MakeMyTrip has started to prioritise market share and transaction growth, in response to the "unprecedented smartphone penetration" in the Indian market.
CEO Deep Kalra told analysts on the company's 2015 Q1 earnings call that it would be "prudent" to find ways to increase its market share even if net revenues and margins will take a hit as a result.
Mobile is clearly driving the Indian travel market and in the three months to the end of June, MakeMyTrip's standalone hotel bookings from mobile increased by well over 200% compared with the same period last year. Cumulative downloads of its apps reached 8.5 million by the end of the quarter.
He said that MakeMyTrip was constantly updating and improving its apps. He was particularly excited by "a deep integration with Google Maps" which will be part of the new Android app, ready by the end of August.
Incentivising new customers to use the app lifts marketing spend but when the business focus shifts to transactions and share, this is seen as an investment rather than a cost.
And there is more mobile growth to come. Kalra started the call by referencing a recent report from KPMG and the Internet and Mobile Association of India which says that while internet penetration in India is relatively low at 19%, it is the world's third largest smartphone market with 278 million users, 159 million of which are mobile-only internet users.
And by 2018, he said, there will be 400 million smartphones users in India, bigger than the entire population of the United States.
He said:
"This makes us believe that it’s the right time for us to single-mindedly focus on accelerating transaction growth in the hotels and packages business to grow our market share in this strategic segment with a view of consolidating long term market leadership in the OTA space.”
(The markets however are unimpressed by the new approach - within hours of the call, its share price on NASDAQ was down by as much as 18% on the previous night's close)
Kalra said that MakeMyTrip currently has around a 40% market share of the Indian online travel market, and that goibibo.com was the most aggressive of its competitors. He also welcomed the budget hotel aggregators into the market, as they were helping to bring that sector of hotels online "more quickly than otherwise" and feeding the overall shift from offline to mobile.
He named Oyo and Stayzilla specifically, but said there are about ten "credible players" in the market with many more regional players involved. MakeMyTrip is a distribution partner for most of the aggregators and Kalra is not concerned that they might adopt a direct-only approach.
Elsewhere, he revealed MakeMyTrip's latest investment - a $5 million injection into Bona Vita, a new tech firm focused on the travel sector founded by Amitabh Misra, former CTO for Snapdeal.com.
This follows last week's acquisition of a 28% stake in mobile-focussed Indian travel community Holiday IQ for $15 million and smaller plays into trip-planning start-ups Mygola and Inspirock.