Not just for buying cars, refrigerators or washing machines but customers can now also take loans for going on holidays. Online travel agencies and hotel chains are working to offer customers instant credits for booking hotels and flights in order to drive customer stickiness and growth.
Online travel agency MakeMyTrip has launched a pilot wherein it is allowing customers to book a flight or hotel by just paying a fraction of the total cost. The rest of the amount can be paid later in tranches. It has partnered with non-banking financial company (NBFC) Bajaj Finserv and is open to align with fin-tech companies.
“We today have about 29 million customers’ history who have transacted with us on all the three brands (MMT, GoIbibo and RedBus) and that is like a gold mine. Then there is data related to visits, traffic, search … so there is tons of data that we have and we are building intelligent platforms. Can we leverage our own data base to solve for consumers need with respect to the micro lending? The answer is yes,” Rajesh Magow, co-founder and chief executive officer, India, MakeMyTrip, told Moneycontrol in an interaction.
So far about 300-400 customers have been offered these loans. According to Magow, the average ticket size is not different from the regular ticket sizes.
Currently, the offer is for hotels and will be extended to flights soon. It, however, would not be offering loans for travel packages or buses. “This we are trying to do online first. So in packages I don't think we would offer. Again not buses because the ticket size we offer is too small,” said Magow.
OTAs and hotel chains have always offered customers the option of booking hotels online and paying while checking out of the hotel.
However with the new plan, MakeMyTrip will be offering a pre-defined credit limit to its users. Customers will be given a timeline to repay this amount.
“If you need funding and don’t have a credit card then this will act as an instant credit. We will be able to see your history and would know if you would default or not. The third party fin-tech companies will come and give the loan and then subsequently collect,” said Magow, adding that the offering should pick up speed by June.
Magow however said that it was too early to comment if the loans will also boost the number of transactions of the platform.
“I think it should hopefully but will not happen this quarter. It is very hard to say. We will see if the trend is picking up because everyone is betting big on fin-tech. The jury will be out in a couple of quarters,” he said adding that instant loan is expected to motivate customers and push impulse purchases.
MakeMyTrip has also started offering working capital loans to partner hotels in association with fin-tech startup Indifi. “We are just introducing the company with the hotels. They are actually giving small six months kind of loans to the hoteliers,” he said.
Budget hotel chain Treebo that raised USD 34 million in a round led by by Hong Kong-based hedge funds Ward Ferry Managementand Karst Peak Capital is also in talks with micro-lending firms such as LazyPay to offer lending to its customers.
“There are already companies like LazyPay which extend micro-credits. We don't even need to do it from our balance sheet. This is their core business. All we need to do is to enable these guys to come on to our platform that we will do,” Rahul Chaudhary, co-founder of Treebo told Moneycontrol in an interaction.
"If we see a big use case we are definitely open to testing it out. That’s not necessarily going to be amount like Rs 10,000-30,000 but will simply be for the transaction on our platform,” he said adding that an average transaction cost on Treebo is Rs 4000-5000.