CASE STUDY MakeMyTrip.com A journey from Okhla to Gurgaon 14-Feb-13 IDRBT

By Shiv Khatri (12MCMB20)

Piyush Kumar(12MCMB19) Chandan Gautam(12MCMB03)

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INDEX

Sno. Topic Page No

1. Introduction and History 3

2. Tourism Market in India 4

3. Business Model and its Operations 5-6

4. Product and Services 6

5. Recent Developments 7

6. Media Selections and Advertisements 8-9

7. Booking was never so easy : M & E 10-12

8. Customer Segmentation 13-14

9. Technology Analysis 15-18

10. Financial Analysis 19-20

11. Competitive Environment 21-24

12. Conclusion 25

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Introduction and History: A Business Plan on a Napkin

MakeMyTrip.com was founded by Deep Kalra. After his MBA, Deep Kalra worked at ABN

Amro Bank and GE Money and lived a successful and luxurious life. But he was no more

ready to listen his boss’s voice . Nothing happen incidentally, every dot leads to some line

and same thing happen with Deep Kalra, His life is dramatically changed after a meeting with

a friend at a Mumbai mall , and a canvas tinged with colour and a business plan developed on

a napkin & the company comes on the floor from napkin.

Market crash leads to success…

Deep Kalra was obsessed by the Internet and same time foiled by travelling in India and both

reason leads to open a online travel portal MakeMyTrip.com. Travel portal in India is a

copycat from foreign but a place where only 50 million internet user and out of that 2 million

have broadband connection -- & they are also not ready to use consumer web, in such a

circumstances if you have only thought to open online travel portal then it is just a demented

mind work. Even in that case, market crashed and his foreign investor revoked to invest

money.

But Kalra and two senior managers stuck with the business and worked without salaries for

18 months. He did not stop there—told to employees for 40% pay cuts. Twenty-five of them

ride out and 17 employees took their own path. Due to lack of customer in Indian market

Kalra focused on returning Indians but he didn’t forgot his main motto to open a online travel

portal in India.

In 2004 – when Internet users started to grow and sometime IRCTC launched and gain very

high popularity among people then Kalra understand it is the right time to enter into the

market. So, one most important thing, Kalra didn’t play a blind game or his work is not a

detained mind work that was well planned and highly strategic. This is the reason Expedia of

India launched and travelled a long journey by others dream of travel.

MakeMyTrip is India’s leading online travel portal, It’s a

illustration that “a seed nurtures through perfect planning

and idea leads to a giant tree”. A student who didn’t

participate the entrepreneurship program in IIM-A became a

leading entrepreneur in a thrust field of India i.e. online

travel.

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Following data tells us rest of the story :

The portal sells more than 12,000 flight tickets, 1,000 hotel room nights, and 100 holiday

packages every day. MakeMyTrip attracts more than 3.5 million unique visitors every

month.

MMYT covers more than 50% of all online sales in India, It has 24x7 customer support,

which is enhancing day by day, and 2 international offices in New York and San

Francisco.

The growth of MMYT is not gradually, it is exponentially. It opened a path on the closed

road and attracts other capitalist to invest money in this field. MMYT is one of the reasons

that ―now booking is not a scrape work but ―just my wish‖.

The Tourism Market in India

Since 2001, India's tourism industry has been booming due to a rush of foreign tourists and

increased travel by Indians to domestic and overseas destinations. In 2003, the number of

Indians travelling abroad increased by 30 percent to 4.5 million. The airlines, railways,

hotels, and car rentals supply their travel services through the travel agents, Government

Ticket counters etc.

Currently, the Airlines, hotels, railways are using the Internet to reach travellers directly, thus

eliminating the role of travel agents. Airlines receive 15 percent of their business through

Internet sales. As a result, the travellers can get service directly as well as at cheaper cost.

According to the Travel & Tourism Competitiveness Report 2012 brought out by World

Economic Forum, India is ranked 68th overall in a list of 139 assessed countries in 2012.

“There is a fine line between resilient and stubborn. It worked out, so we can say we were resilient. But at the time I worried I was just being stubborn. But I figured you regret the things you don’t do in life, not the things you do.”

By Deep Kalra

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The Business Model and Operation

The customer could use either MMYT website or its call centre to book air tickets, hotel

rooms, and travel packages. There were three enabling components: technology, people and

process, and supplier relations. For a travelling organization, the strong relationship with

suppliers such as domestic airlines, international airlines, and hotels would help the

organisation to run the business model.

MMYT had already developed proprietary technology which would help it link all supplier

sites to check the inventory and compare prices. In fact, the search engine the company had

developed would enable it to offer the lowest possible price to the customer. The booking

engine would also enable customers to customize the booking of their flight and hotel

packages to maximize savings.

