In 2000, just months after its launch, online travel portal MakeMyTrip found itself in the middle of the dot-com bust, which sent the internet industry into a tailspin. It was started to serve the travel needs of the US-based Indian community, but today MakeMyTrip has survived a downturn and emerged as a leading travel company. Through a bouquet of acquisitions, it has consolidated its market share and transformed from a small startup to a Nasdaq-listed company. In an interview, founder Deep Kalra talks about how technology is disrupting the travel space.
What are the megatrends that will drive the future of travel?
The erosion of traditional silos is transforming travel as brands are offering vacations or business trips tailored to the needs of the customer. Travel companies are attempting to own every facet of the traveller’s experience, from airport pick-up to restaurant reservations to activities on their bucket list. It is what’s changing under the hood, in the back-end tech, that is driving the evolution of the travel industry. Immersive experiences are being created in travel and hospitality in the face of increased digitization. Millennials and Gen Z in corporate India are averaging six holidays a year. They are not inclined to save and invest in property or a fancy car but are willing to spend on experiences.
How you internalized innovation as a culture in the organization? Can you give us examples of disruptive technologies you are working on to cement MakeMyTrip’s position.
Change is happening at a pace not known before in all things touched by technology, and travel is no different. While it’s still early days for conversational commerce, we are seeing very encouraging results as we drive deeper into the Indian market beyond big cities by bringing down barriers through voice commerce and vernacular approach. We are making sustained investment in artificial intelligence (AI) and natural language processing to understand user intent better.
Our investment in chatbot technology is helping us reach out to users through popular apps like WhatsApp. In India, people seek a lot more hand-holding than in other parts of the world, but we are slowly seeing the shift as more people are comfortable applying filters to make relevant searches and using chatbot conversations.
Are there any inspiring models from outside India for the future of travel and tourism?
There are many companies we follow closely and it is critical that we do. Of particular interest is Chinese online travel behemoth Ctrip, which has invested in us and has been a great partner. We have received tremendous strategic inputs and advice from a market leader that operates in a more advanced but similar market.
Today’s consumer is spoilt for choice, especially since funded consumer internet companies give discounts. How are you reinventing yourself in the face of such competition?
Loyalty is the hard grind. The competition for customers’ wallet, smartphone space and genuine brand loyalty is getting more intense, so it’s imperative for businesses to evolve the value proposition that will fundamentally change user behaviour.
As we look at building sustainable e-commerce businesses, we have to go beyond just customer acquisition and focus on customer retention. If only top-line performance is rewarded without looking at critical business metrics like retention, the discounts will do nothing for customer loyalty and businesses can keep burning cash for expensive acquisition and re-acquisition sprees.
You survived the 90s dot-com bust and have emerged stronger since. What are the differences between doing business then and now?
There were two big things that helped online travel take root in India. First, Indian Railways went online and IRCTC got the average Indian to trust paying and purchasing online. Second, the advent of low-cost airlines put choice within the consumer’s reach. We aggregated all of it and at the back-end and built direct connect with these airlines. The real take-off for MakeMyTrip was in 2005, when we launched in India. Democratization of the internet has meant that our travel products are now accessed by customers across the country. Proliferation of smartphones juxtaposed with low cost data access has meant that there is increasing category comfort with buying travel products online.
What are the fads when we talk about future of travel—easy to be seduced by but difficult to implement?
Virtual reality (VR) holds promise but given that we have seen such a small play of consumer-oriented VR, it’s real impact is hard to fathom. The VR headset experience was a technological wonder to behold and it was enough to get the conversation started, but it hasn’t really stirred up things quite the way it was being talked about.
Now blockchain is considered an emerging technological force that promises to change travel industry’s status quo but it will take time before we see it implemented.
Smart hotels and bots acting as reception staff are reality in some parts of the world? What impact do these trends have on the travel/ hospitality industry?
Technology is being deployed not just to gain advantage over traditional businesses or optimize operations, but to build new business models. As I look at the future of travel sector in India, I am convinced it will be powered by data but driven by people. Increasingly every action, every decision, every choice, every interaction has more data behind it.
The cell phone has become our tour guide, travel agency, restaurant locator, map, and more. Where will the next wave of disruption come from?
New economy travel companies are delivering real value-add by applying machine learning and AI atop online search, planning and booking experience. We are focussing on ‘relevance’ to build powerful messaging and product bundling capabilities based on context and past purchase propensity of travellers.
AI in travel and tourism is being used today to predict travel choices, personalized services, complete bookings and manage in-trip and post-trip needs.
Within the global travel and hospitality industry, it is large OTAs, metasearch players and branded hotel chains that have managed to use big data to bring out insights that can help improve customer experience. This data helps understand a user’s intent, consequently preparing a customised user interface, sending relevant notifications and offers.
At a time where market leadership is also defined by how much capital you attract, how defensible are consumer internet companies in the current environment, especially when there is so much capital available and you have the likes of Softbank to fund huge burn rates?
I think if you’re in a vibrant and a robust industry, you will have competition. It’s the nature of the beast, which is a good thing. If there’s no competition, it means there’s not enough market. Private market today runs very deep. Some investors are willing to put in a lot of money, so they’re using capital as a competitive advantage. But companies should lose sleep on creating value, not valuation. In this unicorn obsessed start up era, there is nothing wrong with billion dollar dreams and moon-shot ambitions but the lack of appreciation for $100 million success stories is just hype-driven cynicism. Focus should be on building not selling -- building a better product that solves a real pain-point, and building a better experience that will be universally loved.
Virtual reality technologies will allow you to experience (see, hear, and even smell) your chosen destination months before you arrive. Augmented adventure will become popular thanks to the use of Google Glass-style wearable technology to detect virtual reality and data apps embedded in the landscape, adding a new layer to a hike in the hills, and making getting lost a thing of the past. Are you also making use of these innovations for your customer and how?
Any virtual reality experience can become a very persuasive channel of communication. As customer attention gets shorter, virtual reality tools can offer immersive experiences and engagement in novel ways. There are a handful of global players in travel space that are investing in VR content experiences showcasing underwater views, high street experiences or using it to train their crew. We are learning and educating ourselves about the opportunities and possibilities that virtual reality presents.
Since product is evolving, monetization models will have to evolve too. What are the key changes being seen here?
When we started out - the aim was to make things more informative and transparent while booking travel online. As we look ahead, we want to add another dimension - make it equally intuitive. There is a big focus on personalisation, conversational commerce & bringing Artificial Intelligence out of labs for customer focused solutions. Chatbots are already helping airlines and online travel companies like ours handle some of the simpler customer transactions booking, boarding passes etc, so that human agents can focus on more complex interactions. But that’s not all, customers are now being recommended flights, hotel and holiday package based on their search history, booking behaviour, location, preferences etc. This is all part of exciting change that will not just unlock new revenue opportunities for travel players.