Skift Take

Investors are understandably focused on MakeMyTrip's ongoing operating losses. But in good news, the company is narrowing the size of those losses while maintaining its growth rates.

MakeMyTrip, India’s largest online travel agency, narrowed its losses by using loyalty programs to encourage more repeat, high-value bookings and by expanding into profitable intercity bus ticketing.

On Tuesday, the Gurugram-based group reported that its revenue for the three months ending June 30 grew 25 percent, year-over-year, to $170 million.

The group continues to spend heavily to woo customers, though not as heavily as a percentage of revenue as it did in the past. It increased marketing and sales promotion expenses by 4.6 percent year over year to $149 million.

For every $100 the company earns, it spends $87 in marketing — a perilous level that makes profitability elusive. Much of that marketing expense was for offering consumers discounts for hotels and brand advertisements.

On the positive side, the company narrowed its operating loss to $32.8 million, down from a loss of $52.3 million in the comparable quarter a year ago.

Loyalty Efforts

The MakeMyTrip Group continues to invest in its loyalty program for its flagship brand. MMT Black Loyalty, which debuted in July 2017, lets travelers earn vouchers redeemable toward future bookings. More than 900,000 customers have joined, the company said Tuesday.

The company also offers MMT Double Black, a luxury twist on the loyalty program, where consumers pay a fee in the style of Amazon Prime to get access to members-only benefits, such as no fee for canceling trips. About 33,000 people have enrolled so far in MMT Double Black, the company said.

“So far, we see significantly higher repeat transaction rates from these cohorts,” said MakeMyTrip Group CEO Deep Kalra.

This past spring the company also introduced a loyalty program for its Goibibo brand. The program rewards people who contribute hotel reviews with credits that can be redeemed for future travel.

To further expand its sales, MakeMyTrip has been slowly rolling out a delayed payment option. Qualified customers may receive micro-loans to pay later for bookings made now. In other new products, MakeMyTrip debuted a multi-city flight search tool for its mobile app that makes it easier for consumers to identify how an itinerary with a layover of a night or more can be less expensive or more convenient.

Rapid Growth in Bus

This quarter was the first in which the company broke out statistics on its intercity bus ticketing sales. The company’s brands sold 14,894 tickets in the three months ending June 30.

While representing only about 12 percent of gross bookings for the quarter, the bus ticketing is important as a marketing tool as it is a frequent purchase and helps to cement usage of the company’s brands in user minds. Margins, at 8 percent, are about the same as for flight tickets, which are 7 percent.

Kalra said the size of the bus market is $3.5 billion but most tickets are booked offline.

To help bring more of that content online, a month ago MakeMyTrip disclosed an unspecified investment in Bitla Software, a Bengaluru-based travel technology company, that sells digital marketing, online booking engines, and distribution software for intercity bus operators, bus global distribution systems, holiday tour operators, and others.

Bitla claims to manage India’s largest direct inventory of intercity buses and bus operators.

MakeMyTrip believes the deal will help to enhance its technological skill at intercity bus ticketing, giving it an edge over its competitors.

Perhaps coincidentally MakeMyTrip secured $24.74 million from its Mauritus-based parent company this calendar year, according to financial filings.

The company has added videos to some of its hotel reviews. It also added amenity and quality ratings to flights to help customers choose among long-haul route options.

The Los Angeles-based investment firm Capital World Investors has in recent months increased its ownership stake in MakeMyTrip to 5.9 percent of the outstanding shares, according to a recent filing.


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Tags: earnings, india, makemytrip, online travel agencies

Photo credit: Shown here is the Gurgaon headquarters of MakeMyTrip, the largest online travel company in India. The company reported quarterly earnings on Tuesday. MakeMyTrip

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