In The Big Chair - Deep Kalra of MakeMyTrip

Deep Kalra, CEO

MakeMyTrip launched in 2000 in the United States to help the country’s Indian community manage its travel to and from India. It started operations within India in 2005 and now offers flights, accommodations and rail and bus tickets.

Deep Kalra founded MakeMyTrip and now serves as group chairman and group CEO of the company, which includes brands such as Goibibo and redBus in its portfolio. Prior to MakeMyTrip, Kalra had corporate stints with GE Capital, AMF Bowling Inc. and ABN AMRO Bank.

You launched MakeMyTrip in 2000 - just before the dot-com bust and then the 9/11 attacks. How did those two events impact the company in those early years?

When we started out, we raised money fairly quickly - from eVentures, one of the first venture capital firms of the time. Both the euphoria and funding were short-lived as we soon found ourselves in the middle of the dot-com bust.

The second promised tranche did not come through as our fund shut shop. Post the dot-com crash and 9/11 in 2001, there was virtually no appetite for a B2C internet play, that too in travel. To make matters worse, the outbreak of SARS had a direct impact on the travel business. Funding was hard to come by and at one point we were advised to shut down the business.

The choice was to either wind down and go back to the corporate world or somehow muster further investment. I invested all my personal savings, took money from angel investors, right-sized the business and focused on turning profitable. This helped us run a tight ship.

We bootstrapped between 2001 to 2005; the team also shrunk significantly, but I was fortunate to have some senior colleagues who stayed on, even invested their own money to keep it going and became co-founders along the way. It also led us to building a core team of people who learnt about nurturing the business beyond the immediate remit of roles they were hired for.

I was always convinced in this idea and believed in it whole-heartedly so there really was no turning back for us. I think what this period showed us was how unpredictable things could get despite the most thorough planning and robust forecasts. As they say, even the best laid plans can go awry, but it’s the ability to think on your feet and persistence that can make all the difference between success and failure. Self-belief and unrelenting focus on improvement have been the building blocks, of MakeMyTrip and we continue to live by that every day.

In April, you announced a partnership with Flipkart, the leading e-commerce platform in India, so its more than 100 million registered users can book travel through MakeMyTrip’s brands directly in Flipkart. What are the early learnings, and how does it evolve with Walmart’s acquisition of Flipkart?

Flipkart is one of the most exciting companies of our times, and we see immense value in partnering with them to help accelerate the massive online travel opportunity in India as we reach out to an even wider consumer base. Both the brands have played a defining role in shaping the consumer internet ecosystem in India, bringing millions of Indians to shop online.

Since April, we have successfully integrated our domestic flights funnel within the Flipkart app, and we are now moving to integrate other lines of business onto the platform. We have also integrated redBus with PhonePe, FlipKart’s UPI-based digital payments platform. Goibibo’s hotel offering and flights are also now available on PhonePe. Change of ownership should not have any bearing on this partnership.

About two years ago you acquired Ibibo Group, which operates Goibibo, redBus and other subsidiaries. What has been the most challenging aspect of that merger?

When we were exploring the merger, we recognized that the coming together of these assets would be unique and would have the potential to unlock some enormous opportunities other than just acquiring a much bigger size as a combined entity. We were very impressed with the technology and talent at Goibibo and redBus, and with little overlap in our customer base we were convinced about the value of this merger.

We knew we were taking up an ambitious merger, and we are delighted to have come good on it. We have built a much stronger identity and traction for our portfolio of brands, increased pace of product and technology innovations, and we have teams competing and collaborating to bring out the very best.

Mergers typically start on a good note because of the promise they bring, but it’s the transition period that could be challenging as you attempt to give it shape and form what you had envisaged. While employees are key to the merger’s success, it takes the senior management’s leadership to successfully implement it. For a successful melding of the best from two companies it requires time, patience and reinforcement of the merger mission among the employees.

How valuable is the bus ticketing business now to MakeMyTrip?

Very valuable. RedBus is a market leader in a category that is highly fragmented, which places it in a very sweet spot.

With redBus, we have a service that has innovated and solved many of the challenges faced by passengers and bus operators in the intercity segment of bus travel in India. Along the way, we have developed strong technological capabilities and a full suite of products - right from industry-leading mobile apps, desktop and mobile web sites to cloud-based SaaS platforms for bus operators to digitize and distribute their inventory, vehicle tracking application, a GDS and a booking platform for traditional travel agents - spanning the entire bus travel ecosystem.

We are bullish on the hotels opportunity.

Deep Kalra

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We get a lot of inquiries from companies around the world asking to partner with us or to license our technology, and recently we have identified the global markets as an opportunity for business growth.

We have also made an investment in Bitla Software, a technology provider with SaaS-, cloud- and mobile-based solutions, with an aim at providing an extensive suite of technology products for the bus and hotel supplier ecosystem that will further strengthen our strong market position.

You took a sizeable investment from Ctrip in 2016. Apart from being an extension of its own global strategy, what operational and strategic advantages does that alignment give you?

Ctrip has been a great partner. We have received tremendous strategic inputs and advice from a market leader that operates in a more advanced but similar market. We believe there are many similarities in the Indian and Chinese online travel markets, and the strategic relationship with Ctrip has proven to be mutually beneficial.

While Ctrip has gained exposure to India’s fast-growing online travel market through this investment, we have managed to strengthen our hold in the market as we see deepening internet penetration while the competitive landscape continues to evolve. Maintaining our overall lead, we continue to grow in critical areas like online hotel bookings, posting strong transactions growth every quarter since the investment.

