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MakeMyTrip aims to dominate half of the online hotel booking space

Online travel company MakeMyTrip has set a goal of doubling its market share in the online hotel booking space to 50% over the next two years. The Nasdaq-listed company, which recently raised a $180 million investment from major Chinese tour operator Ctrip, plans to deploy significant funds to expand the high-margin hotel booking business.

“We already had reserves of $100 million before this investment on our balance sheet. For the next level of growth, we wanted to raise more money to strengthen the balance sheet and drive the next phase of hospitality growth,” Rajesh Magow, co-founder and CEO, India, at MakeMyTrip, told Business Standard. .

Magow said the company has a 25% share in India’s online hotel booking industry, according to a recent report by Millward Brown. “We are focused on growing it as fast as possible. There is significant room for growth, as it is estimated that only around a fifth of all hotel bookings are made online today.

The company, which lists nearly 27,500 domestic hotels and 2,500 international hotels, will continue to consolidate more hotels across all categories to drive growth. “The focus will be more on outside the top 10 Indian cities. Travel demand from the next tier of cities will drive the need to broaden the city base and aggregate demand,” he added.

“Much of our growth will come from people who book through offline channels, such as travel agents or after reaching the destination. Today, it is much more convenient to book over the phone. We believe that the Online penetration in hotel bookings will grow from 20% to 40-50% over the next three to four years,” Magow said.

In order to double the share, MakeMyTrip must grow at a much higher rate than the market, which is expected to grow 10-15% every year. “We need to grow by double digits or even triple digits to reach 50% of the market,” he said. The company’s online hotel reservations grew 168% in the last quarter. The company will invest in strengthening mobile booking platforms.

The focus on hotel revenue growth is understandable. Hotel bookings offer a 12.5% ​​margin, compared to 5.7% offered by airline ticketing. The company derives 45% of its revenue from hotels and hotel packages, while 55% comes from airline ticketing. Magow said the contribution from hotels and packages will reach 75% over the next two to three years. The company posted revenue of $299 million last year.