MakeMyTrip’s chairman and group CEO Deep Kalra is often a favourite on our WiT stage because India is just that exciting and MakeMyTrip has been a key figure in the online travel community there. This time, Kalra shared about his journey from harder times to better, more promising ones, and what he is excited about these days.
Sometimes when a door closes, a window opens. That could well describe MakeMyTrip’s point in its journey back in 2012 when Kingfisher Airlines went belly-up, dragging the online travel company in the red.
Back then, 85% of MakeMyTrip’s business was from air bookings.
“We were pushed into the red by Kingfisher, and we realised at that point in time that we can’t run a business that is solely dependent on the airlines,” recounted Kalra.
That resulted in the Indian online travel company making its foray into hotel bookings. Since the market is only doing about 10 to 15% of its hotel bookings online, it is definitely an area of growth and opportunity for MakeMyTrip, he said.
“We are obviously trading off some amount of profitability for growth, but if you look at the last five quarters, there is clearly a trajectory of managing to get to profitability with growth, and we think that’s the right kind of balanced approach,” said Kalra.
Although still concerned about the health of airlines in India, Kalra said it feels less vulnerable. Some 56% of its revenue now comes from accommodation, and only 34% are generated from air bookings.
Giving further insights into what’s happening with the hurting air industry in India, Kalra said it is not for lack of demand but a “double whammy” of high oil prices and a weakened rupee against the US dollar and many of the regional currencies.
“There is a lot of demand. India is actually the cheapest market to fly in the world. And the prices have just been too cheap in the zeal to get market share. And that’s not sustainable. I think we will see some sort of correction. I won’t be surprised to see a U.S.-like situation where we have fewer players, and everyone will raise prices,” said Kalra (pictured below).
Although air is still a profitable revenue stream for MakeMyTrip despite its thin margins – volume makes up for it – the hotel space is where Kalra is setting its keen focus and efforts. Since market penetration for online hotel bookings is just at 10%, MakeMyTrip has its work cut out for there.
“We have so many new people, both young and those who have never bought [travel] online before, coming to buy online. Every year, we have 10 million youngsters who get into their first jobs in the country and for these folks, being online is almost second nature,” said Kalra.
Another area Kalra is excited about and one much talked about in the industry is Experiences. Will it build its own brand organically or look outside to acquire?
“We have always taken a pragmatic approach. If there is something that can give us speed to market, and with scale, we are on the lookout…there is nothing right now that says wow but things are changing,” said Kalra.
In the tech arena, MakeMyTrip is already dabbling in voice to text technology, and in applications surrounding messaging.
“A lot of Indians are not that comfortable with English, but are comfortable talking, texting and chatting in their vernacular language. There are many in India who have the money and want to travel but who are not literate, so you want to give them an enabler,” he said.
Messaging is huge in India with Whatsapp being dominant. MakeMyTrip was one of the launch partners for Whatsapp for Business meaning its customers can now receive their e-tickets via Whatsapp and potentially, customers can pay, book a meal, or make a seat selection all without leaving the app. “We think that’s pretty cool,” he said.
What does Kalra see as potential game changers that will move India deeper into the online space, and become an even more sought market in the world?
Mobile is definitely one. With half a billion people in India holding on to smartphones and only an estimated 50 to 60 million who have bought something online so far, the opportunities are immense. This, coupled with the fact that Indians are taking six to eight short breaks a year, will surely mean India’s travel online market is a pie large enough to feed many, and feed them well.
What about blockchain? “Potentially a game changer”, but it needs to be easy to adopt, easy to use, in an app-like form. “It may take the next generation to do it”.
But Kalra said meanwhile, it will continue to invest “disproportionate resource” behind AI, data science, and big data as the “secret sauce” that can make the difference.
Where he will put his money in is the extension of data science to artificial intelligence and with that, the relevance it will give to the consumer. Kalra looks to Amazon as the gold standard.
“Amazon is focused on the end-to-end experience, not just the buying. We need to think like that. Preempt and think about every road block and what you can do to make sure the consumer is not left saying what do I do now?”
Photo credit for featured image: Getty Images