IPO-bound EaseMyTrip reshuffles pecking order of online travel agencies, claims second spot

Delhi airport (File image: PTI)

IPO-bound EaseMyTrip has managed to re-arrange the pecking order of country's online travel agencies (OTAs) amid COVID-19 and now claims to have replaced Yatra.com as the second largest OTA in the country.

MakeMyTrip continues its perch at the top of the industry.

Documents filed by EaseMyTrip with market regulator SEBI show that the company has overtaken Yatra, in gross booking volume. It has also taken the lead in revenue in the current 2021 financial year. It had trailed Yatra on both parameters a year ago. Interestingly, it claims to be the only profitable online travel agency, at least among the top ones in the country.

The reshuffle happens even as the travel industry makes a slow and gradual recovery from the dent created by COVID-19 and the subsequent lockdown. Air passenger traffic in December stood at about 56 percent of year-ago levels.

While this has impacted all travel agencies, EaseMyTrip seems to be the fastest on the road to recovery, a point that it underlines in the documents filed with SEBI. This sets it up well for the IPO, which is planned before the financial year ends on March 31.

The listing was earlier announced in December 2019 but got delayed because of the pandemic. Founded in 2008 by Pitti brothers - Nishant, Rikant and Prashant, EaseMyTrip plans to raise Rs 510 crore through the listing. The promoters will divest 25 percent of their holding.

The Delhi-headquartered firm has engaged Axis Capital and JM Financial as merchant bankers. AZB  & Partners, Khaitan & Co. and SPB are the law firms involved.

What the numbers say

EaseMyTrip declined to comment on the story. But documents filed by it throw up some interesting data.

Easy Trip Planners (which operates the OTA) had done 2.1 million trip bookings during the nine months ended December 31, 2020. In comparison, MakeMyTrip had segment bookings of 5.3 million and Yatra had trip bookings of 1.52 million.

MakeMyTrip uses segments, instead of trips, to report its volumes. Even if these segments were converted into trips, it would retain the number one position.

Easy Trip Planners claims to have recovered the most from the pandemic. At the end of December 31, 2020, its booking volumes stood at  70 percent of the year-ago numbers. In comparison, MakeMyTrip was able to recover 46 percent and Yatra, 44 percent.

And when it comes to the bottom line of these companies, it is only Easy Trip Planners that was in the green. While the company had a net profit margin of 23.33 percent at the end of the last financial year, peers MakeMyTrip and Yatra were in the negative.

In terms of gross booking revenues too, Easy Trip Planners had generated Rs 1,200 crore in nine months ending December 31, 2020. Yatra, on the other hand, reported Rs 555 crore. Interestingly, Yatra continues claims the second position, if one goes by its financial statements for the third quarter.

How did EaseMyTrip turn the tables?

Its costs are lowest among immediate peers.

The company's marketing and sales promotion expense as a percentage of gross booking revenue stood at 0.83 percent in the 2020 financial year, as compared to 2.73 for MakeMyTrip and 0.96 percent for Yatra.

Also, a risk it took during the COVID-19 months paid off.

EaseMyTrip gained on the market share in the months after the domestic aviation was opened up in May 2020, once it started refunding tickets. It was an issue that saw a lot of customers airing grievances as airlines opted to park money in credit shells, instead of refunding them to customers. These were of the tickets of flights that got cancelled.

The OTA refunded its customers, even before airlines began doing it, dipping into its cash reserves of Rs 200 crore. The company also continues its practice of not charging convenience fees.