 "We will continue to have new kind of competitors: Ashish Kashyap")
Online travel company MakeMyTrip and competitor ibibo decided to merge last month, making it the biggest such deal in the country’s travel space. The merged company will be a clear No 1 and miles ahead of the competition. ibibo’s founder and group Chief Executive Officer ASHISH KASHYAP has built (goibibo), sold (PayU) and acquired (redBus) businesses within a decade of his entrepreneurial journey. He is now merging the group with MakeMyTrip. Kashyap tells Ajay Modi about the thoughts behind the merger, the possible synergies and the road ahead after the merger. Edited excerpts:
Where does ibibo stand in the Indian online travel market?
We’re clearly the largest among online travel agencies in terms of transaction volume, including the hotel, flight and bus business. We are No 1 in hotel and bus booking and a significant No 2 in air ticketing. When we started operations around 2009-10, a lot of incumbents in the market were in a denial for a long time. But, we are proud of what we have created.
Will there be a reduction on headcounts as a result of this merger?
I don’t think the numbers for current businesses are going to change. It can only go up because we’ve operated frugally all these years and we are on a fierce growth path. In FY16, our hotels business grew 400 per cent. Even the tradition flights business grew 95 per cent. The bus business grew 60-65 per cent.
Since you were growing at a great pace, what prompted the merger?
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I realised that the market could be much larger if we combine forces. We’ll be able to accelerate bringing offline to online. We have complementary strengths. It was not that one weak and one strong player were coming together. We both were solid brands. Again, this is unlike most mergers. Here, the founders and the existing shareholders are not exiting.
Was there a feeling that it’s better to collaborate than compete and burn cash?
Till now, we were locked into a fight which was exciting. Of course, we’ll continue to have new kind of competitors. In terms of access to funds, we both had no issue. If the market becomes large, the scale and network effect takes off. The cost of bringing offline to online is bigger if done alone. People mistakenly say we’re burning cash. There is no problem if you do it the right way and bring network advantages.
What will be the focus areas after the merger?
We’ll be able to develop alternate accommodation, alternate transportation and the outbound market. We’ll bring holiday packages online. We’ll be able to innovate and execute and put the resources in the right direction with this combination. There are complementary strengths. MakeMyTrip expertise is in holidays and packages; we do buses and have alternate transportation.
When can we expect the online travel business to be profitable? Will the merger quicken it?
It is too early to comment right now. We’ve to get approvals from the regulators. We’ll keep improving the efficiency of our businesses but will never do it in a way that it hurts market growth.
Since the merger involves two leading companies, is there any concern on Competition Commission of India approval?
Overall, the travel market is $30-35 billion. We are less than 10 per cent. International outbound travel is yet to shift online and the domestic hotel is only 15 per cent online. Except for flights, the online market is under-served. I don’t think there should be an issue.
How has Naspers been as a partner and investor?
Naspers brought access to a lot of global knowledge and understanding. It is a good partner to have. Its playbook is emerging markets and in India, it is playing with leading internet brands. ibibo is a good example of returns to Naspers. (Naspers, now ibibo’s biggest shareholder, will become the single largest shareholders in the merged entity).
Will you look at areas outside the travel space?
We want to stick to solving problems in the transportation and accommodation sector. We don’t want to do new sectors. There is so much to do here. The volume of passengers travelling inside India and outside is very small.