Online travel firm MakeMyTrip expects hotels and packages segment to be its major revenue growth driver, contributing as much as 70 per cent to the overall number by 2018.
In the fiscal 2015-16, the company which clocked revenue of USD 336.1 million, had earned 50 per cent revenue from hotels and packages and the remaining from air ticket sales.
“We can say that 70 per cent of our revenues will be from hotels and packages by 2018 as our focus is now on non-air side of business – Hotels and Holiday Packages,” told MakeMyTrip Co-Founder and CEO-India Rajesh Magow.
The hotels segment in India is under-penetrated and highly fragmented, he added.
“MakeMyTrip has made aggressive efforts to tap into this segment by partnerships with more than 30,000 hotels and guest houses in India and 3,00,000 hotels abroad,” Magow said.
Net revenue from its hotels and packages improved by about 6 percentage points in the last fiscal, he added.
On the reason for the shift in focus to the hotels and packages segment, Magow said: “Hotels and packages offer relatively higher margins in double digits while pure air ticketing offers single digit margins”.
Also, on the air ticketing side, there are only a handful of players, while on the hotels and packages side, there are more firms that help diversify the business, he added.
“Within hotels and packages, MakeMyTrip was more in favour of packages during the initial years. Now, we are designing products more in favour of hotels,” Magow said.
Emphasising the growing role of mobile-led internet penetration, Magow said: “The vibrant mobile ecosystem was one of the key drivers for the dramatic growth this year. In online standalone Indian hotels segment, mobile now accounts for over 70 per cent of the total online transactions”.
On the current business climate in the country, he said: “The overall travel and hospitality space is growing and the environment is very positive.”
With more people planning and booking their travel themselves, India is at the edge of yet another boom in online travel industry. This time it will be driven by hotels category, fuelled by increasing smartphone penetration and app adoption, he added.
When asked about issues faced by e-commerce firms, specially in relation to employees where some firms had resorted to lay-offs, he said the company hasn’t faced such problems and has been able to “keep more than 1,600 employees motivated”.