Being a travel commerce website, the company believed that its own products would generate

adequate revenue to successfully run the business model without depending on revenue

generated from selling advertisement space on the website.

The other key component of the business model would be employees having domain-specific

skills in order to help MMYT develop and offer suitable products and services for the travel

consumer.

MMYT's operations are represented schematically below:

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The sales team consists of three divisions-Internet sales, corporate sales and general sales.

MMYT ensures a dedicated set of executives to service the sophisticated corporate and

general sales business.

MakeMyTrip had approached NetCarrots Loyalty Services with a unique case, of how to

add value to a customer's journey experience during their visit to India. The solution brought

to light "The Tripper Saver" program which is a one of its kind customer initiative. As the

name suggests, it helps customers save money during their stay in India. NetCarrots on behalf

of MakeMyTrip has specially tied up with exclusive brand names and well known

establishments that will provide the customers with the best of deals. These deals range from

free access to airport business lounges to discounts for hotel accommodation. Some of the

prominent brands include Apollo Clinics, Hidesign, Espirit, Dominos, Cafe Coffee Day,

Sarovar Park Plaza Hotels, Choice Hotels & many more.

Board of Directors

Board of Directors of MakeMyTrip comprise investor and independent board members.

Financial Investors include:

1. SAIF Partners

2. Helion Venture Partners

3. Sierra Ventures.

Independent Members comprise such an amazing entrepreneurs and travel professionals as:

1. Philip C. Wolf (President and CEO of PhoCusWright Inc.)

2. Frederic Lalonde (Founder and CEO of Openplaces.org).

Products and Services

MMT planned to provide a comprehensive basket of products and services, starting with

outbound and domestic travel services for leisure and small business travellers.

MakeMyTrip.com offers the following products and services:

International and Domestic Flights- Air Tickets

Holiday Packages and Hotels in India as well as International

Domestic - Bus and Rail Tickets

Private Car and Taxi Rentals

MICE (Meetings, Incentives, Conferences & Exhibitions)

B2B and Affiliate Services

Mobile Site & Apps

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Recent Developments

Appointment of Directors

The Company has appointed

Mr. Rajesh Magow, Co-founder and Group Chief Financial and Operating Officer

Mr. Keyur Joshi, Co-Founder and Group Chief Commercial Officer as directors of the

company effective November 6, 2012.

Acquisition

Campaign Design

Acquired November 6, 2012,

HT Group has been operating the

website www.hoteltravel.com (the website) for more than a decade

and has its presence in Thailand, Singapore and Malaysia.

Acquired November 26, 2012

The ITC Group comprises of International Tour Center Co. Ltd., ITC Bangkok Co. Ltd. and ITC South Co. Ltd.

Acquired May 2011

Singapore and Malaysia based company.

The campaign focused on the lowest airfare

guarantee to pull the customer. The tallest

claim in the market — “If you find a lower

fare we pay the difference” — was designed

to grab the attention.

Devika Khosla (Head, Content) said

company's advertising and communication

strategy on three pillars-

1. Convenience of 24/7 service,

2. Reliability and

3. Competitive pricing

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Media Selection and Advertisements

To reach the customer, MMYT aggressively made the alliances with brands that are associated

with the Indian consumer in a unique way. For example, its offline alliance with Coke.

It targets customer through all feasible media options:

1. TV

2. Print

3. Internet

4. Outdoors : Like advertise on Airport

5. BTL (Below the Line)

6. Analytics, public relations (PR) and other

Advertising Budget (spend %age of total)

Internet Advertisement:

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Print Advertisement:

Outdoor Advertisement:

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MakeMyTrip Television Commercials:

Booking was never so EASY: M & E

Booking is in your finger tip only. It contributed and utilizing the M-commerce (M) in a very

effective way. It provides mobile app in a very interactive manner and user friendly.

Following is snapshot of mobile apps.

Above report give us a hope that m-commerce will exponentially increase in

upcoming days and then obviously MMYT business also.

165+Million mobile Internet Users in India by 2015 (IAMAI)

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Before E-commerce (E) you can’t imagine that booking is just few buttons away from

you. By just few click you are full with knowledge about hotel. You can see in following

figure:

Internet users are gradually increasing in India and it is the main deriving factor for E-

commerce business. you can verify this fact by two IAMAI report :

Continuous Enhancement of Customer experience…

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Source: Internet and mobile Association of India.

Holiday Packages:

It offers various holidays package:

Source: www.makemytrip.com Q3FY 2013 report.

H & P transaction growth of +68% per year (Q3FY2013)

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Customer Segmentation

The Indian travel market can be classified into two broad categories:

1. International travellers

2. Domestic travellers

The international travellers can be further classified as :

Inbound travellers: Those who travel into the India from overseas

Outbound travellers: Those who travels internationally.

