Around the same time, the company’s investors, eVentures, withdrew all their investments in the country, including in MakeMyTrip, as a direct result of the dot-com meltdown. Saddled with a young business still in the red, the choices before Deep were to either wind up the company and go back to the corporate world or somehow muster further investment behind a potentially viable business. At this time, the cons of running the business seemed much larger than the pros. Internet penetration remained low, bandwidth was expensive and consumers were far from trusting online services. Deep Kalra, however, remined firm in his belief that his brainchild had immense potential to perform. Tempted though he was to sell the business at US$10 million at the time, Kalra finally decided against it.
STRATEGIC SMART: Did not let a good idea float away: believed in the proposition of MakeMyTrip and stayed resilient despite the pressure of multiple adversities.
Perhaps as a testimony to Deep’s conviction, came an opportunity. Ebookers, a UK-based online travel agency (OTA), came to India scouting for a development and support partner. MakeMyTrip was shortlisted as the India partner for Ebookers. However, this came at a price. Rajesh Magow, co-founder, chief financial officer and financial wizard of MakeMyTrip left the company to run the Ebookers venture full-time. (Rajesh and Deep had met through a head hunter in 2001 and had clicked immediately and as a result Rajesh had decided to join MakeMyTrip.)
Ebookers had a stake in the company, as well as some representatives from the management who may not have wanted to continue further with MakeMyTrip. In order to effect a complete management buy-out, Deep convinced other key members of the management team and some ‘angel investors’ (including individuals in eVentures who saw promise in the business) to invest in the company. Working on a bootstrap model for the next eighteen months, the company turned profitable in 2003. Strategic focus and persistence paid off as MakeMyTrip grew steadily over the next few years to emerge as the single-largest provider of travel services to NRIs in the US in the year.
Though Deep had temporarily lost the support of his long-time partner and confidante when Rajesh joined Ebookers, the cord was never cut and Rajesh rejoined MakeMyTrip in 2005. From 2001 to 2005, Rajesh oversaw a team of 1,500 employees, and migrated all processes from Ebookers to the India back-office. He also managed the transition of the business from Ebookers to Cendant (Cendant acquired Ebookers in 2005). For an entrepreneur, in every adversity lies an opportunity. Rajesh gained valuable experience in running the Ebookers business end to end which was to come in handy for MakeMyTrip in later years. His learnings from that stint (that helped him solve future business challenges for MakeMyTrip) included:
»Building operations from scratch—especially being a start-up—and subsequent scale-up.
»Domain experience—same model, multiple channels and processes of an Internet-based business model.
»Building a captive unit for Ebookers with transition of customer service operations, sales functions, technology back-end unit and financial services unit.
»Change management experience.
An idea whose time had come: The start of a memorable journey
While the NRI business continued to grow well, Deep never lost sight of his core vision of revolutionizing the way resident Indians bought travel. The changing industry and market environment in 2005 brought with it the dawn of a new era:
»The sudden emergence of new airlines (particularly low-cost carriers) along with fierce ensuing competition.
»Growing levels of the Internet and credit-card penetration in India.
»Growing propensity of the domestic consumer to buy online (as evident from the success of Indian Railways).
Deep was convinced that the time was finally ripe for the domestic travel market to go online. While the external environment was conducive, Deep was clear that a lot of marketing effort was needed to mould consumer buying behaviour. To meet the need for increased marketing investments, MakeMyTrip required external funding. The management, therefore, took the decision to raise private equity to fund its India launch. MakeMyTrip was fortunate to receive multiple offers and chose SAIF (Softbank Asia Infrastructure Fund) as investors.
MakeMyTrip.com was relaunched for the Indian market in 2005. With intensive work on the technology backbone, the site connected real time to all the airlines systems using direct connect and XML feeds. MakeMyTrip pioneered the concept of OTA (online travel agent) and guaranteed the lowest airfares and real-time bookings.
