OTAs Part 3: Make My Trip and Easy Trip Planners

Easy Trip Planners really doing some thing special

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.

• Started in 2000 and listed on the Nasdaq in August 2010.

Airline

The company facilitates bookings with airlines either through a GDS (use both Amadeus CRS and Galileo GDS) or via “direct connects” to the airlines’ booking systems. In terms of revenue, India’s domestic air travel remains a significant contributor. However, as of FY23, international travel also contributes approximately 10% of air segment revenue.

Hotels and Packages

The hotels and packages business primarily operates through MMT India, which encompasses both the MakeMyTrip and Goibibo brands. In fiscal year 2018, the company streamlined suppliers by merging them into a unified technology platform. This platform caters to domestic and self-contracted international accommodation properties, accessible through websites and mobile applications.

The company obtains access to room inventory from hotel suppliers through three methods: “direct connects,” “direct allocation” and for most hotels outside India, through contracts with online travel agents and aggregators outside India.

Strategy Expand Hotels and Packages Business. The hotels and packages segment yields a better and more complex nature than air tickets. The company is focused on expanding its hotels and packages business and, accordingly, increasing the revenue mix from our hotels and packages segment.

Bus Ticketing

The company operates a bus ticketing business primarily through redBus, a leading online bus ticketing platform with a presence across India through www.redbus.in and in select countries overseas through other regional redBus websites.

Bus ticket inventory is obtained through two channels: real-time inventory from operators and inventory from aggregators, who are directly connected to the company booking system.

Other Services and Products

Rail Tickets. It sells railway tickets in India on MakeMyTrip and Goibibo platforms through “direct-connect” access to Indian Railways’ passenger reservation system online.

Car Hire. In fiscal year 2018, it introduced outstation cab services on both MakeMyTrip and Goibibo platforms. As of March 31, 2023, it offered outstation cab services in more than 1,700 cities in India. The company also offers transfers to and from 25 airports across India.

MMYT has been largely loss-making on account of elevated advertising and promotion costs, which used to be at 10% of gross booking which exceeded peers by 4-6%. Air ticketing is profitable for MMYT too but discounting and promotions in hotels have been a key reason for negative contribution margins and hence losses for MMYT.

Post-pandemic companies have changed their strategy by reducing discounts, sales, and marketing spending. The early trend is visible as FY24 quarterly results are profitable at the PAT level. The big question is the change in spending trend is it indicating that competition has reduced and going to bring in a major shift in overall OTAs would good be watched.

Easy Trip Planners

EaseMyTrip started its operations in India in the year 2008 by serving the business-to-business-to-consumer (B2B2C) market segment. They operated as a distribution channel and provided travel agents with access to their website to book domestic travel airline tickets to cater to the offline travel market in India.

• Started in 2008

PRODUCTS AND SERVICES

• Airline Tickets, which comprise the standalone sale of airline tickets, as well as airline tickets sold as part of the holiday packages.

• Hotels and Holiday Packages, which comprises standalone sales of hotel rooms as well as travel packages. The company has partnerships with aggregators (no inventory with the company) and receives commissions from them.

• Other Services comprise rail tickets, bus tickets, air charter services, taxi rentals, and ancillary value-added services such as travel insurance, visa processing, and tickets for activities and attractions.

The company adopts the following option to have a better margin.

• No Convenience fee option

• Advance deposits to cash-hungry suppliers to get better commission.

Hotel business

It is in the incubation stage, so the company uses 23 aggregators and the direct relationship is about 7,000 odd hotels with whom we work to get room inventory and get rates from all who have negotiated rates with hotels.

This model increases the likelihood of getting cheaper prices. This helps to keep our brand image of being a very cost-effective company out there in our customer’s minds and that is how we have designed our hotel business.

The company aims to broaden its reach into hotel segments, where it faces competition from MMYT and others. MMYT has aggressively invested in discounts, sales, and marketing to establish a strong foothold in this segment and merged with 2nd player in OTA in 2017 Goibibo which was strong in the hotel segment. While the hotel segment is still in its nascent stage for EaseMyTrip, the company’s strategy involves gaining market share through cross-selling air tickets. Notably, post-IPO acquisitions have predominantly focused on the hotel and packages segment, signaling the company’s ongoing efforts to strengthen its capabilities in this area.

Acquisition

• Hotel Mangement Asset

  • Spree - Operate Three Star and Four-Star Hotels with 1220 operational key.

  • ECO Hotels and Resorts 13% stake

• Hotel Teck

  • Traviata

    • A platform for Hotels to discover the best price from all the agents. It is a type of bidding platform for the hotel room price discovery.

• Package or Travel service.

  • TripShope Travel Technologies Pvt. Ltd:

    • A leading travel solution platform that provides a range of solutions and boasts a large B2B Database of Kashmir

  • Dook Travels Pvt. Ltd :

    • The travel service provider operates across Central Asian countries, Turkey, the UAE, and India

• Other

  • YoloBus

    • Provide enhanced and superior bus travel. experience.

  • Guideline Travel Holidays

    • A Leading cruise provider and a highly reputed travel company that excels in both B2C and B2B circuits.

EaseMyTrip is known to give the best price to customers by keeping them as profitable. They had shown good growth in Air ticket booking to become the number 2 player. In FY24Q2 company emphasized that they are further focusing on profitability over the growth which show degrowth in the FY24Q3 number with a reduction in discount spending.

To invest in this company my concern is they could not get dominance in any of the segments, and they are still taking bay steps outside Air ticket booking. The only point management repeated is frugality, as valuation is not that attractive I would watch the following to see how things pan out.

• How EaseMyTrip benefit from the market leader’s reduction in discount spending?

• Airline tickets – Main revenue stream, how does the Hotel segment get built in relation to market leaders?

• How do current assets change with overall growth in GBR? will the Advance deposits and Trade receivables keep growing?