Source: Indian Tourism Statistics 2011

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The domestic travellers are those who travels within india. Domestic tourism is growmg,

and this seems to provide a good opportunity for technologically advanced travel portals like

MMYT to focus on customer loyalty and maximize the Internet's ability to drive repeat

purchases by getting instant customer feedback.

Indian Tourism Statistics 2011

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Technology Analysis

MakeMyTrip portal sells more than 12,000 flight tickets, 1,000 hotel rooms, and 100 holiday

packages every day. Every month 3.5 million unique visit to website.

Integrated Technology Platform

Features are as follows:

Simple booking with robust and reliable

Web-enable centralized booking system

Scalable search and caching corresponding result ,quick response time

Enhanced security by VeriSign secure online transactions

Integrated Model like B2B, B2C and Mobile platforms.

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Technology and Business Challenges

To increase sales and revenue, it needed to increase user conversion rates by delivering

specific and relevant content to its visitors that related to their profiles, pattern, and locations.

Because the portal gets incentives from airlines based on the number of hits with bookings.

―Some users visit the site in the morning and come back again in the afternoon to

search for deals. In order to convert these visits to transactions, we needed to track

these cookies and users to determine if we should offer better deals or give them

something on their return visits,‖

Sanjay Kharb, Assistant Vice President – Technical Operations, MMYT (India) Pvt. Ltd

Technology solution

IT infrastructure plays a vital role for the company to meet its business objectives and gain

access in a highly competitive market. Using F5 BIG-IP Local Traffic Manager (LTM) was

chosen for its performance and flexibility .The F5 BIG-IP framework has a cost-effective

Application Delivery Controller (ADC) that lets customers for processing needs according to

their users, applications, infrastructures, and businesses. F5 -ADCs has modular design,

allowing customers to add new functionality, from web security to topology-based load

balancing and enabling faster response to changing business policy and needs .Four of these

Application Delivery Controllers were implemented at the portal’s two data centersone as

operational and the other one as a backup at the end of 2008. The new devices deliver the

inventory application, which was developed in-house based on Open Systems.

Benefits of F5

The F5 solution has enabled MakeMyTrip to handle its increased traffic, provide a better user

experience which increases revenue, no longer have load balancing or SSL server overload

issues. The F5 appliances have a capacity of 20,000 transactions per second on SSL per

second.

―With the F5 BIG-IP LTM devices in place, our system load has decreased by up to 30

percent and there are no more failures at the back end. Drop-off rate went down by

four to five percent.”

By Sanjay Kharb

MakeMyTrip has also been able to track users and their patterns of search using the F5 easy-

to-learn scripting language, iRules.

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MakeMyTrip is looking to upgrade its existing F5 ADCs to advanced F5 ADCs. These come

with quad-core processors that enable support for multiple BIG-IP modules, such as BIG-IP

Application Security Manager and BIG-IP Web Accelerator, within one platform.

Web Technologies

MakeMyTrip Server-Side programming language build on different platform and framework

PHP, ASP.NET, JAVA switches according to content specific and handling security issues.

Web-site elements containing cookies which expires in hours or one day that are used for

identifying user search pattern and providing content according to it . MMT SSL certificate

is authorised by VeriSign which is owned by Symantec.

MMT advertising Network is devised by Google’s made Double-click advertising platform.

Web-site Statistics makemytrip.com

Makemytrip.com's three-month global Alexa traffic rank is 880, India it rank 70.

Approximately 24% of visits to the site are one page view only.

Based on internet averages, makemytrip.com is visited more

Frequently by males who are in the age range 25-34

Explore average time of 6 minutes on website

Average load time is very slow (3.89 Seconds) about 90% of sites are faster

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MakeMyTrip Clustrix Database

MakeMyTrip had a two-server MySQL configuration at two data centers one for operational

and other for backup that consisted of the following configuration:

4 Intel Xeon with 8 Core

32GB RAM

Mirrored 320GB Intel 710 SSDs

MakeMyTrip upload 38GB of data on MySQL per day, managed by temporary transactional

data into 16 additional MySQL servers. The system uses Me cached and Redis query caching

in front of the MySQL databases, Solar and Lucene for search and Cassandra for user-

generated content and session data.

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Financial Analysis

MakeMyTrip is the largest online travel company in India and second most visited travel

website after IRCTC .

Business area

Financial Overview

Year over year (yoy) analysis for 3 year period are as follows:

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With India's travel and tourism market expected to double in size by 2020, MakeMyTrip will

need to make only incremental investments to support additional website traffic, and though

outsourced call centre costs should scale with higher volumes, it should gain strong leverage

on sales and administrative overhead. In other words, the company's margins are in line to get

an upgrade from coach to first class.

