MakeMyTrip scouting for more acquisitions after Ibibo
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Mumbai: MakeMyTrip Ltd will look to acquire technology-oriented hotel solution providers, reduce discounts and offers and focus on sustainable long-term growth, the online travel firm’s chief executive said.
The Nasdaq-listed company acquired rival online travel agent Goibibo in October. Deep Kalra, founder and CEO of MakeMyTrip said the 90-day integration with Goibibo, which started in January, is close to completion. MakeMyTrip has put a leadership team in place to look into various verticals.
While MakeMyTrip co-founder and chief executive officer (India) Rajesh Magow will hold a critical role within the group overlooking marketing, finance and human resources, Goibibo founder Ashish Kashyap will handle product development mainly in the technology space, while also executing other growth strategies of the company, Kalra said. Global management consultant McKinsey & Co. is the adviser to the integration programme, he added.
The company now has around 2,700 employees across the country. Before buying Goibibo, which also owns redBus, an online bus ticket platform, MakeMyTrip has made a series of investments in small to mid-size travel technology firms including Simplotel, Mygola.com, Inspirock, HolidayIQ and Bona Vita Technologies Pvt Ltd.
Last year, the company received an investment of $180 million from Chinese online travel agent Ctrip.
“We are very clear that we are going to continue on a fast growth path particularly on the hotel side. We have consciously invested in it. We are looking for more acquisitions ranging from start-ups to mid sized companies which have great teams and who are doing some niche work through technology,” Kalra said.
At present, 55% of the company’s overall revenue comes from the hotel business and expects to push it to 75% in the next two years. Air travel business generates the rest of the revenue, down from 85% four years ago. Revenue from the hotels and packages business increased by 18.1% to $82.2 million in the quarter ended December 31, 2016 as against the same period previous year.
The company also plans to ramp up its international air travel and hotel businesses for its future growth. However, it plans to scale down its discounts and offers, focusing instead on building data analytics and algorithms to introduce the right products in a more targeted way, Kalra said.
“We can obviously rationalise a bit of the discounts. We don’t have to be that crazy now. We can focus more on building of products which can have a more long-term sustainable advantage. I want to focus on building algorithms, personalisation tools, leverage data through analytics...because in the long run, these things will help,” he said.
Chetan Kapoor, a research analyst at global travel research firm Phocuswright, said though online hotel booking business is a growing segment, it is still at an early stage and hence provides a huge opportunity for most of the online travel agents (OTAs) to expand in the category. “Hotels (segment) is at a very nascent stage when it comes to online distribution. It will continue to fuel growth. If MakeMyTrip and other intermediaries can expand their lodging category beyond hotels to bungalows, and bigger houses...customers will shift online and this will be the next round of evolution,” he said.
The other future growth area in India is international air travel as increasingly more and more Indians are travelling abroad, Kapoor said. “That market is ripe for tapping into. These are the people who have the disposable income and given that there is not much discounting warfare going on in international travels, that enables OTAs like MakeMyTrip to gain some of their margins,” he said.