MakeMyTrip Bets on the Pandemic Speeding Up India's Shift to Online Travel
Skift Take
Executives are fine-tuning their strategy by pushing more into business travel management, tours-and-activities sales, and international bus booking.
MakeMyTrip Group is betting that the coronavirus pandemic will put an existing Indian national trend of buying more travel online on a faster timeline.
"Given the drive toward contactless travel engagement forced by this pandemic, we believe online booking adoption should accelerate even faster," said Deep Kalra, group executive chairman of the online travel company based in Gurugram, India.
During an earnings call on Friday, Kalra called out a report by Goldman Sachs from late July that predicted the pandemic would hasten India's shift from offline, traditional agencies to online ones.
After the pandemic, Goldman Sachs expects India's online travel market to grow at a pace of 14 percent through 2025. Online booking of hotels will grow 20 percent a year on average through 2025, given low internet penetration now, wrote analyst Heath Terry.
A faster pace of online bookings is critical to MakeMyTrip Group's game plan. Growing all its travel product offerings is not cheap. The company has found operating profits elusive for years. Spending on marketing, consumer incentives, and research and development has devoured revenue.
Yet the cost of serving each extra customer is marginal. So the faster MakeMyTrip can grow its online customer base, the sooner it can become profitable.
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MakeMyTrip executives looked to the future on Friday, using the word recovery 14 times in their prepared remarks. "As a company, we'll prudently invest for the long-term and to make sure our brand, technology, and service platform are ready to scale for the inevitable rebound in demand," Kalra said. Executives gave examples of their tech investment, such as improved customer service chatbots and "simplified but comprehensive, step-by-step instructions on how to navigate state-by-state restrictions on travel." MakeMyTrip is playing a long game. The pandemic devastated its financial numbers for its most recent quarter Nationwide lockdown orders in India in March brought travel to nearly zero in April and most of May. The country still has many state-by-state restrictions on travel and hotels. MakeMyTrip Group reported adjusted revenue of $6.4 million in the quarter en