MakeMyTrip to focus on hotels & packages segment

Aims to make it 50-55% of its revenue in two years

In the next two years, travel portal MakeMyTrip plans to focus on expanding its hotels & packages business. It aims to increase the share of revenue from this segment to 50-55 per cent, against the current 31 per cent.

The shift in focus, though a part of the company’s long-term strategy, highlights how online travel agencies are increasingly focusing on hotels & packages.

“The online hotel market is just five to six per cent of the total hotels in India. This is the next growth area for us. Also, the margin, as percentage of bookings, is much better and higher than in air bookings,” said Rajesh Magow, co-founder, chief financial officer and chief operating officer, MakeMyTrip.

He added a few acquisitions the company had carried out in the recent past would help it meet its targets.

MakeMyTrip has been expanding the hotel network on its site for some time. Today, the company’s site accounts for 10,000 hotels. Last year, the travel portal had acquired Hotel Travel Group for $25 million, securing access to about 80,000 international hotels.

Most of these are in Southeast Asia, one of the most favoured holiday destinations for Indians.

“We have done extremely well on the supply side of the business. We have grown from a 5,000-hotel inventory to 10,000 in just a year and a half. This is all in the domestic market. We have also enhanced the booking experience on our website. We have more authentic videos and pictures of the hotels; we are also focusing on user-generated content and reviews,” Magow said.

Through the past few years, the company has been trying to increase the revenue contribution from its hotels & packages business. In 2010-11, contribution from the segment stood at 18 per cent, while that from air ticketing was 78 per cent.

For 2012-13, the air ticketing segment’s share stood at 64 per cent, while the share of the hotel & packages was 31 per cent.

A key reason for the focus on the hotels business is that the Indian airline industry has been going through a crisis, as is evident from MakeMyTrip’s results for the quarter ended March — the company’s revenue fell 32.6 per cent year-on-year.

“The Indian airline industry has been going thorough several challenges. Kingfisher Airlines going out of operations certainly impacted us. Also, fares were higher and commissions were impacted. All this impacted our domestic air bookings. This, in turn, hit the bottom line,” said Magow.

Internet reach
MakeMyTrip, which started operations in 2000, has a share of about 50 per cent in India’s online travel agencies market. Magow said the slow penetration of internet in India had hit the company’s growth plans.

“We are satisfied with the growth we have achieved and the way our business has shaped up. But I feel our growth numbers could have been better. I believe the best is yet to come,” he said.

THE NEXT STEP

• The online hotel market is just 5-6 per cent of the total hotels in India. Hotels and packages are the next growth area
• As part of the refocus, earlier this year, MakeMyTrip extended its brand campaign from Memories Unlimited to Hotels Unlimited
• The acquisition of the Hotel Travel Group in 2012 for $25 million allowed the company to get access to almost 80,000 international hotels
• In FY2011, the contribution of hotels and packages was about 18 per cent and air ticketing 78 per cent. In FY2013, air ticketing went down to 64 per cent and hotels & packages increased to 31 per cent