Management case | MakeMyTrip’s value added services2 min read . Updated: 12 Nov 2014, 12:44 PM IST
As airlines aggressively started selling tickets directly, MakeMyTrip decided to reduce its dependence on air ticket booking
Mumbai: What doesn’t kill you, makes you stronger, they say. MakeMyTrip Ltd could vouch for it. Founded by Deep Kalra, India’s largest online travel agency survived a financial slowdown and a SARS (severe acute respiratory syndrome) scare, which grounded many travel and dotcom companies. In 2002-04, venture capital firms pulled out from MakeMyTrip, and the company couldn’t pay its employees for 18 months. But MakeMyTrip ploughed through. It successfully listed its US unit on Nasdaq in August 2010. On listing, the scrip trebled from its issue price of $14.
Identifying the destination
Kalra quit GE Money, a unit of General Electric Co., in 2000 to launch MakeMyTrip.com with $2 million. The management found that many non-resident Indians (NRIs) were browsing the Internet but not buying. MakeMyTrip started targeted advertisements for NRIs. It paid off and the company broke even in 2003. When low-fare airline Air Deccan was launched in 2004, MakeMyTrip brought it on its platform. Skipping the traditional booking system saved agent commissions, and the low-fare airlines on MakeMyTrip benefited.
Planning the trip
As competition intensified, the management realized that acquisitions were a shortcut to growth. But instead of blockbuster acquisitions, MakeMyTrip went for small companies it could digest. In May 2011, MakeMyTrip acquired a majority stake in Luxury Tours and Travel Pte Ltd, a Singapore-based agency that provides hotel reservations and tours for $3.4 million. In July that year, it bought a stake in Ixigo.com, an online travel search engine, for $4.8 million, and in November, it bought a 29% stake in Delhi-based My Guest House Accommodations Pvt. Ltd for $1 million. In November 2012, MakeMyTrip bought effective majority equity in a group of companies known as ITC Group in Thailand. In February 2014, the company completed buying the entire equity interest in a group of companies comprising the EasyToBook.com Group for $5 million. These purchases helped MakeMyTrip add technology muscle and the ability to offer customers accommodation ranging from budget to luxury rooms.
Designing the itinerary
As airlines aggressively started selling tickets directly, MakeMyTrip decided to reduce its dependence on air ticket booking. MakeMyTrip started adding hotel rooms, car services, train services, holiday packages and airline tickets. In 2012, the management decided to change its revenue mix from 75:25 (75% from air tickets, 25% from other channels) to 50:50. MakeMyTrip added holiday packages to its bouquet, which was more profitable.
Paying for the trip
In August 2013, MakeMyTrip named chief financial officer Rajesh Magow its chief executive officer for India and named senior vice-president (finance) Mohit Kabra chief financial officer. Founder Deep Kalra decided to stay out of routine things, remaining as chairman and group chief executive officer, leading the group’s strategic developments and overall execution excellence.
MakeMyTrip’s services and products now include air tickets, customized holiday packages, hotel bookings, railway tickets, bus tickets, car hire and facilitating access to travel insurance. Through its primary websites, the company provides access to all major airlines, more than 11,300 hotels and guest houses in India and more than 102,800 hotels outside India.