Ahead of school vacations, it became an annual practice to figure out where to go. While many aspired to travel abroad if their holiday budget would permit, others would look out for leisure destinations such as Goa to just chill and relax.
Now domestic travel bookings soar! Back in 2019, when the world seemed to be a very different place from what it is now, Indians loved to plan for their travel destinations during summer vacations. Ahead of school vacations, it became an annual practice to figure out where to go. While many aspired to travel abroad if their holiday budget would permit, others would look out for leisure destinations such as Goa to just chill and relax.
How the world flipped completely with the onset of the pandemic and travel took a severe hit!
With the onset of the Coronavirus pandemic, there has been a sea change in the approach to travel. The second COVID-19 wave dented the confidence of many travellers to step out of their homes and lockdown restrictions across states made it necessary to stay indoors and work from home.
One thing that hasn’t changed., though, is the Indian traveler’s appetite for domestic travel.
Currently, domestic travel bookings are picking up dramatically and this trend is expected to rise further as restrictions are eased, according to Rikant Pitti, co-founder, EaseMyTrip. Terming the pandemic as a ‘litmus test’ for all travel companies, he expressed an optimistic travel outlook for the coming months.
“While our gross bookings diminished by 50% during the pandemic year, we recorded our highest ever profitability in FY2021 due to increase in margin and commissions and reduction in operational expenses. We were able to achieve better profits as we were able to negotiate better with our vendors. We offered advances to our vendors, including airlines and hotels and we negotiated harder and gave them advanced deposits during the pandemic, which enabled us to command more margins during the period. Our operational expenses in FY21 reduced by 51% whereas our total income reduced by only 17%, crearly denoting increased margins and better cost controls,” Rikant Pitti informs Financial Express Online.
In Q4, EaseMyTrip witnessed a V-shaped recovery. Can you elaborate what this means in terms of travel bookings for the quarter and your key takeaways from this?
Travel had been severely affected last year as a result of a national lockdown and pandemic dictated domestic and international travel, however, in Q4, the company clocked almost 89% of the gross booking revenue of the corresponding quarter in the previous fiscal, leading to a V shaped recovery. In Q4 of FY 20-21, we clocked in gross revenue of Rs 907.6 crore as opposed to Rs 1024.9 crore in Q4 of FY 20-21. In this quarter, profit was also up eight fold to Rs 30.5 crore from Rs 3.6 crore in the corresponding fiscal in FY20 while adjusted total income jumped to Rs 103 crore from Rs 60 crore.
The key takeaway from this is that bookings numbers are picking up dramatically and we expect this to rise even more as travel restrictions continue to ease. Travel is expected to pick up further with a substantial decline in new cases. We see that the momentum is picking up, as in the past few days itself, bookings increased by at least three times compared to mid-April, following the onset of the second wave of covid-19 infections.
What steps are you taking to ensure a lean cost structure and what other measures are being taken to economize further?
Over the years, we have moulded the company to be extremely cost efficient and have focused on creating a lean business model instead of concentrating on marketing efforts, which has enabled the company to be the fastest-growing travel portal in the country.
Since inception, the company has always focused on passing maximum value to its customers instead of spending the margins on operational expenses, and this has ensured the company’s growth via word of mouth. We have been doing this for the past 13 years so we know how to maintain and sustain this cost structure.
Due to our lean cost structure, we have been able to adapt to our ecosystem and have continually introduced new economic measures. One of the measures implemented last year was automating processes that were human resource intensive. We will continue to introduce new measures and implementations as per requirement.
In your view, what are the key lessons for the travel industry after having battled the headwinds of the COVID-19 pandemic and how well do you feel prepared for the rest of the year?
I believe that the pandemic was a litmus test for all travel companies. We had to take a lot of actions and decisions to ensure that we stay profitable. Since travel came to a standstill at one point, we had to use other measures like increasing commissions and margins and reducing operating expenses. We believe that the biggest learning for the travel company was to be authentic, empathetic, and resilient, and look for different measures that can push profitability instead of waiting for the industry to eventually recover. The travel industry has also taught valuable lessons in the customer service and redressal procedures, as there has been a widespread concern about booked and cancelled tickets since the pandemic.