Hotels will contribute 50% of our revenue in two years: MakeMyTrip CEO

With airlines cutting down commission, margins under pressure, online travel companies are increasingly diversifying their businesses

India's largest online travel portal MakeMyTrip expects nearly 50% of its revenue from hotel business over next two years, portal's chief executive officer and founder Deep Kalra stated today.

With airlines cutting down commission and margins under pressure, online travel companies like MMT are increasingly diversifying their business by launching holiday packages,  offering bus and train tickets and promoting hotel bookings. The thrust of the portal on promoting hotel reservation is evident as it has changed its brand tag line from "Memories Unlimited'' two years ago to "Hotels Unlimited'' now.

"What was happening in air ticketing business was not one off. It was a trend and we realised it will be tougher and tougher to make money in air ticketing. When we did our IPO three years ago about 85% of our revenue came from air ticketing. Now it is 68% and by next two years we will have a revenue share of 50:50. It is a tougher business to begin with but is better in the long run as the margins are high and number of suppliers are  more,'' Kalra said.

Currently 31% of portal's revenue comes from packages and hotel business and small fraction comes from car rentals, bus and train bookings.

MakeMyTrip  has an inventory of 80,000 hotel rooms, a majority of them abroad. "It (hotel business) helps us to add value to small players who otherwise would not be able to reach target audience without us,'' he said. "We have been reporting 60-65% growth in hotel business for last three years. The%age of people who booked air tickets online is 40% and hotels is just 5% but is growing,'' he said.

Kalra said he is also exploring expansion opportunities in South East Asia by setting up country specific booking sites and growing number of franchisees in India.  It runs an office and portal in UAE. At present its share in business is in low singe digits but is growing fast.  The portal also made three acquisitions in last two years buying two destination management companies and a hotel booking site in South East Asia.  "The portal has to be customised for that audience  and otherwise there is no value,'' he said.