MakeMyTrip (MMT), founded in 2000 by Deep Kalra, has become a household name in India’s travel and tourism industry. Starting as an online platform for flight bookings, MakeMyTrip has evolved into a comprehensive travel aggregator offering a wide range of services, including flights, hotels, holiday packages, bus and train tickets, and more. With its robust technology platform and customer-centric approach, MakeMyTrip has cemented its position as a leader in the Indian travel sector.
This article explores MakeMyTrip’s business model, its revenue streams, and the strategies that drive its growth and profitability.
Overview of MakeMyTrip’s Business Model
MakeMyTrip operates on an online travel agency (OTA) model, connecting customers with travel service providers like airlines, hotels, bus operators, and tour operators. It acts as an intermediary, offering a one-stop solution for all travel-related needs.
Key Features of MakeMyTrip’s Business Model:
- B2C and B2B Services:
- MakeMyTrip serves individual travelers (B2C) and corporates (B2B), offering tailored travel solutions for both segments.
- Aggregator Model:
- The platform aggregates travel-related services from multiple providers and offers them to customers at competitive prices.
- Comprehensive Offerings:
- From flights and hotels to vacation packages and car rentals, MakeMyTrip covers every aspect of travel.
- Tech-Driven Platform:
- The company leverages advanced technology, including AI, machine learning, and big data, to personalize recommendations, optimize pricing, and enhance user experience.
How Does MakeMyTrip Earn Money?
MakeMyTrip generates revenue through multiple streams, leveraging its vast network of service providers and its large customer base. Here’s how MMT earns money:
a. Commission from Service Providers
- MakeMyTrip earns commissions from airlines, hotels, and other travel service providers for bookings made through its platform.
- Commission rates vary depending on the service:
- Flights: 5–8% of the ticket price.
- Hotels: 10–25% of the booking value.
- Holiday Packages: Up to 25%, depending on the package’s complexity and price.
b. Convenience Fees
- MakeMyTrip charges customers a convenience fee for every booking made on its platform. This fee covers the operational costs of maintaining the platform and providing customer support.
- For example, customers booking flight tickets often pay an additional fee of ₹200–₹500 per ticket as a convenience charge.
c. Hotel Bookings
- The hotel booking segment is a significant revenue driver for MMT. It earns revenue through:
- Commission: From hotel partners for bookings made through its platform.
- Premium Listings: Hotels pay for higher visibility and priority placement in search results.
d. Holiday Packages
- MMT offers curated domestic and international holiday packages, earning revenue through:
- Package Pricing Margins: The difference between the price negotiated with service providers and the final price charged to customers.
- Custom Tours: Tailored packages for families, corporates, or groups, which generate higher margins.
e. Advertising Revenue
- MakeMyTrip monetizes its platform by offering advertising opportunities to airlines, hotels, and tourism boards. This includes:
- Sponsored listings and banners.
- Co-branded campaigns and seasonal promotions.
f. Bus and Train Ticketing
- MMT earns revenue by facilitating bus and train bookings, charging a small commission or convenience fee for each ticket sold.
- The platform partners with government and private bus operators and the Indian Railways for ticketing services.
g. Car Rentals and Airport Transfers
- The company partners with car rental services and local operators, earning a commission on bookings for airport transfers, local travel, and outstation trips.
h. Subscription Services
- MMT offers MMTBLACK and MMTDOUBLEBLACK, loyalty and subscription programs that provide benefits like free cancellations and exclusive deals. These programs generate recurring revenue through subscription fees.
i. Corporate Travel Solutions
- Under its B2B vertical, MakeMyTrip provides travel management solutions to corporates, earning revenue from:
- Service Fees: For managing employee travel.
- Volume Discounts: From travel providers, which the company passes on to clients while maintaining a margin.
Why MakeMyTrip’s Model Works
MakeMyTrip’s business model succeeds because it simplifies travel planning for customers while offering competitive pricing and a seamless experience. Here’s why it works:
a. Convenience and Aggregation
- MMT brings together a wide range of travel services under one platform, eliminating the need for customers to visit multiple websites or vendors.
b. Wide Reach
- The platform caters to both domestic and international travel needs, reaching millions of users across diverse geographies.
c. Customer Trust
- With a strong brand reputation, MakeMyTrip has built trust among customers by ensuring secure payments, reliable bookings, and excellent customer support.
d. Personalization
- Leveraging AI and big data, MMT personalizes recommendations, offers, and itineraries, enhancing user satisfaction and driving repeat business.
e. Dynamic Pricing
- The platform uses dynamic pricing models to offer competitive rates while maximizing revenue from high-demand periods.
Financial Performance
MakeMyTrip has demonstrated consistent growth since its inception, with strong financial metrics showcasing its success:
Revenue Growth
- In FY 2023, MakeMyTrip reported significant revenue growth, driven by a post-pandemic surge in travel demand and an increased focus on non-flight segments like hotels and holiday packages.
User Base
- The platform serves over 40 million active users, making it one of the most widely used OTAs in India.
Market Share
- MakeMyTrip holds a dominant share in India’s OTA market, competing with players like Yatra, Cleartrip, and EaseMyTrip.
Challenges and Opportunities
Challenges
- High Competition:
- MMT faces competition from other OTAs, global giants like Booking.com, and direct booking channels from airlines and hotels.
- Low Margins in Flights:
- The airline ticketing segment has thin margins, requiring MMT to focus on high-margin segments like hotels and packages.
- Seasonality:
- Revenue is highly seasonal, with fluctuations during off-peak travel months.
Opportunities
- Growing Domestic Travel:
- With rising disposable incomes and increased tourism infrastructure, domestic travel presents a significant growth opportunity.
- Focus on Tier 2 and Tier 3 Cities:
- Expanding services to underserved cities can attract new users.
- Non-Flight Segments:
- Increasing focus on hotels, packages, and experiential travel can boost profitability.
- Technology Upgrades:
- Investments in AI, blockchain, and AR/VR for personalized itineraries and immersive booking experiences.
Future Prospects
MakeMyTrip is poised for continued growth as it expands its services and adapts to changing consumer behavior. Key focus areas include:
- Strengthening its position in Tier 2 and Tier 3 markets.
- Investing in technology for a better user experience.
- Expanding its loyalty programs to boost customer retention.
- Enhancing partnerships with local operators and global brands.
Conclusion
MakeMyTrip’s business model combines innovation, convenience, and customer-centricity to create a leading platform in India’s travel industry. By diversifying revenue streams and leveraging technology, the company has built a robust and scalable business. While challenges like competition and low-margin segments persist, MakeMyTrip’s strategic focus on high-growth areas like hotels, holiday packages, and subscription services ensures it remains at the forefront of the travel and tourism sector. As travel demand continues to rise, MakeMyTrip is well-positioned for long-term success in a rapidly evolving market.
