MakeMyTrip scouting for acquisitions2 min read . Updated: 01 Apr 2013, 11:56 PM IST
Firm seeks to buy niche travel technology entities and specialist travel firms dedicated to certain segments
Hyderabad: Nasdaq-listed travel site MakeMyTrip Ltd is scouting for potential acquisitions and has identified three areas for inorganic growth, even as it sees a surge in the hotel bookings business.
The company is seeking to buy niche travel technology entities and specialist travel firms dedicated to certain travel segments, said Deep Kalra, founder and chief executive officer of MakeMyTrip, which celebrated 13 years of its founding on Monday.
A third area would be “supplier disintermediation", he said.
“We believe that there is scope for one intermediary between suppliers, be it an airline or hotel, and customer, and we believe we are that intermediary. We will look for supplier disintermediation wherever we can see it," Kalra said.
Gurgaon-headquartered MakeMyTrip has made five acquisitions—three overseas and two locally.
In November, it bought Hotel Travel Group, which operated the website hoteltravel.com, for $25 million, adding 70,000 international hotels, mostly in Southeast Asia, to its inventory.
Earlier, the company acquired a majority stake in Singapore-based tour and hotel reservation agency Luxury Tours and Travel Pte. Ltd for $3.4 million, a 19.9% stake in Le Travenues Technology Pvt. Ltd, which runs online travel aggregator iXigo.com for $4.8 million, and a 29% stake in My Guest House Accommodations Pvt. Ltd for $1 million in November 2011, which gave it access to budget travellers.
MakeMyTrip is seeking to tap into newer traveller categories.
“To give you an example, if there is a good company for pilgrimages that would be very exciting for us," Kalra said.
“It is clearly evident that they are following the direction in which customers are moving," Chetan Kapoor, research analyst at travel industry research firm PhoCusWright Inc. said, identifying religion travel as one of the biggest forms of travel in India.
Kalra said ticket size is not a constraint and the company is open to even larger acquisitions.
“If we find a company which is fantastic but is very large, we will have to see financial options or structuring," he said.
Kalra said the management was willing to put to use the $70 million MakeMyTrip has in cash reserves and is prepared to debt-finance a large acquisition.
“We have to now put this cash to good use," he said. “Tough time is a good time to get companies." Currently, there are “many deals" coming the company’s way, he said.
Kalra also said the hotel bookings segment will be a significant revenue driver for the company, and expects the airline-hotels ratio to come to 50:50 within two years from the current 70:30. Short haul regional travel by Indians to West Asia and South East Asia is seeing strong growth and is a potential opportunity, Kalra observed.
Stand-alone hotels on the website saw over 100% growth in transaction terms while hotel and packages grew 60%, he said.
The company has 10,000 hotels in its inventory in India, apart from the 70,000 overseas properties that came in through last November’s acquisition of hoteltravel.com.
Other travel firms are betting on bundled packages involving accommodation as well. MakeMyTrip’s rival Yatra Online Pvt. Ltd bought hotel room aggregator Travelguru.com in June last year, after acquiring another hotel aggregation firm MagicRooms earlier.
Revenues from Indian hotel rooms are expected to grow from $4.9 billion in 2011 to $6.9 billion in 2013.