room nights in India sell for less than ₹2,000 a night, while independent hotels account for 73% of rooms.

This market overlaps with ixigo’s customer base – 94% of its transactions involve travellers going to or from Tier II and III cities, while more than nine in 10 trips booked are by train or bus.

More than 86% of Q2 hotel bookings came from existing users, which management believes can help it scale without acquiring every hotel customer separately.

ixigo has more than 70,000 hotels on its platforms, including over 12,000 directly contracted properties across around 1,100 towns. Direct partnerships stood at over 10,000 properties across nearly 700 towns in the previous quarter. The company said HELLO, its AI-first hotel partner platform, helped accelerate this expansion.

The Q2 figures also include Brevistay, in which ixigo acquired a 54.66% stake for ₹65.69 Cr. The startup offers rooms for three, six, or 12 hours rather than a full-day stay. ixigo is using the acquisition to expand direct hotel relationships, meaning reported growth includes both organic expansion and Brevistay’s contribution.

While ixigo builds its hotel business, its three established verticals continue to fund the expansion, with differing growth prospects across trains, flights, and buses.

How Are ixigo’s Core Businesses Performing? 

The number of train passenger journeys booked through ixigo rose around 7% YoY to 2.9 Cr in Q2 FY27. Revenue increased 16% to ₹149.1 Cr and contribution profit grew 29% to ₹47.2 Cr.

Management said ixigo’s share of the OTA rail market reached around 64%. With railway capacity growing at an estimated 4-5% annually, further expansion will increasingly depend on new products, monetisation, and cross-selling, alongside booking volumes.

Trains’ share of GTV has fallen from more than half to the low-40% range as other categories expand. Management expects this proportion to decline further, even as the business grows in absolute terms.

Flight GTV increased 37% YoY, but revenue declined 8% to ₹82.7 Cr. The gross take rate fell to 7% from 9.4%, reflecting pressure on monetisation amid higher airfares, capacity constraints, and a changing booking mix. Higher ticket values supported GTV but did not translate into revenue growth.

The festive season provided some support to flight bookings, but management cautioned that the recovery remains uncertain as high airfares and capacity constraints continue to weigh on demand. 

“We hope this improves as the peak of the festive season arrives, though it is too early to call, and this should not be read as guidance,” ixigo said in its earnings release. 

Buses remained a stronger growth channel. Bus GTV increased 32% YoY to ₹752.65 Cr, revenue grew 24% to ₹81.04 Cr, and contribution profit rose 27% to ₹43.14 Cr.

These established businesses provide the earnings and customer reach to support hotels. The challenge is to convert that advantage into sustained growth while managing expansion costs that extend beyond the segment’s reported contribution loss.

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