India’s travel and tourism sector is booming on the back of a growing middle class, increased disposable income, and changing travel behaviour. Against this backdrop, the country’s largest travel platform MakeMyTrip has launched a new campaign urging the Indian diaspora to rediscover their homeland. In this interview, Rajesh Magow, co-founder & group CEO, talks to Geetika Srivastava about some new travel trends and shares the company’s expansion plans. Edited excerpts:
We have seen the emergence of niche travel booking platforms. How are you competing with them?
We have multiple brands. We’ve got MakeMyTrip, we’ve got Goibibo, and we’ve got redBus. We’ve also got specific use cases. Platforms like redBus are focusing on bus and rail. Goibibo focuses largely on budget hotels, but also on ground transport products. MakeMyTrip is a comprehensive shop. Our vision is that of a super app, which means that we want to be a one-stop shop for every possible travel use case. Our hypothesis is that when a customer comes to MakeMyTrip to buy a product, she should be able to buy not only travel-related products, such as transport or hotels or alternative accommodation, but also ancillary products like forex and insurance, and have the flexibility of book-now-pay- later.
We want to be a one-stop shop, and that is helping us to not only compete in the market effectively but to march ahead. A differentiated customer experience is part of our core strategy. We’ve been coming up with industry-first features to improve the customer journey experience across the board.
Can you tell us more about this “differentiated product experience” aspect on makemytrip?
Over the years, we have serviced over 75 million consumers among all three brands. So we have a lot of preference history. We also have a lot of searches. The richness of data is helping us give a very personalised experience for different customer segments. We are also leveraging generative AI and summarising thousands of reviews for our consumers. We’ve recently come up with a 360-degree street view for some of our premium properties. There are other differentiated features that we have launched already, including free cancellation, date change and trip guarantees.
Are there any new markets or travel segments that you’re planning to target?
MakeMyTrip was launched in the UAE in the middle of the pandemic and it is doing well. We want to expand to Saudi Arabia. For our redBus platform, we have gone to emerging markets, which are other international large bus markets like Singapore and Malaysia. We are already getting into Indonesia and Cambodia.
We are also looking to scale up the corporate business, because there is a tremendous amount of headroom on the hotel and accommodation side. Homestays is one category that is emerging, getting traction from customers. We have built about a 27,000 property-supply on our platform. We want to grow that as well. Last but not the least, we have recently made our platform accessible to about 160 countries, with a thought that we want to make it accessible for the Indian diaspora living all over the world. So Indians should not only be able to book flights or hotels back home, but also book a different destination for a leisure trip.
What are the key consumer trends in the segment now?
One of the emerging trends that we have seen coming out of Covid is the tendency to spend more on experiences out of the discretionary income that people have. Of the surplus income, the share of experiences has gone up. And within the experiences, travel is right at the top, because people want to go out and have a good time, and also because of flexibility at the workplace, people are going on short-term getaways.
As a result, the number of trips by an average Indian traveler has gone up from 1.5 or so to 2.5 or 3 trips in a year. For the top end of the middle class, it is as high as five or six, including one or two international trips. So the frequency of travel has gone up and the propensity to spend more on travel has gone up.
There is also a tendency to explore new destinations and stay at homestays, service apartments, hostels and villas. Then there is the emerging trend of visiting pilgrimage destinations for history, culture and experience, and not necessarily for pilgrimage purposes. We saw a lot of traffic going to Ayodhya, Varanasi, and Tirupati.
You’ve been profitable for a while now. What is driving this growth for you?
We were cruising along on a profitable trajectory even pre-pandemic, and we would have turned profitable in the last quarter of fiscal year 2020 or the first quarter of fiscal year 2021 if the pandemic hadn’t disrupted everything. The reasons for us turning profitable, with a mid-20s growth rate, are twofold. One, being the market leader, the recovery on our platform was due to the realisation that the brand is more reliable. Because even back during Covid, we were able to service our customers. Over the years, the stature of the brand has become very reliable in the consumer’s minds. That started to give us accelerated returns on the number of users on our platform.
The other important factor is that during Covid, we had invested in building new platforms, and completely new demand segments, such as corporates. We accelerated our efforts for small and medium enterprises, and now that business is contributing about 10% today. Then there were many other platforms that we built that helped the profit pools. These included advertising solutions on our platform and ancillary products such as insurance, forex, consumer lending plans like Book Now Pay Later, and a travel agent affiliate platform.
So the pandemic is well and truly behind you?
The recovery is behind us. It was behind us in the fiscal year 2023 itself, when we reached the pre-pandemic levels of gross booking and transaction bookings. All segments, including domestic travel, international, outbound and inbound travel have recovered. So all the business use cases, the leisure use cases, and pilgrimage use cases, have recovered.
The competition is intense in the category compared to the time when MakeMyTrip was launched. How has category communication changed over the years?
What is important is that when you have to reach out to customers, the kind of message that you want to give has to be a powerful one. The other thing that is very important is that you must know what are the sort of channels that you can reach out from effectively. Today you have the choice of reaching out to the customers on multiple social media channels. The TV has always been a big channel, and you can also reach out through print media or digital channels. You have to be creative and data-oriented to be able to get the best ROI on that. Coupled with the fact that your messaging is very crisp and clear with substance, it does the trick, and I guess that’s the playbook that has been working for us.