On the back of its unique proposition—a lowest airfare guarantee—the launch was an outright success. Soon after the launch, the site became the default place to research and buy air tickets, and even for other travel agents to find the best deals. Within the short span of a year, MakeMyTrip became India’s largest OTA, issuing the highest number of domestic air tickets in the country, forever changing the way Indians bought travel services.
Under Deep’s guidance, the company grew from strength to strength and soon became the top seller for virtually every airline in the country, ahead of established players in the segment—Thomas Cook, Cox & Kings and American Express.
The magic ingredients of success
Taking stock of MakeMyTrip’s success unveils a holistic approach powered by the vision and spirit of each one of its employees, for whom no idea was too big and no problem too difficult.
»The success of the travel services provider can be attributed to the fact that it has been able to pre-empt trends and continually evolved its technology. It has set standards in service that competition had a tough time living up to.
»From the very beginning, the company deployed the best in technology to raise the bar as far as service standards were concerned. For instance, MakeMyTrip was fully powered by Amadeus, a state-of-the-art lowfare search tool that helps customers find the best match within their budget. Their payment gateways carried ‘Verified by Visa’ or ‘Master Secure’ protection layers for those who used credit and debit cards to make purchases.
»With untiring innovation and determination, MakeMyTrip proactively began to strengthen its product offering, adding a variety of online and offline products and services that clearly separated the wheat from the chaff as far as OTAs were concerned.
»While diversifying their product portfolio, they kept in mind the mental blocks that customers usually have. For instance, when holiday packages were being offered, they realized that, being a high-involvement product, it required a different strategy. Customers had a multitude of questions and concerns when it came to travelling overseas or on a long itinerary to multiple destinations in the country. While they were happy to do research online, the buying decision needed physical reassurance at least at this early stage of development of the market. MakeMyTrip decided to address the holiday packages market by setting up its first retail store in 2007, the first to be launched by an OTA. Initally these were just consumer touch points in cities like Mumbai, Bangalore, Kolkata and Ahmedabad to reach out to customers beyond the Delhi/NCR market. With such stores attracting customers, MakeMyTrip developed this concept into a hybrid business model of online and offline presence. This worked especially well in category B cities where customers wanted to come into a retail store and plan their holiday in the presence of a travel expert.
Hotels: The next destination
The next adjacent opportunity for growth for MakeMyTrip was the hotel business. While the opportunity was large and obvious, the challenges were even greater. The hotel business was a difficult market to capture since over 80 per cent of hotels in India comprised small, independent properties with abysmal levels of automation. Unlike the airline industry—which created the first global distribution system (GDS) in the 1960s largely to keep track of flight schedules, availability and prices, and SABRE (owned by American Airline) and Apollo (United), which began installing their proprietary internal reservations systems in travel agencies as early as the mid-1970s—hotels in India had no such system.
Challenge No. 1: One of the
key challenges was creating a viable supply-chain that not only ensured availability of the inventory online but also a seamless purchase experience on the website.
MakeMyTrip endeavoured to overcome this by creating India’s first extranet for hotels to load room inventories, either as a rolling stock with a cut-off date or on a real-time basis for sale on MakeMyTrip.com. So, the company took on the herculean task of bringing over 2,500 hotels in India online, irrespective of size and location. From stand-alone cottages in hill stations to shacks on beaches, all were now available to be booked real-time only on MakeMyTrip.
The cost for CMS (content management system) integration and automation was borne by MakeMyTrip. However, this also helped in forging deeper relationships and alliances with smaller, non-chain properties. As of 2015, MakeMyTrip offered access to the largest selection of hotel inventory in India (over 20,000) and nearly 200,000 properties worldwide.
Challenge No. 2: The next challenge was to ensure that once the bookings came in, they were honoured by the hotels and customers did not face any problems.
