MakeMyTrip Rides India’s Early Domestic Travel Recovery

Seeing signs of a domestic travel recovery in India over the past two months, MakeMyTrip officials said during the company’s fiscal third quarter earnings call that the company gained market share and is well-positioned for an envisioned acceleration of digital travel booking post-Covid.

In the discussion with financial analysts Thursday, executives from India’s leading online travel agency said that in December flight capacity rebounded to 65 percent of pre-Covid levels, booked room nights reached 59 percent, and more than 70 percent of its domestic hotel network was operational. MakeMyTrip’s redBus unit was operating at 75 percent of pre-Covid seat capacity in December, the final month of the quarter.

All of these were improvements over the prior quarter.

Rajesh Magow, co-founder and MakeMyTrip Group CEO, cited market share gains, including in MakeMyTrip’s flight business, as a positive sign. He said the company is seeing increased leisure demand to places such as the Maldives and Dubai. Thailand and the Maldives have opened borders, he added, but quarantine requirements crush travel demand.

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Founder and Group Executive Chairman Deep Kalra said MakeMyTrip’s focus is on the domestic recovery and cost-containment. He said Covid cases in the country peaked in mid-September and have declined steadily. He noted that a vaccine rollout is in its early stages, but expressed optimism because of India’s track record in mass vaccination programs.

With many international borders closed, he said, a recovery in that part of the business will likely have to await herd immunity.

The Numbers

For the quarter, which ended December 31, MakeMyTrip saw revenue decrease 61.3 percent year over year to $56.8 million because of the pandemic, travel restrictions, and subdued travel demand. However, that revenue mark was a 169 percent jump compared with just $21.1 million in the September 30 quarter.

The company’s net loss was $3.5 million in the fiscal third quarter compared with red ink of $29.5 million in the second quarter.

MakeMyTrip reduced its sales and marketing expense 82.7 percent in the second quarter to $7.8 million as it opted out of promotional events or engaging in brand building. However, Kalra said the company significantly increased its repeat booker numbers because of social media campaigns and improvements in optimizing organic traffic.

Cash On Hand

The company ended the quarter with $227.6 million in cash and cash equivalents on the books. It also has $100 million in undrawn secured credit, including $70 million from its largest shareholder, China’s Trip.com Group.

In answering an analyst’s question, chief financial officer Mohit Kabra said he felt comfortable with the company’s cash position as long as it can continue to operate roughly in the “break even” range. He added that MakeMyTrip’s cost discipline positions it well even if variable costs, such as marketing expenses, rise in lockstep with increased travel volumes.

Meanwhile, group chairman Kalra cited an estimate that the pandemic would triple e-commerce in India by 2025, and that MakeMyTrip would be there to take advantage of increased online travel booking adoption when it does.

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