IPO take off

With five million shares worth $70 million for public offering at initial period,

MakeMyTrip.com recently went public on NASDAQ global market. The company says

MakeMyTrip’s IPO listing on NASDAQ is a major step forward for the industry as it

marked the first IPO by an OTA player in India. ―The Indian OTA industry has been

gradually growing over the past few years and this year the industry has witnessed many

key events,‖

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Competitive Environment

MMT is now facing competition from others and it was expected as in Kalra’s words...

―when MMT started to think about its India operation, it did not estimate more than four

competitors. However I expected competition to be fierce in the next couple of years as

multiple well-funded online ventures were likely to be around. This would be a very positive

development for the overall market growth, as many other companies would share the burden

of educating the customer regarding the benefit of buying travel products online. ―

---- Deep Kalra -----

From above quotes, it is sure competition always comes with some good things.

Market share with other competitors:

Cleartrip vs MakeMyTrip:

Although, both website interface was good but cleartrip’s website looking so simple and give

us a feel easy to use for new customer who is not using internet regularly. If you look at their

initial campaigns it was always about "Keeping Travel Simple".

In contrast, MakeMyTrip website is looking bulky with full of advertisement but where as

Cleartrip only dedicated to ticket sales, they are not completely into hotel booking with sell

tour packages, provide deals etc, in my point of view

―if Cleartrip gets into this sector, then they also put down ads relating to tours, ads relating

to offers, ads relating to hotels etc. And a typical Indian consumer will prefer shopping from

a big bazaar than life style and MakeMyTrip understood this.‖

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Yatra.com vs MakeMyTrip

MakeMyTrip was founded in 2000. Yatra was launched in 2006. MMYT faced a steep

competition from Makemytrip.com since Yatra.com had a rapid growth.

But

Makemytrip.com has gone a step further from Yatra.com as it provides affiliate services and

B2B. Makemytrip.com offers travel insurance for travelers within India and also overseas.

Travel insurance package:

Rank Site Remarks

1 Yatra.com Tata AIG

Rs 129 per parson

Flight delay up to Rs 1500 for every 5 hours delay

Trip cancellation upto Rs 20000 cancellation charges

Accidental Injuries & death Reimbursed upto 7,50,000

Medical emergency Reimbursed upto 5,00,000

Checked-in-Baggage losses Reimbursed upto 5,500.

2 Makemytrip.com Apollo Munich health

Rs 111 per parson

Trip cancellation upto Rs 15000 cancellation charges

Accidental Injuries Reimbursed upto 1,00,000

Medical emergency Reimbursed upto 100,000.

Checked-in-Baggage losses Reimbursed upto 7,500.

3 Cleartrip.com ICICI Lombard

Rs 129 per parson

Flight delay Reimbursed upto 10,500.

Trip cancellation upto Rs 20000 cancellation charges

Medical emergency Reimbursed upto 100,000.

Checked-in-Baggage losses Reimbursed upto 7,500.

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How much fare on Search Engine Result:

Keyword: Book Hotel

Keyword: Book flight

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Keyword: Book train

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CONCLUSION

As players in online travel market are increasing, definitely MMYT is getting higher

competition but our environment is large enough so that any company can sustain and do the

gradual growth, since there are various types of customers exists and every customers have

their own views and needs. When every travel company provides the same facilities to the

customers then only thing can differentiate them is “Customer Services”.

With India's travel and tourism market expected to double in size by 2020, MakeMyTrip will

need to make only continuous investments to support additional website traffic, and

outsourced call centre costs should scale with higher volumes, it should gain strong interest

on sales and administrative operational cost.

Company should focus their business on emerging segments area such as railway ticket and

bus ticket by providing fast booking service using their high speed server for connecting to

IRCTC server, and define a scheme based on priority booking for tatakal ticket with extra fee

charges. Otherwise it can collaborates with IRCTC website for settling transaction amount

at end of the day and enable MakeMyTrip to introduce their transaction server to customer

for fast response and empowering customer service for ticket booking and enquiry.

Customer service can be increased by encouraging booking agents to use MMT network B2B

model for booking tickets and hotels rooms across the country for which agents get incentives

from company that lead to increase company reputation and profile around people and

investors.

Company should introduce platform which allows low budget small travel agency to enter

their data and can able to manage and customize data which allow them to stand against large

travel agency on technology basis and support online booking facilities to its customer

through make my trip and increase its market reputation and business relation with small

agencies.

Company should decrease their failure transaction rate by allowing multiple payment

gateway switch algorithm and implement Ajax elements in website for better response and

switching page content without reloading whole page and avoid loading image which distract

users for one page view only.