MMT used the last two years to prepare for growth after the pandemic: MakeMyTrip Co-Founder & Group CEO Rajesh Magow

While the pandemic years severely dented MakeMyTrip’s (MMT) core operations, the online travel agency (OTA) used the last two years to prepare for the time when the pandemic would end, Rajesh Magow, co-founder and group chief executive officer told Moneycontrol in an interview.

Magow said that MMT has not only expanded its core business, taking its operations to 400 more cities in the past two years, but it has also added six new verticals to its business. He added that the entry into the six new businesses was done using in-house staff and very little investment.

He added that 2021-22 was cash accretive for MMT and that it has managed to increase the cash balance to around $450 million at the moment.

Edited excerpts:

Q. What is MMT’s strategy from this point and how is it different from your pre-pandemic strategy?

The strategy at MMT over the last two years has been to expand our operations and venture out into new verticals to grow as a company, and with our core travel and tourism operations being limited, especially in 2020, we managed to use this time to improve the efficiency of our MMT platform and expand into new verticals.

Since 2020, we have managed to gain market share in our core business-to-customer (B2C) platforms, and also enhance capabilities of our core business. Besides that, we have added around six initiatives or platforms, which are going to fuel the next level of growth and profitability for us.

Q. How has MMT used the last two years to grow given that demand for travel was stunted?

The last two years have been quite unprecedented for the travel space and we were no different.

We have adopted a two-pronged strategy in the last two years. First, when the pandemic hit us, we needed to manage our profit and loss statement and balance sheet. I think it was an opportunity for us to go back to the drawing board and see what we can do in order to rationalise our costs and that is what we ended up doing.

Secondly, we identified that it was very important to build new verticals in the down cycle so that we are absolutely ready when business returns. We also expanded the operations of our primary business vertical which is our MakeMyTrip platform.

Rationalising costs

We adopted a lot of automation and artificial intelligence technology during the first phase of the pandemic and ended up automating a lot of our after-sales service processes. We enhanced our MyTrip Session on our platform, and that helped us optimise the outsourcing cost on customer service.

The other important one for us was that we had this legacy channel of our own retail shops across the country, about 20 retail shops, which are owned by us and manned by us. We changed the whole model for operating our retail shops from an on-center model to a franchise model.

So now we have more than 20 retail shops and we have been expanding more centres.

Even our franchise partners are quite happy as business is coming back.
There were many other areas which were related to IT infrastructure costs where we optimised our costs as well.

As a result of all of this, fundamentally we changed our cost structure and reduced our fixed costs and improved our operating leverages.

Building new verticals

And in the last two years we have launched a number of new platforms. Our “My Partner” platform, which is a platform for travel agents, was launched to address the B2C demand in India. There are still a large number of people in India who would want to just go to the next-door traditional travel agent and do business with them. So we built and rolled out the “My Partner” platform during the pandemic and we today have 25,000 travel agents on that platform.

This helped us tap into the demand from customers who were looking to work with local travel agents, whom they trusted. And local travel agents gained our expertise, especially in the case of hotels that we built over the years, the inventory, the content, the pricing. They are leveraging the content that we have for hotels, flights and other products. We are also gaining traction on that platform.

We also enhanced our corporate platform called “MyBiz”, which we had started in 2018, but was significantly enhanced in the last two years.

On the corporate side, we've acquired a bunch of new accounts as well.
We also invested manpower and significantly enhanced the capabilities of our “Quest to Travel” subsidiary during the pandemic. “Quest to Travel” was only offering flight products earlier, so we integrated and started offering hotels on that platform.

We also built a third-party advertisement platform, where our partners, tourism boards, airlines, and hotel partners can come and advertise, because we've got very high traffic on our website and app and we can now monetise that traffic even more.

We also built a platform called “Trip Money” which is a travel fintech initiative that has three verticals. On our “Trip Money” platform we offer insurance products, lending products like ‘book now pay later’, EMI (equated monthly installment) solutions and we also offer foreign exchange trading. We recently acquired the majority stake acquisition in BookMyForex and have integrated that with our “Trip Money” platform.

And last but not the least, we have also launched an API (application programming interface)-based capability called “My Affiliate”. With “My Affiliate”, we are powering many other verticals in the market. The first, important one is Amazon Pay. Amazon Pay’s travel platform is powered by MakeMyTrip.

Our goal was to get the traffic from the tier-III and tier-IV cities, which is what we have been able to do and it is already getting good traction. We also have partnered with HDFC SmartBuy.

We are also looking to expand redBus from a bus booking platform to a ground transport platform.

We will launch a large intercity cab brand called “ride” and will also launch “redRail” which will be a rail booking platform. We had launched a redRail independent app, which is a light app at the moment.

Expanding MMT

We have also tied up with more properties and hotels across cities, we used to cater to 1,200 cities in 2020 and now we cater to 1,600 cities, and our market share in booking plane tickets has gone up from 27 percent to 30 percent in the last two years.

We also launched our operations in the West Asian market, with a new mobile application and website for the UAE (United Arab Emirates). And now we are looking to launch in Saudi Arabia as well. We already have built the Arabic language platform.

We have also significantly grown into new categories, like alternative accommodation.

Q. What is the amount of capital investment that has gone into creating these platforms over the last year?

The investments that go into building these platforms are basically technology resources, the engineers and the product resources, and all of them are in-house.

So we effectively leveraged our in-house technology team, which was not necessarily focusing on any of the normal business operations at that point of time because the business was not happening then. So we didn't have to really bring in any additional third-party investment or hire more engineers to be able to do it.

We had the bandwidth. And we had the strategy in place, we just deployed these resources in the right areas. And we ended up building this, there is no other investment on building this platform.

Q. How do you see these different platforms contributing to your top line, as well as bottom line?

I think that the first milestone is that they should be contributing at least 10-15 percent of our overall business in a year.

Q. Now that the travel and tourism is returning to normal, are you at MMT looking to hire more resources to cater to the rising demand and to maintain your new verticals?

While we have expanded our operations significantly during the pandemic, we have not expanded our teams by a lot.

The reason for that is that the technology backbone that we have used is effectively the same backbone that we had built for our core operations at MMT. Our technology backbone is very scalable and we are currently leveraging that in our new verticals as well.

We had to hire a few people to manage the front operations of our new verticals and also hire people for the relationship management team of each new vertical, which comprised around 15-20 people for each vertical.

Yes, as we come out of pandemics, we will definitely, speaking relative to the pandemic level, we will have more engineers who would be working with us.

In technology or for our online products, wherever there is a business development activity growing along with the core business, we are always in the market for hiring. We will probably increase the strength by another 50-100 people.

Q. In February 2021, you had raised around $ 200 million, and you had called it your war chest to invest in new areas and initiatives. How much of that $200 million have you used till now?

As it stands, we have actually added more cash to our balance sheet. We had around $200 million on our books in February 2021 and then we raised another $200 million. Then 2021-22 has been cash accretive for MMT. So we continue to sort of hold on to close to $450 million in cash and cash equivalents on our balance sheet.

We will keep our minds open to any niche area, inorganic, that is out there and may be interesting to grow, but at the moment we don’t have any major investment in mind.