Homestays showing lot of promise with compounding growth: MakeMyTrip CEO

Magow talks about the travel boom in the country and the company's new avenues to drive growth

NASDAQ-listed travel platform MakeMyTrip reported its best-ever quarterly growth in December, posting a net profit of $24.2 million in the third quarter compared to the corresponding quarter last year.  Its total revenue increased 26.9 per cent to $214.2 million against $170.5 million compared to the same time last year. Rajesh Magow, the co-founder and group CEO of the online travel aggregator, talks to Akshara Srivastava about the travel boom in the country and the company’s new avenues to drive growth. Edited excerpts:

You reported your third quarterly results with the highest-ever numbers. What do you attribute this growth to?

I think it's a recovery that has been happening post-pandemic. As the sector recovers gradually, demand too, has been increasing. It would be fair to say that it's becoming more permanent in nature rather than temporary pent-up demand. Along with that, supply constraints in the industry have also been gradually improving.

What are the factors driving the sector’s recovery?

The industry is currently growing at double-digits, and I think that is a very healthy growth rate. Supply on all fronts is improving. Incomes are rising, and there is a shift in people’s behaviour to spend more. These are the drivers of growth. Even the government’s spending on capital expenditure is increasing, which is critical for the growth of the sector. The kind of road infrastructure that has been created, new rail projects underway, new airports being built, and capacity addition to existing airports help improve the traveller experience, which fuels the sector.

When it comes to your sources of revenue, what is the share between hotel bookings and air travel?

In 2010-11, our IPO year, air bookings were 90 per cent of our business, while 5 per cent was packages and hotels. Today, 45 per cent of our revenue comes from hotel bookings, while air travel makes up about 38-39 per cent. About 12-13 per cent comes from ground transport — largely redBus. Our immediate target is to get the hotel business mix to 50 per cent in the short term.

What new avenues are you exploring for revenue generation?

Homestays is a new category, which is showing a lot of promise and I see it growing at a compound annual growth rate of 30-40 per cent for the next three to four years. We have over 100,000 rooms, including villas and hostels, now on our platform and we are growing our supply significantly. The increasing ground transport also provides headroom for growth, which we plan to cover with 'Savari' (an inter-city cab service that MMT recently invested in). We have also accelerated our corporate business with myBiz for small and medium enterprises, and Quest2Travel for large enterprises. In the travel segment, 30 per cent of business happens through corporations, which gives us a tremendous amount of headroom. While our base is low, we expect the business to grow at 30-40 per cent for some time.

Finance Minister Nirmala Sitharaman highlighted tourism in her Interim Budget speech. What potential does spiritual tourism hold?

I think it definitely holds potential. Religious tourism has also evolved from people just traveling to do darshan to people now looking to travel for experience, which these destinations provide. Infrastructure improvement in some of these places is also driving growth.  A lot of branded, premium hotels are now coming up at these spots, which is driving growth.