Travel expenditure grows 165 per cent during festive season: Report

PayU unveiled its Insights Report – Festive edition today which compares digital payment transaction trends on the PayU platform between the festive seasons of 2021 and 2022*. 2022 saw a 64 per cent increase in expenditure & 31 per cent increase in the number of transactions vis-à-vis festive sale period in 2021. 

Moreover, the report also mapped the overall pandemic impact on Indians’ adoption of digital payments for the festive period. There has been a 245 per cent increase in expenditure & 130 per cent increase in the number of transactions between the ‘normal’ period of 2019 & post-pandemic period of 2022.

Credit cards were the most preferred mode of payment this season. Interestingly, credit card users spent about 5 times more than debit card users in 2022 (total expenditure), in spite of the fact that there is 1 credit card for every 12 debit cards. On an average, a credit card user spent Rs. 6000 as opposed to a debit card user who spent Rs. 2500, in 2022. Year on year, credit card transactions and expenditures grew 42 per cent and 84 per cent, respectively. One reason could be banks offering cashback, reward points, discounts, deals & add-on services on co branded cards & standalone cards.

The appetite for credit is also reflected in the fact that credit repayment (i.e. personal loans for consumers & businesses) saw a 107 per cent increase in expenditure & 105 per cent increase in transactions over the last festive season. One of the highest categories for UPI spending was Credit Repayment, showing that Indians are increasingly repaying personal loans using UPI. Not surprisingly, debit card transactions declined by 34  per cent.

Whether motivated by revenge tourism or the extended Diwali weekend Indians’ expenditure in the travel and hospitality sector showed a 165 per cent increase this festive season. Not only are Indians traveling extensively, but they are using all modes of travel. Cabs showed a 121 per cent increase in expenditure, while train bookings witnessed a 50 per cent increase in expenditure & 33 per cent increase in average ticket size. Airlines saw a 95 per cent increase in average ticket size. Holiday packages saw a 70 per cent increase in expenditure & 341 per cent increase in average ticket size. 

There was a 133 per cent rise in the number of transactions and a 124 per cent growth in expenditure compared to 2021, probably echoing economic recovery, increased UPI adoption by small businesses & consumers. Interestingly, the average ticket size for UPI transactions has gone down marginally (-4 per cent). Consumers used UPI for small ticket items such as groceries, within city travel & entertainment, which could be the reason ticket size declined. The top 5 cities contributing to the highest number of transactions through UPI are Mumbai, Bangalore, Hyderabad, Chennai and Delhi NCR.

In the Banking and Insurance sector, transactions & expenditures increased by 100 per cent and 143 per cent respectively. This general sentiment is reflected across BFSI categories; total expenditure made in the insurance space grew by 41 per cent perhaps driven by economic expansion, regulatory moves and increasing insurance penetration. Investments saw a 66 per cent growth in expenditure & 50 per cent growth in average ticket size – one possible reason could be the increased adoption of do-it-yourself wealth management platforms – especially among millennials & post-pandemic behavioral changes.

The entertainment industry witnessed an increase in both expenditure and transactions of 52 per cent and 54 per cent. OTT expenditure has grown by 80 per cent & transactions by 175 per cent; gaming expenditure shot up by 20 per cent. However, expenses related to watching movies physically and attending on-ground events witnessed a decline in expenditure and transactions of 11 per cent and 43 per cent respectively – perhaps habits set during the pandemic (OTT preference & avoiding public spaces) continue post-pandemic.

Commenting on the PayU Insights Report – Festive Edition Paulami Das, Director, PayU Payments said “PayU is a pioneer in driving value addition for merchants and banks through data insights, offering targeted solutions which allow them to deepen customer engagement & create actionable business strategies. Based on these insights, we are able to determine economic & industry-specific trends and whether these reflect broader market movements. We see that behaviors formed during the pandemic persist into the new normal with the preference for travel, digital entertainment & UPI continuing to increase significantly this festive season.”

PayU, India’s leading online payment solutions provider, is regulated under the Reserve Bank of India and has advanced solutions to meet the digital payment needs of the Indian market. PayU India aims to create a full-stack digital financial services platform to serve all (tapped and untapped) financial needs of customers (merchants, banks and consumers) through technology.