Business Lounge with MakeMyTrip’s Deep Kalra
MakeMyTrip founder CEO Deep Kalra on putting all his eggs in one basket, his obsession with the internet, and creating India’s largest online travel company
Gurugram: Deep Kalra loves travelling. But for someone in the business of travel, his choices are pretty much tried and tested, be it the pristine Radhanagar beach on Havelock Island, in the Andamans, the magical passes of Ladakh, or the clear blue waters of the Maldives. “If there is one place I love going back to, it is the Maldives,” says Kalra, founder and CEO of MakeMyTrip. “For a scuba driver like me, it is paradise.”
We are meeting at the MakeMyTrip office in Gurugram and I am late. Kalra, who has the patient demeanour of a monk, greets me with a smile, before reminding me politely that he will need to leave in 45 minutes. The walls of the spacious office are lined with memories: a collection of hotel room keys, photographs of award ceremonies and river-rafting trips. “We used to do a lot of those in the early days of MakeMyTrip,” says Kalra, pointing to one rafting photo. “As the business started growing, time for such group activities shrank.”
Kalra always wanted a stable salaried job, like his parents. His father had worked at one company for 30 years, and his mother had taught at the Convent of Jesus and Mary in Delhi for 28 years. “When you grow up in such a family, I think, willy-nilly, you start absorbing a lot of those things,” says Kalra. “I thought that’s what I was going to do.”
So, after finishing his MBA from the Indian Institute of Management, Ahmedabad, in 1992, Kalra got a job in the banking sector. But after stints at ABN Amro Bank and GE Money, and a failed venture in between, he changed tack. He founded MakeMyTrip in April 2000 and went on to become the poster child of the online travel industry in India.
Kalra’s introduction to the internet happened in 1999, while working for GE Money. “Every time I did anything on the internet, it was five times more convenient than the offline model—be it dealing with my travel agent or my stockbroker,” he says.
Around the same time, online deals saved him about $100 (around ₹6,745 now) on a hotel booking for his Thailand holiday, and fetched him about ₹20,000 more for his Maruti Suzuki Zen. “So there were several ‘aha’ moments, after which I was determined to take up the online industry,” he recalls. It was a toss-up between the stock market and the travel industry. “Stockbroking seemed like the domain of a large financial institution; travel seemed far more exciting. It helped, I guess, that my wife and I have always been big-time travellers,” says Kalra. “And the online travel model was working in the US and Europe, so I thought, how difficult can it really be?”
Over the years, MakeMyTrip has become an end-to-end travel solutions provider, from booking tickets—international and domestic, air, rail or bus—to hotel reservations and holiday packages.
Kalra is dressed casually in a blue polo T-shirt with “go-mmt” branding and a pair of brown khakis, the solid colours standing out against the kaleidoscopic walls. He’s wearing a Cartier watch gifted by his wife; he is happy he can wear it while scuba-diving.
We settle down with tea as Kalra recalls the company’s journey since its initial public offering (IPO), “the single most important financial landmark for the company till date”, in 2010. MakeMyTrip listed on Nasdaq in August that year for an IPO price of $14 a share. The scrip closed at $39.75 on Nasdaq after Wednesday’s trading.
“The IPO was defining,” says Kalra. “It didn’t only allow our investors a great return and exit, but also got us a whole new set of investors. It also propelled us into a different peer group. We are now competing with the likes of TripAdvisor and Expedia.”
From the firm’s perspective, the IPO gave it the momentum for growth, and allowed it to conduct mergers and acquisitions (M&As). Since 2011, they have closed about a dozen M&As, Goibibo being the biggest—the company acquired 100% in brands Ibibo and RedBus from the parent company Naspers, which, in turn, got a 40% share in MakeMyTrip, making it the biggest shareholder in the online travel firm.
The Ibibo deal was a coup. Kalra, who wants to retain the Ibibo and RedBus brands, is focused on growth, even at the cost of losses in the immediate term. The company has spent a great deal on advertising and accelerating growth in hotel bookings, which Kalra thinks will become the mainstay of the business—in fact, these expenses rose 144% in the December quarter from the year-ago period. More than 40% of the revenue today comes from the hotels business, compared with 15% in 2011. And Kalra is focused on becoming the first port of call for anyone planning to travel.
