Newer segments driving growth at MakeMyTrip, foray into activities and experiences soon, says Rajesh Magow

In the past you had mentioned that investments made during the pandemic have started contributing significantly to MMT's growth story. Can you shed some light on which new segments have now become the biggest contribution to MMT's growth?

The first big segment that comes to my mind is actually our corporate platform ‘MyBiz’, which we had started in 2018 for small and medium enterprise but has significantly enhanced in the last few years. When we had launched the product, we realized that the corporate market, which is around 30 percent of total domestic flight booking market, had not seen a real disruption on the product interface side.

We didn't want to follow the old corporate travel structure of putting implants in different corporate office as we felt it is not scalable. With our new platform, MMT's advantages is that our cost of corporate customer acquisition is low, therefore, it helps our bottomline, and offers more options and variety to clients.

MyBiz has started to contribute significantly now and is growing at about 40 percent year on year. We are continuously adding more products on our MyBiz platform and are seeing that the customer service customer satisfaction is really high. This segment is contributing high single-digit to our topline.

The second segment is our travel agent platform ‘My Partner’, which  focuses on international outbound segment, and has been showing significant growth in the last few years.

We are also expanding our operations in the Middle East and North Africa (MENA) region, which will be a big segment for us. MMT is already the largest flight booking platform in the United Arab Emirates (UAE) and will soon launch operations in the Kingdom of Saudi Arabia (KSA), which will be a huge market for us.

Another segment, which is contributing significantly to our growth is the TripMoney platform where we sell travel-related insurance products.

Our 'book now pay later' platform where we have partnered with 15 banks, NBFCs and fintech players - including HDFC Bank, IDFC Bank, Capital float and Zest Money - is also showing significant growth.

We have also built an advertising platform which we call the Adtech platform where hotels, tourism boards, or airlines can come and advertise with MMT and we our promise is that MMT's return on ad spend for travel-related companies is much higher than the market.

The reason for our promise is that is we have high traffic, and also high-quality traffic with high travel intent. This is another segment that is helping improve our bottomline because the Adtech platform product is profitable.

Last but not the least, our alternate accommodation platform - which includes homestays, villas and hostels - is showing significant growth. Around 10 percent of our volumes come from the alternate accommodation segment.

The best part is that no significant capital expenditure has gone in since the pandemic to develop these new segments. While the pandemic years severely dented our core operations, we used the time to prepare for the time when the pandemic would end.

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.

Are there any more segment that MMT will be expanding into? Can you share more details on the topline contribution of your rail and visa segment?

There are three or four new segments which are in the works, which will be launched soon. We have recently launched a platform to help customers fill out their visa and are helping customer apply for visa easily. In all fairness, our visa segment is not going to be a big contributor for our top or bottomline, but is will help us retain customers.

Our new activities and experience product and cruises platform will be launched in a quarter or two, which are the two products we are excited about.

Our railway segment actually helps us with new user acquisition. We are not a very large player in the railway ticket segment, but it actually helps us with a large number of new users.

We expect our visa activities, experiences, cruises, intercity cab and forex, segment to scale in the next 4-5 years and then start contributing with real meaningful numbers.

But a lot of our new segment have really helped boost our repeat customer rate or stickiness. Since the pandemic MMT's repeat value has grown from 65 percent in the pre-Covid times to 70 percent currently and is expected to grow to 75 percent soon.

Which segment contribute to push us MMT's margins currently and which segment do you expect will help boost the margins in the future?

MMT's margin structure, if you see, is directly-linked with the fragmented sales. Our hotel and alternative accommodation segments offer relatively better margins when compared to our retail airline ticket sales. Ground transport, including buses and intercity transport, excluding railway ticket sales offers a double-digit margin. Airline ticket sales has a margin of single digit.

On an overall gross level, MMT reports an operating profit margin of around 16-18 percent.

The domestic business travel airline market has become a major focus for the two large airlines in India, Air India and IndiGo, as they look for profitability. What disruptions does MMT expect in the coming few years in the business travel airline market as both airlines look to take a significant chunk of the pie?

The business travel airline market makes up around 30 percent of the total domestic aviation market in India.

I don't expect any completely new feature that airlines or any other online travel agents can offer that will help them boost their business class traffic. In my opinion, corporate customers mostly look for convenience, selection and price competitiveness.

