MakeMyTrip to buy 28% stake in HolidayIQ for $15 million
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MakeMyTrip, India’s largest online travel company, will pick up a 28% stake in Bengaluru-based HolidayIQ. The transaction is scheduled to be completed in August. This is MakeMyTrip’s fourth stake acquisition since January.
“HolidayIQ operates in a very exciting space in the Indian online travel market. Their pace and appetite for innovation matches ours, and we see great synergy in our focus on hotels and mobile. The opportunity to drive scale jointly is fairly significant,” Deep Kalra, founder and group chief executive officer of MakeMyTrip.com, said in a statement on Wednesday.
Last September, MakeMyTrip set up an innovation fund of $15 million to invest in start-ups. In January this year, it bought a 25% stake in Bengaluru-based digital hotel marketing solutions firm Simplotel, using money from the innovation fund. Following that deal, in April, it acquired the assets of travel planning website Mygola.com.
In May, MakeMyTrip had bought an 18% stake in Inspirock.com (based in California), an online planning tool for developing customizable itineraries. To be sure, the latest acquisition is not out of the Innovation Fund.
HolidayIQ said it will use the funds to further strengthen its capabilities on content, mobile and product development. HolidayIQ had raised series A funds from Tiger Global and Accel Partners.
“Mobile is creating new unprecedented opportunities for growth and innovation. This capital gives us additional resources to expand quickly and strategically and accelerate pace of product innovation. We look forward to working closely with MakeMyTrip in getting a much larger number of Indian travellers to participate in the creation of Indian traveller opinion,” said Hari Nair, founder and chief executive officer of HolidayIQ.
HolidayIQ.com lists more than 2,000 tourism destinations and over 50,000 accommodation options (hotels, resorts, home-stays, jungle camps and serviced apartments) in India.
“HolidayIQ brings on board the much needed user engagement edge, where you can find reviews, do your research, seek feedback and these formats are not easy to replicate. In today’s time, it is the content and engagement which is driving higher valuations and as part of enriching their existing model it is a good investment for MakeMyTrip,” said Kashyap A. Chanchani, managing partner at The RainMaker Group, a digital technology focused investment bank in Mumbai.
MakeMyTrip had an average of about 7.8 million unique visitors per month in fiscal year 2015. With more than 7 million downloads (to date), MakeMyTrip’s mobile app is one of the most widely used travel apps in India.
According to data from the Registrar of Companies, HolidayIQ posted revenue of Rs.8.04 crore in the year ended 31 March 2014, compared with Rs.4.62 crore the previous year, an increase of 74%.
That investors are keen to put money in the online travel segment is clear from the fact that since January, four start-ups have managed to raise nearly $54.05 million, according to data from VCCEdge, the financial research platform of VCCircle.
“As search engines increase their influence in the online (travel) research and shopping flow and, in a few cases, push their own products over organic search results, travel companies are looking at avenues to safeguard and monetize their traffic,” said Chetan Kapoor, a research analyst at consulting firm Phocuswright Inc.