MakeMyTrip commits to growth as Ibibo integration gets under way

MakeMyTrip has completed its merger with Ibibo Group and will continue to prioritise growth over profitability in the short-to-medium term.

Talking through its Oct-Dec16 financials, MakeMyTrip’s CEO for India, Rajesh Magow, explained to analysts that its approach post-Ibibo hadn’t changed. As MakeMyTrip sees it, the overall online travel industry in India has room to grow across most segments and the combined business is in prime position to capture this business.

By 2021, travel in India is tipped to be worth $67 billion, with online accounting for 35%.

During the reported quarter, MakeMyTrip recorded triple-digit growth in its standalone Indian hotels business – bookings were up by 105.3% compared with Oct-Dec15, with mobile bookings up by 150%.

Domestic hotels are growing for MakeMyTrip quarter-on-quarter. And with online (including mobile) hotel bookings accounting for around only 15% of the market, it believes it can keep growing its market share at the same time as the market itself grows.

Other segments of interest are international hotels and international air, both of which are “underpenetrated” in terms of the wider online market and within MakeMyTrip.

Domestic air is one area where online is relatively mature and where MakeMyTrip’s growth is outperforming the market. During the quarter, its domestic air market share climbed to 17%.

Magow noted that the different maturity and growth profiles for these four segments means that there could be “a completely different strategy [for each], in terms of whether we go aggressive or less aggressive.”

A recurring theme for MakeMyTrip is the offline to online shift, with mobile dominating this shift. Magow noted that external tailwinds are helping, notably the roll-out of 4G networks, the adoption of smartphones in India and the resulting competition between the networks which is making data plans more affordable.

“Our mobile first approach is clearly the right strategy. As a company, we are seeing strong growth of net users coming from smaller cities and towns, which are rapidly coming online via mobile. This trend is driven by very attractive data plans offered by telecom companies in the quarter,” he said.

To prove this point, Kalra pointed out that during the quarter MakeMyTrip’s app was downloaded some six million times (bringing its cumulative downloads so far to 33.5 million) and that one-third of the new downloads came via Reliance Joi’s recently rolled out 4G network.

The merger with Ibibo Group is now complete, and the integration process is under way. When asked about how the combined group’s main brands would develop, Kalra confirmed that both MakeMyTrip and gobibo would operate as standalone brands, but with “technology hotel supply and marketing synergies” in play.

He hinted that both would be able to grow their business independently and that neither would be prescribed a specific customer base to target.

“We do believe that both brands have very loyal target segments of their own and we definitely don’t want to limit the aspirations of either brand by straightjacketing it or containing it in one particular area.”

MakeMyTrip’s perception of India’s competitive landscape is even more in focus following the Ibibo merger. When asked, Kalra noted’s recent listing on Nasdaq and pointed out that it was more active in packages and air than hotels; Cleartrip, he said, has been around for ten years but had allowed Ibibo to catch it up on hotels; Expedia and “are probably growing” their domestic business but are mainly servicing upmarket, inbound visitors.

One outlier he brought into the fray is Paytm, a mobile wallet which has a marketplace selling air, hotels and, importantly, rail and bus.

Click here to access the holding page to access its Oct-Dec16 earnings report.

Related reading from Tnooz:
Cleartrip builds activities white label for Dubai hotels (Jan 17)
Yatra opens marketplace as part of new look (Jan17)
Pivotal moment in 2016 – when MakeMyTrip merged with Ibibo (Dec16)

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