India's oldest online travel aggregator (OTA) worked on a war footing to conserve cash and devised a two-track strategy to get back on track, even though business was down 95% in the first quarter
Rajesh Magow, co-founder and group chief executive, MakeMyTrip
Photo: Amit Verma
Graphics: Sameer Pawar
Though the pandemic shows no signs of abating, and Europe facing a second wave with lockdowns, there is hope for OTAs. Online travel, Skift Research notes, has lived through two past recessions—the tech-bubble crash and the global financial crisis. In fact, Expedia Group and Booking Holdings increased their combined worldwide gross bookings from $25 billion pre-crisis to $31 billion by 2009, the report underlines. Another big positive for OTAs are high variable cost structures such as sales and marketing expenses. When Expedia Group, underlines Skift Research, saw its Q2 2020 revenues fall by 82 percent year-on-year, it was able to respond with an identical 82 percent cut in sales and marketing. At Booking Holdings, too, revenues fell 84 percent, so it cut sales and marketing costs by 79 percent, the report pointed out. Back home, MMT, too, has slashed this component generously. For Q2, marketing and sales promotion stood at $2.3 million, a 94.3 percent cut from $40.1 million during the same quarter last year. A cut in expenses, along with revenge travel, is driving the slow revival for MMT. The fruits of revenge travel, though, might not turn out to be so sweet if Indians continue to stay reckless and the pandemic surges on. Magow is keeping his fingers crossed. “If things don’t turn worse from where we are today, I am quite hopeful for the next quarter summer season,” he says. At least in the domestic market, recovery from April-June onwards should be close to 75-80 percent, he adds. Kalra is betting big on a successful vaccine. The days of carefree, leisure, discretionary travel could gradually return once the virus is adequately controlled or an effective treatment or vaccine is developed, he said in an earnings call in June. “But we have a long climb ahead,” he added. It’s been a long, strange trip for MMT, but the good news is that the journey is still well and truly on.