The concluding session of PhocusWright Conference featured MakeMyTrip founder Deep Kalra – arguably the most credible face of Indian travel tech business. And in his candid interaction, Kalra touched upon a myriad of pertinent issues including the growing competition and the new verticals which need further harnessing.
The recently held PhocusWright inaugural conference in India (held at The Leela, Gurgaon) probably could not have hoped for a better climax. After a series of power-packed presentations by senior luminaries of travel tech vertical (including representatives of companies like Facebook and Airbnb) on the concluding day of the event, the last session was reserved for India’s biggest mascot of travel technology – Deep Kalra, founder of MakeMyTrip. Having taken a shot in the dark at the turn of the century, Kalra today unquestionably holds the position of a pioneer who saw it happening much before anybody else. In fact, there are many observers in the marketplace who credit him for not only kickstarting online travel booking trends in the market but also being in the forefront of ushering the e-commerce business in the country which has assumed a gigantic shape now, graduating from travel to general merchandise. What makes MakeMyTrip story extraordinary is its positioning both as cause and effect factors of the online booking boom in India – it has been a catalyst and a leading beneficiary too. So when Kalra alongwith the Co-Founder and CEO of MakeMyTrip Rajesh Magow took the centerstage in the concluding session, a strong audience of over 200 present listened to him in rapt attention.
With MakeMyTrip’s journey synonymous with the growth of the online travel booking business in the country. Kalra firstly recounted the story of his company’s initial bout of struggle. The launch of MakeMyTrip had coincided with unfortunate incidents like the 9/11 terror attacks, the collapse of the dot-com business and the outbreak of Severe Acute Respiratory Syndrome (SARS) which had severely impacted the global travel business. Initially, the company was catering to the Indian-US travel market but given a negative business environment, the required funding was not readily available. And it had taken about five years for the company to kickstart its Indian operations. “Our initial business plan was to start it from India. But that is something we could do only in 2005. Apart from other issues, the non-alignment of Indian consumers with online buying mode was a key reason to delay our launch in India,” Kalra recalled. “After starting this business, we realized that we are ahead of our times. To tell you the truth, our business between 2000-2005 was tiny. But we somehow hung around because we had the conviction that it will ultimately work. We had realised in the early stages that to expand our wings, we need to do more elaborative market research. And this became a guiding principle for us,” Rajesh Magow added.
But the phenomenal internet penetration which the Indian market has seen post-2005 added wings to MakeMyTrip’s growth story. The resulting change in consumer behavioral pattern where online booking began picking up momentum in the country further convinced the promoters that their reading of “seeds of the future” was not off the mark. And since then, MakeMyTrip’s spectacular journey has seen several positive twists and turns which is also symptomatic of trends in the market place. “Air business had surprised us with its fast growth pattern. Customers wanted cheap tickets which we provided them online. Packaging market was the next to take off for us. But hotel market took some time to show robust growth pattern. From the perspective of India market, the hotel market took off about two years back and real velocity has become discernible only from the last year. Due to the addition of this new vertical, the business has dramatically changed. In 2010, 85 percent of our revenue was coming from the air business which has now come down to 50 percent,” said Kalra underlining the milestones of India’s biggest OTA achieved over last one decade.
The theory that Indian online travel booking space is in the midst of a critical churning dominated major part of Kalra’s address to the PhocusWright conference delegates. “Mobile has become the most secular driver for our business. It has brought in the humongous amount of customers, most of the last minute bookings are happening on mobile. And this platform is only getting better and bigger. From e-commerce, we are heading to m-commerce era at a fast pace,” Kalra pointed out. “Mobile is your indispensable companion available with you on a 24×7 basis. Bandwidth has significantly improved. The entire eco-system which we are noticing today has fundamentally evolved because of mobile,” Rajesh Magow spoke no differently.
The founders of MakeMyTrip also focused on some key broader issues. For instance (as per a strong market perception) despite the global boom in the online travel booking business, the pace of consolidation has been low. Responded Rajesh Magow, “I guess, the market players have been waiting for the hotel market to open up. From their standpoint, this logic has a strong validity given the fact that online hotel booking is a high-margin market. Even we are aspiring to convert it into our major vertical. And now that online hotel inventory is growing, the pace of consolidation could also grow.”
In terms of micro verticals of the larger travel platform, Kalra also pointed at some nascent domains for the existing and upcoming online players. “I don’t think, anybody is doing much in the last minute booking segment. It’s a great niche area and need to be harnessed by our community,” he advised. Meanwhile, a moot point raised at the session was competition in the online booking space skipping to a new stratosphere with more players jumping the bandwagon. Its not merely the issue of arrival of new age aggregators in the business but also companies like Paytm (known more for their online payment solutions) integrating their processes to also cater to the travel business. The founders of MakeMyTrip, however, strongly opined that to succeed in the market, new players will need to have travel as the core of their business offerings. “There are so many players trying to enter into the fray. There may be more competition in the market. But they might be getting into a non-core area and we are positioned to match them in every aspect,” Rajesh Magow emphasized. “For any online player, travel just can’t be yet another vertical. This business has its own complexities,” Kalra added. And amidst the growing competition, which many believe is also a function of deep discounts which some of the start-ups are offering, how will the scene pan out? “It is difficult to understand the power of deep discounting though it opens up the market. But nobody can keep on doing it permanently,” Kalra reasoned.