This was achieved by intense rigour put in by a young business development team that was placed in key commercial and leisure destinations across the country and supported by a central operations team that confirmed and reconfirmed bookings while obtaining future inventory. As MakeMyTrip established itself as the dominant travel brand in India, it got increasingly easier to sign up domestic chains and stand-alone hotels. However international chains, headquartered in faraway Europe and USA, had a much longer gestation period. By the year 2012, MakeMyTrip forged several direct connects with international bookings systems and offered thousands of hotels across the world with last-room availability. With MakeMyTrip’s ability to fill rooms, the hotels on its lists experienced an increase in productivity that led to a virtuous cycle which ensured that getting new hotels on board was no longer a challenge.
Challenge No. 3: A fundamental challenge in customer-behaviour owing to the nature of the product still awaited MakeMyTrip. Purchasing hotels rooms in India was a fragmented affair—most people just showed up at the destination while many leaned heavily on contacts and friends and family to make bookings. This was unlike the established buying behaviour of customers purchasing air and rail tickets through travel agents.
To counter this trend, MakeMyTrip followed a two-pronged approach. It focused on creating awareness and building credibility around the promise of a hassle-free experience. The latter was strongly supplemented by building content, both proprietary and user-generated, which included photographs and customer reviews. In line with the psyche of the valueconscious consumer, MakeMyTrip offered a best-price guarantee with easy cancellation terms. Further innovations such as early-bird discounting, last-minute deals and launching a bundled flight+hotel-discounted product added even more value for the consumer.
Challenge No. 4: Seamless customer experience was the next big hurdle. Despite these mammoth efforts, MakeMyTrip’s journey of selling hotels was just about beginning. There were plenty of hiccups along the way. For starters, customers who had used the airline ticketing services of MakeMyTrip booked hotels online only to find themselves in a place with a dirty swimming pool or with non-existent air conditioning. Besides, during the holiday season, small hotel owners refused to honour bookings. As a result, dissatisfied customers angrily renamed the portal ‘RuinMyTrip’! The mistake the company had made was to assume that the hotel booking experience would be a standard experience like air travel, only to realize that on the ground experience for hotels was far more complicated.
Technology lay at the heart of the solution. MakeMyTrip realized that human effort alone could not ensure standardized experience across cities, hotels and customer types. It made amends by acquiring travel tech outfits and hotel aggregators and invested heavily in the backend. During second quarter of 2007, in order to cater to the evolving consumer preferences, a new version of the website was developed to empower the consumer and bring transparency into the process. The new site embraced elements of web 2.0 and allowed customers to post and read user reviews, check natural photos of accommodation and evaluate the hotel’s unbiased ranking before taking a decision to book.
In addition, to strengthen its presence in the distribution of the low-budget accommodation inventory, the company made a strategic investment in ‘My Guest House Accommodations Pvt. Ltd’. Soon enough, with the category maturing, MakeMyTrip’s efforts started to pay off with hotel and packages contributing almost half of the company’s revenues.
A dream debut in the stock market and some lessons along the way
By the year 2010, MakeMy Trip’s revenues had grown tenfold to US$40 million since 2005. Customers had by then realized that MakeMyTrip was not just a ‘call centre’ or an outfit at the mercy of travel agents. The company was now on a growth trajectory and in need of funds to acquire strategic businesses and enhance its technology platforms. The company decided to unlock value and tap the markets to raise funds. However, it was faced with the choice of whether to go public in India or the USA. Finally, after much deliberation, it was decided that MakeMyTrip would list at the NASDAQ, because the US market had a better appreciation of Internet ventures.
Without any prior experience, the company took a mere six months to launch its initial public offering (IPO) under the stewardship of Rajesh Magow. MakeMyTrip became the first Indian travel company to be listed overseas. It was valued at 5.4 times its next year’s projected revenues and raised over US$1 billion in collections, with its shares soaring by 80 per cent after listing on the NASDAQ.
STRATEGIC SMART: Listing on NASDAQ as against Indian stock exchanges, since US markets were more appreciative of Internet ventures.