It took nearly a decade for Indians to be comfortable to book travel online, a couple of years on mobile. What are your thoughts about emerging options such as voice-enabled booking, chatbots and artificial intelligence?

Change is happening at a pace not known before, and all things touched by tech and travel is no different. A major driver of this change is going to be voice or conversational commerce. It’s still early days in conversational commerce, but we are seeing very encouraging results already as we drive deeper into the Indian market beyond big cities by bringing down barriers through voice commerce and a vernacular approach.

We are making sustained investment in AI and natural language processing to understand user intent in a better way to leverage this technology and increasingly personalize service to every customer. Our chatbots (Gia for Goibibo and Myra for MakeMyTrip) have reduced the number of conversations which require human intervention by over 10%. In fact, all our customers booking train tickets are now fully served through Gia for any post-transaction queries.

Our investment in technology behind chatbots is also helping us reach out to our users through WhatsApp – the most popular messaging app in India. By being one of a handful of companies to partner with WhatsApp in the rollout of their enterprise products in India, we’re now able to reach a vast majority of customers in India who are coming online for the first time. This has also helped us launch some customer delight features like Web CheckIn, Seat Selection, Reviews & Ratings etc. through WhatsApp.

We’ve also rolled out Goibibo Xpress, a conversation-based app targeting the next 100 million internet users who are fairly new to the web and primarily use budget smartphones. The app is only 1.5 megabytes in total size supporting voice-based and chat-based inputs from users in both Hindi and English. This app currently allows hotel bookings, train status updates and status check of wait-listed train bookings. Soon, the app will also offer bus and train bookings and be positioned as the go-to app for the next generation of internet users across India.

You launched two new loyalty programs in 2017 - MMT Black and MMT Double Black. What is the strategy behind those and how do you see loyalty evolving?

We want to lean in on providing value propositions and enhanced experience to ensure that not just more people use us but more and more people keep coming back to us. The competition for consumers’ wallet, smartphone space and genuine brand loyalty is getting more intense, so it is imperative for us to evolve the value construct of our loyalty programs to fundamentally change user behaviour. Brands need to master the art of personalization so that you are offering the right incentive, at the right time, promoting the behavioral shift that will create a virtuous cycle.

With our industry-first subscription-based loyalty program MMT Double Black, the consumer is paying out of his own pocket for future transactions, committing himself to a year-long relationship. This form of commitment between a consumer and a brand is perhaps the highest form of commitment in the internet economy space given browsing the internet is virtually free and the switching cost is very low.

We also introduced a spends-based loyalty program called MMT Black, where enrolled members can earn wallet credits based on how much they spend with us.

We have seen phenomenal growth in our loyalty programs - MakeMyTrip Black loyalty program has enrolled over 900,000 customers since its launch in July 2017. In addition, our subscription-based MakeMyTrip DoubleBlack program, which was introduced a month after our Black program, now has over 33,000 paying members.

According to Phocuswright data, India's online travel bookings are thriving - seven in 10 travelers that book online use an OTA. And double-digit growth is projected through 2021. How will MakeMyTrip capture that growth over its competitors such as Cleartrip and Yatra?

The Indian market is thriving, and we are well poised to capitalize on strong travel trends that India has to offer. MakeMyTrip’s powerful portfolio of brands today commands unrivaled market share, scale and brand recognition. We continue to maintain an unwavering focus on going after the online hotels segment, which remains highly fragmented in India.

This means discovery, marketing and sales of hotels still remain hard to crack online in India for hotel owners (independent or chains) and the biggest value-add that a platform of MakeMyTrip’s scale brings is the visibility, promotion and sales for these hotels who can’t spend astronomical marketing spends for traveler visibility.

Just as MakeMyTrip has become synonymous with flights booking in India, where one out of four air tickets are booked on our platforms, we are also bullish on the hotels opportunity. The domestic online hotel market remains lowly penetrated at an estimated 15% but is expected to double over the next few years, and we remain focused establishing ourselves as a clear leader.

For perspective, when MakeMyTrip listed on NASDAQ in 2010, 85% of the revenue came from the online ticketing business, and the rest from the hotel booking business. In full year 2018, the contribution of our hotels and packages business to total net revenue now stands at over 54%, which is in line with our long-term vision of scaling the accommodation business to contribute 70 to 75%.

We also believe that our partnerships will also help us maintain growth over our competitors, and one big focus for us has been partnerships with India’s leading players – be it powering a whole new travel segment on India’s largest e-commerce platform Flipkart and its payments app PhonePe or the partnership with OYO Rooms to boost the budget hotels choice for value-conscious Indian travelers.

Do you think that Expedia and Booking Holdings have missed the opportunity in India?

We have always been a company that is competition-aware, but we stay obsessed with customers. Competition will always try to surge ahead, and in today’s time it comes from different players, but we are in a leadership position and the only way to maintain leadership is to be customer-obsessed.

We believe that the Indian online travel market is big enough to accommodate more players, but over time there will only be a handful of brands and only two will perhaps make money. The winner might not take all in this game but it will take the most.

We haven’t heard of MakeMyTrip’s Innovation Fund for a while. How are you now looking at startup investments?

Our innovation fund was created to invest in early stage ventures operating in the travel and tourism space, with a focus on mobile and IP-based startups. This was an additional prong of our inorganic growth strategy by pursuing merger and acquisition opportunities in the travel technology space. We intend to purposefully go out and look for such companies and take early stage positions as appropriate.

What advice do you have to other travel startup founders?

Execution eats strategy for breakfast, so stay focused on executing your plans to the T. Also, founders must be able to build an environment where ideas matter more than hierarchy and people have a bias for action and a strong sense of ownership. The idea should be to build a company that's durable, and don't build to sell.