He believes the fastest-growing areas will be international travel and hotel bookings. The assessment seems fair. MakeMyTrip is already the biggest player in the online ticketing segment and competition is heating up, with Paytm launching its own travel ticketing system. Hotels and packages, therefore, look like segments with better margins.
“Almost 60% of all domestic tickets are now bought online, while only 15% of all hotels are bought online,” says Kalra, “so there’s a lot of headroom for growth there.” They are, therefore, planning more products and features on the smartphone and app.
“A lot of us find the app easy today but the same app might be intimidating for another customer from a smaller city who is not so well educated and maybe doesn’t speak English. So, to make it easier for those customers, we are now thinking of a chat-based app, a virtual assistant,” he says. The team is testing a voice-based assistant, like Amazon’s Alexa or Apple’s Siri, which will be able to talk in Indian languages and do a full booking, be it air tickets or hotels.
“I think it’s fair to say we will see at least 200 million people come online in the next couple of years. And we should be ready for them.”
Kalra talks about MakeMyTrip’s early days—when they were forced to downgrade from an office to a mezzanine-floor space above a godown in Delhi’s Okhla area—as easily as he talks about the growth strategies of a company that can take on global peers. He founded MakeMyTrip with $2 million in venture capital (VC) funding, but, within a year, the dotcom bubble burst, triggering an exodus of VCs. The terrorist attacks in the US in 2001 made the situation worse. He had to effectively shelve the Indian site because India still wasn’t buying online.
“The next four years were extremely tough,” says Kalra. “We had no money. We had to shrink the team but I was bitten by the dotcom bug and had faith in the internet. So I stuck to my instincts.”
Things began changing around 2003. The international site, targeted at non-resident Indians (NRIs), clicked and helped the business break even. At about the same time, the Indian Railway Catering and Tourism Corporation (IRCTC) started online ticketing, and Indians began warming up to the online booking model. In 2003, the low-cost carrier Air Deccan started services, keeping ticket prices down by taking the online route rather than booking through agents. “The central idea was to remove the intermediaries to save on commissions and things were aligning all right,” he says. In 2005, the Indian site was relaunched.
“Deep’s single minded focus is what makes him different from others,” says Manish Amin, co-founder and chief information officer of Yatra.com. “Even at the time of the dotcom bust, when most people were unsure of the internet, Deep was convinced it would work. That determination is the reason MakeMyTrip survived the dotcom bust.”
In hindsight, it was all about the timing, and hanging in there. “I was 30 when I started MakeMyTrip, still idealistic enough to believe you can do anything. So if someone asked me today why I put all my eggs in this basket, I think it was my faith in the internet,” says Kalra, about a month shy of his 49th birthday.
Family time is extremely important, says Kalra. Son Armaan, 16, left home three years ago to chase a career in football, playing for a club in Switzerland. No wonder Kalra says he will be cheering for Switzerland in the World Cup. He is realistic though. “If I was to put my money on a team, I think I will go with Germany,” he says.
Daughter Manya, 18, will leave in August for Brown University, US, to study liberal arts. “So whenever we get time with one or both of them it is very precious,” says Kalra. Wife Amrita, a television anchor who left her career to focus on the family, has launched a furniture business recently with her sister.
Kalra is focused on the next phase of the company’s growth and believes mobile phones and Artificial Intelligence will disrupt the online travel industry in the near future. He expects most of the growth in air travel and hotel bookings to come from smaller cities and towns. A great example, Kalra says, “could be travelling from Dhanbad to, say, Chandigarh, Amritsar or even Ludhiana. It might have meant a whole day of travelling, including an overnight, in the past. Today, it has come down to about 4 hours.”
Connecting the country is becoming simpler. And, according to the International Air Transport Association, India will witness 50 months of consecutive double-digit growth in domestic air passenger traffic by October. And like the many bets he has taken before, Kalra bets this growth will be fuelled by demand in smaller cities across the country.
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