OTAs Part 2: Yatra Online and ixigo
OTAs on IPO frenzy
Online Travel Agency - OTAs Part 1
Industry OTAs, or Online Travel Agencies, are companies that specialize in selling travel-related products and services. These services include booking air tickets, hotel rooms, travel packages, bus tickets, and railway tickets through their websites and applications. Typically, OTAs act as third-party agents, reselling products and services provided by …
OTAs Part 3: Make My Trip and Easy Trip Planners
Make My Trip MakeMyTrip provides an extensive range of travel and travel-related offerings to meet the needs of both Indian residents and non-resident Indians, as well as travelers coming to India from the United States, Southeast Asia, the GCC countries, and other destinations.
Yatra Online
Yatra Online Ltd. (YOL) is an online travel agency that covers the entire travel and hospitality value chain, spanning both B2C and B2B segments (B2C: 55%, B2B: 45%). It is the largest corporate travel services provider in India regarding corporate clients and is the third-largest online travel company among key OTA players based on gross booking revenue and operating revenue for FY23. Among key domestic OTA players, it has the largest number of hotel and accommodation partnerships, with over 2,105,600 tie-ups as of March 31, 2023 (Source: CRISIL Report).
The company has a market share of approximately 5% to 6%, with over 90% of our traffic coming from direct and organic sources. Yatra operates in the B2B sector, which boasts better EBITA margins, and a significant share of our business comes from the hotel industry, which yields higher commissions.
The company focused on gaining market share at the expense of the offline players with a focus on hotels on the corporate side followed by B2C air.
Corporate travel market, the gain could happen largely at the expense of the mid-tier players and the fragmented market.
The consumer side is seeing a significant amount of channel shift, which could help people move from offline to online to source services and this is happening across tier-2, tier-3 markets.
The company started in 2006 and listed on the Nasdaq in December 2016 through a reverse merger with Terrapin 3 Acquisition Corp (TRTL).
Based on the data it looks like the company has not been able to grow in unit economics from 2016 at the time of reverse merger in 2016 and mostly GBR growth has come from the price difference in the ticket selling price. The key inference is that they could not gain the volume growth they lost margin.
As this is new listed company, I am of the view that at times this is overpriced with the above observations. I would stay away and watch for some time rather than go with great market potential.
ixigo [IPO Cancelled]
Ixigo is an online travel agency (OTA), known for its focus on localized content and app features that solve problems for Tier II/III travelers. The company anticipates that further expansion into non-Tier I cities will drive growth in train, flight, bus, and hotel bookings, a segment they refer to as the "next billion user" segment.
The company's business model incorporates a diverse mix of product and service offerings. For example, focusing on utility and crowd-sourced use cases helps to attract users organically. As more users engage with our OTA platforms, they contribute additional information to the system. This increases the platform's utility and enhances the user experience. These factors contribute to attracting and retaining more users, leading to increased monetization through bookings.
Train Tickets
Ixigo Trains and ConfirmTkt together were the leading B2C distribution platforms for IRCTC, holding a 42% market share in terms of rail booking among OTAs and other B2C distributors of IRCTC.
Flight Tickets
The company acquires inventory for flight tickets either through aggregators or directly from airlines' booking systems via API services.
Bus Tickets
AbhiBus has entered into agreements with several Indian bus operators to source bus tickets. This includes both private bus operators and various government-owned road transport corporation services in India.
Hotel Bookings
They have collaborated with Booking.com. The company earns revenue through commissions from Booking.com.
Cab Bookings
We have formed an alliance with ANI Technologies Private Limited (“Ola”). This partnership allows us to integrate local and outstation cab booking.
The company looks very interesting, built niche dominance in established OTAs with no major presence. It would be interesting to see how they build the overall ecosystem of OTA offerings. It is not an investment option as they have pulled out from the IPO as the company thinks that they could manage without listing as the economy has come back after COVID.