Skift Take

MakeMyTrip is moving its focus from retail customers to go deep into the hinterland by tapping into small travel agents across India. In a country where online penetration is still low, will this bet pay off?

In its quest to win new customers, India’s MakeMyTrip is looking to tap into corporate travel, and its networks of franchisees and small travel agencies.

Traditionally focused on retail customers, the online travel company is now looking to improve its outreach to customers in India’s hinterland by tapping into small travel agencies across the country for last-leg booking via its platform and franchise stores.

“Our target is to double the booking contribution coming from these demand segments from about 7 percent last year to around 15 percent over the next few quarters,” co-founder and Group CEO, Rajesh Magow said during the company’s fiscal 2023 first quarter earnings call on Wednesday.

With work patterns gradually getting back to pre-pandemic normal. MakeMyTrip expected corporate travel demand momentum to further pick up in the coming quarters, aiding overall demand recovery for the travel industry.

MakeMyTrip noted a uptick in the online buying behavior of Indians which bodes very well for companies like them as most segments of the Indian travel industry have traditionally had low online penetration. 

Calling India an under-penetrated travel market, MakeMyTrip noted a huge scope of growth as there is a higher willingness to travel and book online among the young working population with increasing disposable income.

Talking about making small inroads in adjacent markets like the Gulf Cooperation Council (GCC) countries, MakeMyTrip noted that its initial focus has been in the UAE. “Our first target is to be the leading OTA (online travel agency) in UAE by the end of this fiscal year. The first quarter has been good for us. Our gross bookings grew 2.3 times quarter-on-quarter organically, albeit on a low base,” Magow noted.

Even as MakeMyTrip reported its highest-ever quarterly adjusted operating profit of more than $16.5 million, the online travel company noted that increased airfares, as a result of high aviation fuel prices, continue to impact recovery.

The operating profit mark in MakeMyTrip’s fiscal 2023 first quarter, which ended June 30, compared with an operating loss of $8.2 million a year earlier when the pandemic severely impacted operations. Revenue grew 335 percent year-over year to $142.7 million in the first quarter.

However, the company expects travel, both domestic and international, to recover fully to pre pandemic levels by the end of 2022.

“Apart from the short-term positive outlook on demand recovery, we believe there are significant tailwinds supporting robust growth in the travel industry over the medium term of next three to five years,” Magow, said.

MakeMyTrip noted that its investments in India to increase supply would be primarily directed towards bringing more and more small service providers and accommodations onto its platform as well as ground transport services like rail and intercity cabs. 

With accommodation service providers in about 1,900 cities, the company aims to have accommodation supply in over 2000 cities before the end of this fiscal year. 

The company saw strong revenue growth across the board in flights, hotels and packages, and bus ticketing compared to a year ago when pandemic caused airlines and hotels to greatly reduce operations. 

“We witnessed strong recovery during the first quarter of fiscal year 2023, largely attributable to increased demand for travel during the summer holiday season and pent-up demand for leisure travel,” Magow said.

Executive Editor Dennis Schaal contributed to this report.

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Tags: asia monthly, business travel, coronavirus recovery, corporate travel, earnings, india, indian travelers, inflation, makemytrip, online travel agencies, travel agencies, uae

Photo credit: Woman in a doorway in India. MakeMyTrip has several initiatives to win new customers.