MakeMyTrip has successfully listed on the NASDAQ after being 10 years in the Online Business Space. Here is a peek into its Business Model and an Analysis on the same. The company is encashing on consumers conducting travel searches is the second-most popular Internet activity in India (84% of online users search for travel products), after e-mail
MakeMyTrip is the largest online travel portal in India based on gross bookings (US$466m in FY10). Online air ticket bookings for domestic, outbound, and inbound segments: 77% of revenues. Hotel bookings and packaged tours: 20% of revenues. Rail and car bookings: 3% of revenues. Highest gross bookings among online travel operators.
Averages ~1.7m visitors/month. Has a dominant market share of 48% of online travel bookings through OTAs in India. Large network of ~4,000 hotels and ~2,000 travel agents in 250 cities across India. Reported revenues of US$40.3m and net profit of US$1.5m in FY10 (excluding employee stock options charge of US$6.8m). Their well designed homepage helps them cross-sell and build brands for travel and related services.
MakeMyTrip Branding – has launched innovations, such as weekend breaks and packaged trips, to help convert users to book travel
online. It has positioned itself as not just a travel portal but a complete end-to-end holiday / travel consultant. It is the First online travel agency brand to be selected as a ‘Superbrand’ in India for 2009-10.
Online Travel Market Share in India:
- MakeMyTrip – 48%
- Yatra – 24%
- Cleartrip – 18%
- Others – 10%
Key Points in the Business Model:
- On Air Bookings the company gets 3% commission on gross fare net of PSF with Rs 50 to Rs 100 as service fee from the customer
- MMYT generates the majority of hotel and package revenue through its call centers and travel stores. Although only around 5% of transactions are executed through call centers and travel stores, revenues from these transactions account for around 20% of the total.
- Direct link between hotels’ central reservation systems and MMYT’s booking system
- Revenues from other businesses include fees from travel insurance companies, advertising revenues, and new service offerings.
- The net revenue margin in the hotel business to decline from 14% in FY10 to 13% in FY13e, which is conservative when compared with an increase from 8.9% in FY08 to 14% in FY10
- MMYT’s focus is to expand its high-margin hotel business, especially high-value international travel packages.
- Launched Websites for UAE and Canada
- The company is looking for selective merger and acquisition opportunities to boost presence in its targeted overseas market.
- Acquired ticketvala.com to move into bus seat bookings.
Quite a lot of developments for the company.
