15% of MakeMyTrip Transactions through Mobile, Hotels & Packages Big Growth Area

MakeMyTrip Mobile TransactionsMakeMyTrip (MMYT) launched in 2000 focused on Airlines Ticket Booking both the non-resident Indian (NRI) inbound traffic as well as the Indian domestic traffic. Since then it has ventured into IRCTC Railway Ticket Booking as well as Selling Hotels & Tour Packages. Excerpts from Management’s Interaction is as follows,

For MMYT, ~29% of traffic and around 15% of transactions currently happen through mobiles. Within this, hotels are seeing almost 20-25% of the transactions happening on mobile. The company is further pushing for mobile adoptions with offers like last minute deals on independent hotels being offered only on mobiles. MMYT generates higher commissions of the order of ~30% on these deals and hoteliers are willing to pay it as they get to sell their unused inventory, which would otherwise have gone unsold.

MakeMyTrip expects strong growth in hotels and packages segment to continue driven by just ~5% online penetration of hotels segment (compared to ~40% online penetration of domestic air ticketing). The company currently has access to 13,000 domestic and 184,000 international hotels and does not see the need to substantially expand its domestic hotel coverage as most categories across most locations are largely covered. The company takes inventory risk very selectively and only in the packages segment, e.g. in peak summer in hill stations or Goa during the New Year, and typically has exit clauses wherein it can sell down its inventory 2-3 weeks before the date and minimize this risk.

How MakeMyTrip Acquires Customers ?
50% of its traffic directly through users reaching out to MakeMyTrip.com or through its mobile app/website [Quite a Strong Brand Recall], around 26-27% of traffic is generated through SEO.

~23% of traffic comes from SEM (Search Engine Marketing) and display advertising – which involves promotion of the website through advertising on Google or Facebook. The bidding process for keywords for SEM at MMYT is automated with the company having written algorithms that works on the basis of returns generated historically on advertising per keyword. This has taken the manual work out of SEM and makes it easier for its marketing managers to bid for keywords to maximize return. These learnings have been drawn from some of the global competition.