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MakeMyTrip, India's largest online travel portal, expects nearly 50 per cent of its revenue to come from the hotel business over the next two years, a top official said today.
With airlines cutting down commission and margins under pressure, online travel companies like MakeMyTrip are increasingly diversifying their business by launching holiday packages, offering bus and train tickets and promoting hotel bookings.
"What was happening in air ticketing business was not one-off. It was a trend and we realised it will be tougher and tougher to make money in air ticketing," said Deep Kalra, chief executive officer and founder of the portal.
"When we did our IPO (initial public offering) three years ago, about 85 per cent of our revenue came from air ticketing. Now, it is 68 per cent and by the next two years, we will have a revenue share of 50-50. It's a tougher business to begin with, but is better in the long run as the margins are high and number of suppliers are more," Kalra added.
The thrust of MakeMyTrip on promoting hotel reservation was evident as it changed its brand tag line from 'Memories Unlimited' two years ago to 'Hotels Unlimited' now.
Currently, 31 per cent of the portal's revenue comes from packages and hotel business and a small fraction comes from car rentals, bus and train bookings. MakeMyTrip has an inventory of 80,000 hotel rooms, a majority of them abroad. "It (hotel business) helps us add value to small players, who otherwise would not be able to reach target audience without us," he said. "We have been reporting 60-65 per cent growth in the hotel business for the last three years. The percentage of people who booked air tickets online is 40 per cent and hotels is just five percent, but it's growing."
Kalra said he was also exploring expansion opportunities in Southeast Asia by setting up country-specific booking sites and growing the number of franchisees in India. It runs an office and portal in the United Arab Emirates. At present, its share in the business is in low single digits, but is growing fast.
The portal also made three acquisitions in the last two years, buying two destination management companies and a hotel booking site in Southeast Asia. "The portal has to be customised for that audience and otherwise there is no value," Kalra said.
