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Last Updated : Mar 23, 2018 05:40 PM IST | Source: Moneycontrol.com

MakeMyTrip and GoIbibo to start targeting different consumer segments

The overlap between the two brands is barely 25 percent in terms of customers, says Rajesh Magow, CEO and co-founder, MakeMyTrip

Almost a year after MakeMyTrip acquired rival GoIbibo, the company plans to create differentiation in the offerings of the two brands. While MakeMyTrip will target more premium customers, GoIbibo will focus on value conscious travellers. In an interaction with Moneycontrol, Rajesh Magow, chief executive officer and co-founder of MakeMyTrip talks about the strategy going forward.
In a recent investors' call, Deep Kalra spoke about creating differentiation between the two brands. Can you elaborate?

Right after the merger, we started doing a lot of work to gather consumer insights. So based on those insights we have decided to do this positioning. The overlap between the two brands is barely 25 percent in terms of customers. So what we do know is that GoIbibo's customer segment is relatively younger and and value conscious. Basically they would buy (a hotel room) for say in the price point of Rs 3000. Whereas on MakeMyTrip the sweet spot was mid segment and premium segment and even the demographic profile was a little older in the 30s.

How will you push that going forward?
There will be completely different ads (for MMT and GoIbibo). On GoIbibo's side, 'Go Contacts' is a very good property that they have built. It is basically the network effect they get from the Go Contacts. We are trying to promote that. You can refer your friends, sync your phone book start getting incentives. MakyMyTrip doesn't have that sort of property right now. MakeMyTrip's program is very different -- Black and the Double Black (subscription programs).

This will be a 360 degree change from the supply side, product interface side and also campaigning side. There are four or five segments that we are going to call out. These are all for value conscious customers. So there is going to be pilgrimage, traders and professionals who travel for their work, domestic medical travel tourism, students and backpackers. Whereas in MakeMyTrip, you would see more and more focus on the premium category of hotels. We are adding up more inventory in the luxury segment. So it is going to be for a specific high end customer segment focusing on luxury villas and hotels.

Of the 16.3 million room nights in the first nine months of FY 2018, how many were luxury properties?

Very small number of luxury villas were sold. We would have sold many five stars but not necessarily luxury properties. I think we need to do a lot more on the content side keeping Booking .com in mind as competition.

What triggered Oyo's comeback on your platform?

When we stopped working with them, they were competing with us. That's not the case anymore. Now they want to be a budget chain. We want to work with every chain. In 2016, we realised that it was not a budget chain. It was actually aggregating like us. So I said let us compete. They still have some partial inventory in the hotel segment but there is a commitment that they would not be there in about a quarter. I think that is a clear understanding between the two parties. Tomorrow, if they change their strategy or if MakeMyTrip changes its strategy and wants to start a low budget chain of hotels, things would change again.

Even after MakyMyTrip acquired GoIbibo, heavy discounting continues to exist in this sector.
Aggressive discounting is not happening as much in the online travel agency (OTA) space as much as in the horizontal space. But I agree, it still happens. Anyone who has more money could potentially be doing it. In flights for sure. May be Paytm is doing it. They are trying to do it to build their use cases.

I think the fundamental reason is that the penetration level is still low. It is not that the hotel market online penetration has reached 50 per cent. It is still 15 per cent.
First Published on Mar 23, 2018 05:25 pm