The corporate market is quite large in India, and all parties will be able to get a slice of the pie from the market.

Are you seeing that airlines are pitching more directly to corporate clients?

I really haven't seen this happening. Maybe they if they are, I don't have visibility on that.

An example I can share is that a number of hotels in India tie up with airlines to provide accommodation for airlines crew, and MMT is not present in that segment. So, there can be a case where airlines are tying up with hotels to onboard them as corporate clients as well, but I am not aware of this happening.

Corporate companies are also changing the way they onboard clients. Back in the day, a hotel would make a pitch to a large corporate client like Infosys or Wipro with a fixed rate of hotel stay. Now, that market is changing and even corporate clients look for more options when traveling for meeting. Instead of tying up with a particular hotel which might have a couple of locations, corporate clients are looking for flexibility.

How are you competing with the likes of legacy players in the corporate travel market like Thomas Cook, given that your entry into the corporate market is relatively new?

For large corporate clients, MMT has a separate platform called Quest2Travel, which focus on large corporate clients based out of multiple locations. We have onboarded the Adani Group on the Quest2Travel platform.

While Carlson Wagonlit Travel (CWT) and American Express (Amex) have a competitive edge through the kind of user interface that they offer to their customers.

Going forward, we expect this segment to be driven by efficiency of the product and we are working to make our product more efficient.

Given the fact that MMT is transitioning to an asset-light model through the use of artificial intelligence (AI) and is also working to reduce its dependence on call centers for customer satisfaction, is it fair to say that going forward a lot of MMT's outgoing expenditure will be primarily to data centers and data partners?

Before AI got into the picture of customer service, a lot of development to address customer service queries on the smartphone was already done.

AI has mostly helped enhance the customer service experiences and has boosted productivity. The heavy lifting on addressing customer service queries on smartphones was done during the pandemic. During COVID, we had a sizeable sort of customer service unit, and we were able to build capability on smartphone of self-service flow. So, lot of that automation had happened before the use of AI, and those benefits have now started reflecting in our results over the last couple of years. Going forward, there is less headroom for cost optimization to improve for MMT.

There is bigger opportunity to improve the experience for customer using the AI models to provide solutions in different languages, and also provide prompts to customers to help them address a query.

Reliance on data storage and using data quickly has always been a part of the online travel industry and I wouldn't say that has increased over the last few years, but the use cases have changed significantly.

Travel is one segment which after the pandemic there was revenge travel. In the last 16-18 months we have seen a slowdown in consumer spending in FMCG, auto, consumer durables but that's not impacted the travel industry. Why?

We went through a lot of pain during Covid years. Though the growth numbers have tapered but 6.7 percent GDP is not small.

If you look at consumer cohorts based on their earnings - middle and the upper class, high network individuals - I don't think there is any serious impact from an earnings standpoint and they have the disposable income. The impact in some of the categories may be because of rural demand slowing down, or lower middle-class spend going down.

In the discretionary categories, we hope the little slowdown that we are seeing is an aberration, as I don't see any micro factor driving this. With respect to travel, the consumer habits have changed.

The allocation of disposable income one had before Covid years has gone up because people are taking more travel breaks. This is not pent up or revenge travel. In addition, the overall infrastructure improvement in the country has also helped the travel industry, whether it is air connectivity, expressways, or alternate accommodations. All this has created a lot more interest in travel.

How important is the China market for MakeMyTrip especially keeping in mind the recent development of China indicating that in 2025 the pilgrimage from India to China that route will start?

It has not opened up recently. The erstwhile traffic to China was business. When it comes to pilgrimage, we have got so much to offer in India, especially with new destinations coming up.

Pandemic hit the travel industry hard. Local travel agents are still struggling. Now you are offering a pay later function, are you giving travel partners incentives which can help them to not shut down their operations?

I have seen revival across the board. The travel platforms have the support from the content that we have built over the years in different products and services.

Are you looking to explore the fintech space?

On consumer lending, the bank product - which is EMI - we already have. We are not looking at lending money to customers from our balance sheet. We will stay focused on travel, our knowledge base in travel, technology and consumer. We are not in the financial services business.

Any plans to raise funds?

We haven’t utilised the funds we have raised. The money on the balance sheet has grown because we have been profitable. So, there is no need for us to raise funds right now.