The potential of the two major markets in China and India will be better able to negotiate with the hotel; in addition to the integration of the wine products, Ctrip’s experience in dealing with market competition can also be used for MakeMyTrip.
Editor’s note: This article is from WeChat public account“ TravelDaily ” (ID: Traveldaily) , author Zhouchao Chen.
India’s OTA MakeMyTrip expects the company’s loss to narrow below $10 million by 2020.
As of June 30, 2019, MakeMyTrip’s quarterly operating loss was $42.9 million, narrowing $2.6 million; last year’s loss was $45.5 million.
MakeMyTrip founder and CEO Deep Karla said in an interview with Skift, “In three to four quarters, MakeMyTrip’s EBIT (earnings before interest and tax) losses will be narrowed to less than $10 million, when the company’s operations will Close to break even, then you can fully focus on the company’s growth plan.”
Skift believes that MakeMyTrip is confident in reducing losses in the future, more or less thanks to the help of its major shareholder Ctrip.
Ctrip currently holds nearly half of the shares in MakeMyTrip, and 5 of the 10 seats on the MakeMyTrip board are Ctrip. Karla said that MakeMyTrip integrates some of Ctrip’s premium airfare and hotel products to create a wider range of products and pricing options for travelers.
Karla said, “MakeMyTrip and Ctrip established a Direct contact, which is different from getting inventory from a third-party platform such as Booking.com or Expedia.”
The two companies have combined the market potential of the two most populous countries, China and India, to better negotiate and cooperate with hotels.
“The number of outbound passengers in China is expected to reach 200 million in 2020, and the number of outbound passengers in India will reach 30-40 million. From a geographical perspective, MakeMyTrip and Ctrip are located in Asia and there are many common target markets.”
Karla said that 2016 Ctrip investment < / a> a MakeMyTrip $ 180 million, but it was not conducted goods and services integration.
“Ctrip currently holds a 49% stake in MakeMyTrip, and will be more concerned about the operation of MakeMyTrip.” The two companies have set up teams to promote the integration of the two companies in airfare and hotel business.
Karla said that in addition to accessing Ctrip’s product offerings, the partnership with China’s OTA giants will also enable MakeMyTrip to win “strategic assistance” in the highly competitive Indian market.
“Investors poured billions of dollars into the Indian market, and price wars have come one after another. First, Yatra, then Goibibo. MakeMyTrip acquired Goibibo in 2016, and the two companies have merge .” In July, the US financial services provider Ebix for $ 337.8 million Acquired Yatra.
Karla said that Ctrip’s experience in dealing with competition in the Chinese market can be used by MakeMyTrip. China and India are two different markets, but there are many similarities between the two, including the city.The scale of the field is large, mobile services are preferred, and they are all developing countries.
“The mileage of Ctrip’s experience is the first stop for eLong, the second is where to go, and the third is for the US group. MakeMyTrip can gain a lot of experience.”
Aside from the synergies brought by Ctrip, hotels and homestays are also areas where MakeMyTrip is investing heavily, with higher profit margins than ticket products.
As of June 30, 2019, MakeMyTrip’s revenue from hotel and packaged products for the quarter was $68.5 million, down 10.2% year-on-year and 7.3% year-on-year at constant exchange rates.
Trying to challenge Booking.com’s market position in the residential sector will be a daunting task. But Karla pointed out that MakeMyTrip has made great progress in the field of hotel services.
When MakeMyTrip went public in 2010, ticket revenue accounted for 85% of total revenue and has now been reduced to 35%; while hotel and packaged product revenues have jumped from the current 10% to the current 55%. The business landscape of MakeMyTrip has changed, and this trend will continue.”
The Indian market is very fragmented and there is still much room for development. For OTA, providing marketing and search channels for individual hotels will undoubtedly increase the value of the platform.
Karla said that MakeMyTrip has signed direct cooperation with 60,000 hotels in India. Looking at the international market, MakeMyTrip has selected 20 destination cities that are most popular with Indian travelers and has established direct cooperation with local hotels.
Karla said that the short-term rental business is a huge development opportunity. MakeMyTrip has access to thousands of short-term rental properties. Millennials will book high-end villas in resorts such as Goa in India and Phuket in Thailand, and in Singapore and other cities will book apartments to save costs.
In addition to expanding inventory, MakeMyTrip also invests in improving the buyer’s buying experience, including hotel video promotion, encouraging user reviews, and providing Indian travellers with the necessary information, such as whether there are pure vegetarian restaurants in the hotel or nearby.
On the other hand, the old India Travel Group Cox & Kings has been plagued by debt pressure in recent years, which has also released more market competition for MakeMyTrip, which in turn helped MakeMyTrip achieve its goal of reducing operational losses.