Skift Take

MakeMyTrip Group has impressively diversified enough that it forecasts only a minor hit to revenue during the coming year due to the collapse of Jet Airways, a major carrier in India. No wonder Ctrip decided last month to become the company's largest shareholder.

MakeMyTrip Group faced turbulence in the first half of the year after the collapse of Jet Airways India. The company, India’s largest online travel group, aims to weather the storm by seeking growth in China, expanding into corporate travel, and more frequently interacting with customers such as by selling rail tickets and offering credit cards.

MakeMyTrip will take a hit to revenues. “We are expecting domestic air travel growth to be impacted in the first half of the new fiscal year, but anticipate demand to rebound in the second half of the year,” Deep Kalra, founder and group CEO, said on Thursday during the company’s earnings call.

For its fiscal year that closed at the end of March, MakeMyTrip Group’s revenue grew by 26.2 percent on a constant currency basis to $673.4 million. The group achieved gross bookings of over $5.4 billion, representing growth of 28.1 percent.

Importantly the company has cut costs. For the fiscal year, adjusted operating losses fell 36 percent, year-over-year, to $98.8 million. Cuts to marketing helped.

In the first three months of 2019, the company’s total marketing and promotional expenses stood at $123.6 million, which was about 9 percent of gross bookings — a significant drop from accounting for 10 percent of GROSS bookings in the same quarter a year earlier.

China Hopes

In late April, MakeMyTrip announced that Ctrip, China’s largest online travel group, would raise its position in India’s MakeMyTrip to 49 percent in a share swap deal with Naspers. The deal, which would give Ctrip five out of ten board seats, is pending regulatory approvals and is expected to be concluded in the second half of the year.

MakeMyTrip is anticipating more strategic cooperation with Ctrip after regulators okay the deal, Kalra said.

Some critics said that Chinese investors are betting more in India because companies in Silicon Valley are avoiding deals with China because of worries about data security, such as the still unresolved issue of who stole Marriott’s data. Chinese foreign direct investment in the U.S., Europe, and Canada hit its lowest level in six years, said research from law firm Baker McKenzie and research provider Rhodium Group and noted by Quartz.

A Bet on Corporate Travel

Late last month, MakeMyTrip Group acquired a majority shareholding interest in Mumbai-based Quest 2 Travel, a corporate travel management company that serves corporations such as Tata Motors, Aditya Birla Group, and Times Group.

It’s MakeMyTrip’s first significant bet on the corporate travel market.

The move comes as eBix said it would reveal in the next few weeks if it will pursue a proposed takeover of Yatra, an online price-comparison company with a large corporate travel business.

Reaching Customers Beyond Flights and Hotels

Kalra said the company is focusing on trying to persuade its current customers to use its brands to more than book the occasional flight and hotel with a mix of new products, credit card programs, and loyalty programs.

The company continues to expand its bus and rail ticketing services and its tours and activities inventory.

MakeMyTrip claimed traction with its co-branded credit card program with ICICI bank, one of India’s largest private bank. Since its introduction last year, more than 150,000 cards have been issued, and about a third of the cardholders are new to using MakeMyTrip as customers. The bank automatically enrolls cardholders in the online travel company’s loyalty programs.

Earlier this year, the company changed the rules for its loyalty programs MakeMyTrip Black, a free plan with more than 1 million enrollees, and MMT Double Black, a paid plan with 83,000 members. Its Goibibo brand has a free loyalty program with more than 1.9 million registered users.

For more context, subscribers to Skift Research can read “The State of Online Travel Agencies 2018 Part III: India and Latin America.”


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Tags: asia, corporate travel, earnings, india, makemytrip, online travel agencies

Photo credit: An interior view of the MakeMyTrip offices at the online travel agency's headquarters in Gurgaon, India. MakeMyTrip

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