Online portals reduce losses on improved margins

Yatra.com, Cleartrip halve losses in FY14, Makemytrip loss shrinks from $27.6 mn in FY13 to $20.9 mn in FY14

India’s top three travel portals continue to remain in the red but the losses shrank in 2013-14 over the previous year, due to an improvement in margins.

Nasdaq-listed MakeMyTrip reduced its net loss to $20.9 million (about Rs 125 crore) in FY14 from $27.6 mn (Rs 165 crore) in FY 13. Cleartrip and Yatra.com, both unlisted, halved their loss to Rs 40 crore in the same period.

Together, the three companies dominate the online travel space in India, with a combined market share of a little over 87 per cent. MakeMyTrip has 47 per cent, while Cleartrip and Yatra’s is about 20 per cent each.

According to filings with the corporate affairs ministry, Cleartrip’s loss before extraordinary items and tax reduced to about Rs 40 crore in FY14 from Rs 88 crore the previous year. Its income rose 33 per cent to Rs 148 crore, with 83 per cent from air ticketing. Yatra.com’s net loss reduced to Rs 40 crore from Rs 77 crore in FY13 and income grew 16.7 per cent to Rs 189 crore. It did not respond to an email query.

Kingfisher Airline’s collapse, coupled with muted growth in domestic air traffic in 2012 and 2013, had impacted the travel portals as it led to a fall in bookings. However, over a couple of years, online travel agencies have diversified the business, with a growing importance on the high-margin hotel reservation business. The other focus area is sales through mobile phone applications.

“Our adjusted operating loss reduced in FY14 over FY13 because of an improvement in combined air ticketing and hotel business margins. Margins rose from 7.2 per cent in FY13 to 7.9 per cent in FY14,’’ said Rajesh Magow, chief executive officer of MakeMyTrip.

“We hope to break even at an operating level in FY15.’’

MakeMyTrip’s adjusted operating loss in FY14 was $3.5 mn (Rs 21 crore), down from $5.1 mn (Rs 30 crore) in FY13. Air ticketing contributes a little over 60 per cent of the revenue and the rest comes from the hotel and tour package business.

MakemyTrip said the net loss was a result of costs related to employee stock options and expenses related to merger and acquisition and amortisation. The company had reported a net profit in 2011 and 2012.

A Cleartrip spokesperson said: “Our FY14 numbers are reflective of our strategy to invest heavily on mobile technology, as we believe this is the future of the business. This mobile-first approach has started to pay out during the current financial year, with nearly a third of our transactions being driven through our mobile offerings. This has changed the cost economics of our business and is driving a profitable year for us.”

Adding: “The technology team comprises over a third of our workforce and is constantly involved in automating all parts of our business, to make it more non-linearly scalable.”