Companies
MakeMyTrip to renew focus on experiences, activities in its tour packages
Summary
Rajesh Magow, MakeMyTrip's co-founder and CEO, said the Gurugram-based company plans to reintroduce its destination-based activities and experience-heavy offerings that had taken a beating during the pandemic.
Online travel agency MakeMyTrip is betting big on improved consumer sentiment and evolving spending habits of Gen Z and millennials to revitalize its travel offerings.
In an exclusive interaction with Mint, Rajesh Magow, MakeMyTrip's co-founder and CEO, said the Gurugram-based company plans to reintroduce its destination-based activities and experience-heavy offerings that had taken a beating during the pandemic.
“Our destination-based activities and experiences are in the works," Magow said. “We are actively developing travel-based activities which will include more sightseeing and other experience-led products when travelling. We used to have these on our platform pre-pandemic but then demand fell sharply during that time, prompting us to focus more on building our corporate business and other functions. It was just two years old at the time and had grown in low single digits."
The post-pandemic recovery is well underway, and people are again eager to engage in activities and experiences, he said. "The consumer's demand for experiences is through the roof. That was seen in the recent bookings of concerts and events as well with so many thousands of people struggling to secure tickets for high-profile shows like Coldplay and Diljit Dosanjh. We already know that younger consumers are prioritising experiences over material goods. This might be showing differently for different categories, but in our experience, it’s strong," he said.
British rock band Coldplay is holding a concert in Mumbai in January next year, and there was a phenomenal demand for tickets to the event, so much so that online ticketing platform BookMyShow's website crashed just as the ticket sale was about to go live.
Magow said the company’s previous a la carte activities and experiences generated modest revenue due to their early-stage development prior to Covid-19. “Now, as we reintroduce these offerings, we expect them to become a more significant component of our overall hotel and accommodation packages."
MakeMyTrip conducted a survey recently that showed that 46% of all domestic flights booked on its platform were less than a week before departure. This could mean that younger travellers, who tend to be more spontaneous, could be driving this trend. Additionally, half of international bookings are made just two weeks in advance, reflecting a flexible and impulsive approach to travel, which could also be associated with millennials and Gen Z.
In terms of 2024 travel overall, the year has been a mixed bag. On the back of a very strong recovery of both domestic and outbound travel in 2023, 2024 has somewhat paled in comparison. The first half of the year was marred by extreme weather conditions like heat and rain and also a long-drawn-out general election which hurt on travel. But Magow is not overly worried. He said there is an increase in institutional investors visiting India on the back of increased corporate business from conferences and leisure travel. “Many foreign institutional investors are coming to India, and we’re seeing a noticeable rise in hospitality-related conferences with global hotel chains. Across the board, consulting to financial institutions, as well as institutional investors- all are visiting. Even in our trade—travel—many individuals and organisations are coming to attend conferences. Everyone wants to seize the India opportunity," he said.
Industry-wide hotel occupancy moved down around one percentage point
While inbound travel has not yet fully returned to pre-pandemic levels, Magow remains optimistic. “From a business perspective, inbound travel has nearly recovered. I would not be overly worried," he said. Magow described hotel occupancy rates as “very robust," despite some seasonal challenges in the last quarter. "On an overall basis, industry-wide hotel occupancy has only moved down around one percentage point and not lower than that. In September, we saw domestic flights, travel coming back, and air traffic numbers, our daily flow traffic numbers to be quite strong. This is a good indicator," he said. According to data put out by the Directorate General of Civil Aviation, passengers carried by domestic airlines during January-August 2024 was 10.54 crore as against 10.06 crore during the corresponding period a year before, registering an annual growth of 4.82 %.
Bookings on MakeMyTrip’s platform have picked up ahead of the festival season, with consumers increasingly reserving travel for October rather than the end of September.
“This quarter is significant, not just for the festival season but also for leisure travel, and I remain optimistic," he said. While there was a slight softening in domestic travel demand in August, Magow pointed out that it rebounded by mid-September. “The year-on-year growth is still there, but 2023 was a record year for the industry. While the growth rate for 2024 may appear slightly lower, it’s not necessarily indicative of any slowdown. Indian will travel both domestically and internationally, depending upon which customer cohort it is. A lot of people would take long weekends because in November and December, there are also five long weekends coming up. This is led primarily by domestic travel. But for winter vacations which will be coming up, the time coincides with school, college breaks and that will be more international-travel driven," he said.
For the first quarter ended June 2024, the Nasdaq-listed company in its filings to the US Securities and Exchange Commission, reported a revenue of $254 million, growing 29% over $196 million a year ago. Its adjusted operating profit rose 29.9% to $39.1 million.
