MakeMyTrip (MMT), is gearing up to take on smaller rivals Treebo and FabHotels in the budget hotels space and is forecasting up to 75% of its overall top-line to come from hotels and packages segment over the next three to four years.
Speaking to ET, Rajesh Magow, CEO at MakeMyTrip India, said the Nasdaq-listed OTA, which acquired Naspers and Tencent-backed rival Ibibo Group in October, plans to invest “significant” amounts to expand its presence in the space.
This is also the first major announcement by the Gurgaon-based company since receiving the necessary clearances from fair trade regulator Competition Commission of India in January for its acquisition of Ibibo. The merger of the two, which was valued at about $2.2 billion as of December after MMT said it would issue shares worth Rs. 96 crore, is the largest consolidation deal in the Indian internet market.
“We are going to leverage the distribution strength that we have as a combined entity, and come up with a little variant of the model that we have in the budget segment. We will go hammer and tongs after this segment,” Magow told ET. While MMT already operates two budget-specific segments -Value+, and alternate homestay-focused RightStay -Ibibo operates budget accommodation platform GoStay.
Both Treebo and FabHotels have made strong strides in the budget hotel accommodation space, along with the likes of SoftBank-backed OYO. Treebo’s business model includes tying up with hotels for their entire inventory, while taking a revenue share of 18-25% from owners.
FabHotels does not offer accommodations under its brand, instead, it operates more as a franchisee that allows it to be deeply embedded in the operations of its partner hotels, while also having exclusive rights to distribute their inventory.
Both firms list their properties on the MMT platform, and Magow said there were no plans yet to remove the duo from the same. In October 2015, MMT had removed OYO from its platform, citing strategic overlaps. Magow declined to disclose the exact amount that MMT, which has a market cap of $1.9 billion, plans to invest in the budget hotel segment, and also said the firm was still finalising the exact model it plans on putting in place, and expects to announce them in the forthcoming quarters.
“It’s going to be a significant investment that you will see over time. Since it’s going to be in the hotels and packages space, it’s going to be a continuous investment over the next three to four years,” Magow said. The OTA has about a 29% market share, compared to the other online travel operators.
Source: http://brandequity.economictimes.indiatimes.com, 27 March 2017
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