Post its IPO success, the company went on an acquisition spree, making a total of four acquisitions between 2011 and 2012, each strengthening its foothold in various parts of the globe, beginning from Europe, South East Asia and the Middle East.
However, when Kingfisher Airlines stopped operations in 2012, it came as a bit of a jolt for the travel industry. Demand came down sharply as air travel costs soared. The woes of the industry were further compounded by a slowing economy in the aftermath of the global recession. As a result, MakeMyTrip ended the year 2012–13 with a loss of US$13 million. This taught it a valuable lesson that the time had come to diversify. A rigorous phase of transformation thus ensued with the hotels and packages component of the business receiving renewed focus. Once again, as consumer preferences changed and Indian travellers began looking for international packages, MakeMyTrip caught the pulse ahead of the curve and offered convenient and customized packages for international travel experience (Europe Packages). The rebalancing of the business in full earnest bore fruit and the non-air segment grew over 50 per cent in a single year. Additionally, the company’s acquisitions in 2012, ITC Group and Hotel Travel Group, further strengthened its product offering and enhanced the competitive advantage in South East Asia , the key holiday market for Indian customers.
STRATEGIC SMART: Looking beyond the bend and strengthening its international offering to diversify its portfolio and de-risk the business model
The road to success
Today, MakeMyTrip is much more than just a travel portal or a pioneering brand. It is one of India’s largest online travel brands with the broadest selection of travel products and services. Collectively, MakeMyTrip covers virtually every aspect of travel from researching and planning to booking travel, from choosing the best mode of travel to ratings and reviews to making the most of your holiday. The portfolio serves a cross-section of customers, spans local and international destinations and caters to both holiday and business travellers. The fact that it has relied heavily on innovation is what makes it an undisputed leader in online travel, a fact evinced by the trust placed in it by millions of happy customers. Some of the winning moves by MakeMyTrip have been:
»Selling end-to-end holiday solutions: Customers can search for a desired holiday, book a package
of their choice and complete the entire purchase process on the portal. MakeMyTrip also offers instant assistance through a live chat service for any additional information required during booking. FPH (Flights Plus Hotels) was launched for an integrated user experience.
»Influencing behaviours with lucrative offers on hotel bookings 100 per cent money-back guarantee: The company offers customers a 100 per cent refund if the services offered at the hotel booked are not as outlined while booking. This intervention seemingly reversed the traditional business seasonality.
Last-minute hotel discounts online and on mobile: This encourages online hotel booking and showcases benefits to the customer—best rate, widest range of hotels in the country and a hassle-free booking experience backed by the money-back guarantee.
Pay at hotel service: This allows customers to confirm hotel bookings on the website for as little as ₹5, while the rest of the amount can be paid directly at the hotel.
»A successful foray into bus services: Volvos and deluxe buses had made inter-city travel by buses extremely convenient and popular, giving this service a fresh lease of life. As always, MakeMyTrip cashed in on this trend and launched bus services for travellers seeking good value and effort optimization. By the year 2013 the company offered lowest-price guarantee on bus tickets through 1300+ operators over 12,000+ routes across India.
»Going places
Opening of new destinations like Phuket and Maldives to the Indian market: Over the years, MakeMyTrip has strengthened focus on identifying emerging opportunity areas in unexplored, uncharted territories and converted them into viable business ideas. It realized that certain exotic destinations were being avoided by travelers as they were perceived to be expensive. Chartered flight-inclusive packages to Phuket and Maldives were created with the sole aim of rendering these destinations affordable and accessible. The competitive pricing of these packages set them apart from other packages to these destinations in the market and made them a huge success. From creating compelling itineraries, ensuring high service standards and positively influencing the commercials to make it a win-win proposition for the traveller, MakeMyTrip led the category with product innovations. On the back of these efforts, MakeMyTrip was rated as a top producer of attractive holiday packages to South East Asia destinations such as Mauritius, Thailand, Malaysia and Singapore.
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