MakeMyTrip Rides Travel Rebound Driven by India’s Growing Middle Class | Tech US News

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After narrowing its net loss in its fiscal second quarter, MakeMyTrip’s bid to focus on domestic India appears to have paid off as the online travel agency noted that a large chunk of its new traffic came from cities more small

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While inflationary pressure and visa delays have stalled the recovery in outbound international travel from the country, Indian online travel agency MakeMyTrip reiterated that travel continues to pick up on the back of declining Covid infections and positive consumer sentiment boosted by a growing middle class.

The company narrowed its net loss in its fiscal second quarter ended Sept. 30 to $6.8 billion, down 15 percent from losses of $8 billion in the second quarter of 2021.

“The impact of the pandemic on travel decisions was negligible during the quarter. Although we now have inflation-driven macro pressure, the medium to long-term outlook for the industry looks very strong at MakeMyTrip,” the group CEO of company, Rajesh Magow, during the company’s fiscal second quarter 2023 earnings call.

Calling India an under-penetrated market for travel, MakeMyTrip noted that the propensity and willingness to travel is steadily increasing, driven by a growing Indian middle class, with middle-class households expected to reach 330 million by 2023 from 166 billion in 2018.

Despite headwinds in outbound travel, the company’s gross bookings grew 126 percent year-over-year to $1.5 billion in the quarter ended Sept. 30, from $734 million in the second quarter of 2022.

Revenue rose from $67.5 million in the second quarter of 2022 to $131 million as earnings before interest, taxes, depreciation and amortization for the quarter were $10.7 million compared to a loss of 0, 6 million dollars in the same period last year.

India’s digital revolution has also led to ever-increasing internet and e-commerce penetration, the online travel company noted.

Over the past decade, Internet penetration has increased from 11 percent in 2012 to 47 percent in 2022, and e-commerce users have increased more than 19 times from 10 million users in 2012 to 190 million in 2022, Magow noted.

With the recent launch of 5G services in the country, MakeMyTrip hopes to further accelerate this trend with high-speed internet enabling greater adoption of e-commerce.

Calling MakeMyTrip a harbinger of the digital revolution, Magow noted that the company has invested in and facilitated online penetration in different travel segments and would continue to do so.

Building on its stack of products and features based on data science models, the company launched the Quick Book feature that leverages a user’s past booking history to provide them with their preferred flight options.

The company also launched its new flexible payment that allows users to book hotels without paying in advance.

The company said in September it acquired an additional stake in Simplotel Technologies, a travel technology startup based in Bengaluru, India’s Silicon Valley, for $4 million. MakeMyTrip now has a 64.8 percent stake in the company.

For its accommodation business, MakeMyTrip has seen a strong recovery in the premium and mid-premium segments while it said the recovery in the budget segment has been slow.

As the company expands into new geographies and user segments, the company said it continues to focus on driving new customer acquisition and a better user experience.

Magow noted that a large portion of new traffic for the company comes from non-English speaking tier two and three cities. Announcing its results for the first quarter of this year, the company said it is now looking to improve its reach with customers within India.

While noting that domestic leisure traffic in India has recovered more than 100 percent from pre-pandemic levels, Magow cited data from India’s Directorate General of Civil Aviation which states that the domestic daily passenger market in the county recovered to 85 percent.

“We are recovering faster than the market by 98 percent compared to the same quarter before the pandemic.”

Commenting on the Competition Commission of India imposing a fine of around $27 million on MakeMyTripGroup, the company said it is evaluating the CCI’s findings and “expected to obtain advice from external legal counsel to determine the future course of action”.

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