MakeMyTrip has seen year-on-year triple-digit growth in transaction volumes and reminded the markets that revenues will be hit as a result in the near-term.
CEO Rajesh Magow said in the 2016 Q2 earnings statement that:
"MakeMyTrip delivered strong transaction growth in India standalone hotels, particularly on mobile devices. We believe smart-phone penetration, driven by increasing affordability and performance, is driving an inflection point in India’s online travel opportunity.”
In the year to end-September, MakeMyTrip's Indian business increased standalone hotel volumes by 168% compared with the same period last year. Within this, the increase in hotel bookings made by mobile was up by more than 400%.
On the earnings call with analysts, Magow went into more detail about its mobile and app breakdown, noting that a few quarters ago mobile web was accounting for 60% of hotels transactions and the app 40%; in the July-Sept quarter the balance was 50-50 and he said that apps could be as much as 70% of its total mobile business within the next few quarters.
Magow was also keen to tell the analysts that a lot of the growth in mobile web and app transactions was coming from users in tier-2 and tier-3 cities, and that 30-40% of people booking via the app are new customers for MakeMyTrip.
The focus on apps is reflected in MakeMyTrip's latest promotion, "The Great Indian Getaway" which is an app-only sale. It expects this to generate a five-fold increase in traffic to its app.
But having said all that, it's worth remembering that desktop is still a massive part of MakeMyTrip's current business - Magow noted that "we expect the user visit and conversions on mobile to exceed that on desktop by the end of fiscal 2016".
Its commitment to driving market share growth and transaction volume increases spooked the markets when the new focus was announced during its Q1 earnings in July. The initial success has prompted it to revise its outlook - standalone hotel bookings for the year are now expected to increase by 175%-200% in 2016 - compared with a guidance of 75% - 100% only three months ago.
The revenue increase on the back of this transaction growth is tipped to come in at 10-15%, the same as previously guided, which suggests that discounting and promotions will drive the transactions.
This is something MakeMyTrip is comfortable with. Magow reminded analysts:
"We are even more focused and committed to increasing our hotel bookings market share. We will do this by driving transactions growth in the near-term, which as we shared with you last quarter, will have some impact on revenue growth."
Related reading from Tnooz:
Startup pitch: Inspirock, a trip planner, has MakeMyTrip backing it (Sept 2015)
MakeMyTrip targets market share, mobile skyrockets, buys again (July 2015)
MakeMyTrip buys 28% stake in HolidayIQ for $15 million (Juy 2015)
MakeMyTrip buys travel planning startup MyGola (April 2015)