Deep Kalra

The saying goes that each and every person at some point of time is bitten by the wanderlust bug, and having deep pockets definitely helps in fulfilling those dreams. Probably the reason why more than one travel portal in India survived the dot-com bust is this dream itself. And if you are specifically targeting the cash-rich NRI segment for inbound travel like Makemytrip does, you have a potent combination to not only survive but also thrive.

That Makemytrip is no flash in the pan can be gauged from its strong financial results since its inception in October 2001. In the five remaining months in 2000-01, it grossed revenues of Rs 3 crore, while in 2001-02 it recorded Rs 17 crore in gross revenue with Rs 2 crore in gross commission. The last quarter has seen Makemytrip earning Rs 8 crore with gross margins in excess of 10 percent at Rs 1 crore. Net cash flow has been neutral since the portal managed to break even in March 2002. Deep Kalra, CEO of Makemytrip, attributes this success to the sound initial strategic decision to target NRI customers, and subsequently supplementing it with in-depth knowledge of this target audience and their requirements, coupled with rigorous processes and good trade relationships.

Makemytrip has achieved a number of milestones on the way. It has the distinction of being the first IATA-recognised dot-com. It is the exclusive e-agent for Lufthansa in India. It has a major co-branding exercise with Cricinfo and Sify as their official travel partners. A 1-600 toll-free number is another unique feature, taking the business not just through the Net, but offline as well. Currently, Makemytrip offers its customers 80,000 negotiated airfares to choose from, 1,000 negotiated hotel rates worldwide, 500 specially created packages, 15,000 ways to travel across 75 destinations in India and believe it or not one thousand ways of what to do while travelling.

Having broken even, Makemytrip now intends to touch revenue figures of Rs 50 crore in 2002-03. And Kalra admits that the existing target audience of NRIs, mostly in the US, would continue to contribute almost wholly towards this. More than 75 percent of Makemytrip’s registered user base of 100,000 are NRIs from the US. The portal is now attempting to address other geographies like UK, Australia, Canada, S E Asia and the Middle East where there is a high concentration of NRIs with high online penetration. It is also actively targeting foreigners from these markets. Kalra effectively rules out the domestic market, which he believes is not yet ready to transact over the Net.

The moot question remains whether Makemytrip can eke out a sustainable business model by targeting only inbound travellers or whether it needs to look at advertising as a revenue generator. Kalra reveals ad revenues have never been core to Makemytrip’s business plan, though of late it has been able to deliver immense value in promoting some leading NRI focused brands. However, with 2.8 million foreign passport holders coming into the country last year, Kalra believes that the business model requires no immediate shift. The portal itself currently spends 20 percent of its gross revenues on advertising with 90 percent of it being online.