MakeMyTrip (MMT) was established in the year 2000 with the help of Deep Kalra, has become an iconic name in India’s tourism and travel industry. It was initially a platform to book flights, MakeMyTrip has evolved into an extensive travel aggregator that offers various services that include hotels, flights holiday packages, buses or train ticket, and much more. With its powerful technology platform and a customer-centric approach, MakeMyTrip has cemented its status as an industry leader on the Indian travel industry.
This article focuses on the business model of MakeMyTrip and its revenue streams and the strategies driving its expansion and increase in profitability.
Overview of MakeMyTrip’s Business Model
MakeMyTrip operates under the an online travel company (OTA) model, connecting its customers to travel service providers such as hotels, airlines bus companies, tour operators. It serves as an intermediary, providing the one-stop solution to every travel-related need.
Key Features of MakeMyTrip’s Business Model:
- B2C and B2B Services:
- MakeMyTrip caters to individual travellers (B2C) as well as corporate clients (B2B) and corporates (B2B), providing customized services for both.
- Aggregator Model:
- The platform collects services related to travel from a variety of providers and sells clients these services at an affordable cost.
- Comprehensive Offerings:
- From hotels and flights to holiday packages and car rental, MakeMyTrip covers every aspect of travel.
- Tech-Driven Platform:
- The company uses the latest technology, such as AI machine learning, machine learning and big data to tailor suggestions, optimize pricing and enhance the user experience.
How Does MakeMyTrip Earn Money?
MakeMyTrip earns its revenue from several streams, making use of its extensive collection of providers as well as its vast customer base. Here’s the way MMT earns its income:
a. Commission from Service Providers
- MakeMyTrip receives commissions from hotels, airlines as well as other service providers for bookings made via its platform.
- Commission rates are different based on the type of service:
- Airfare: 5-8% of the cost of the ticket.
- Hotel: 10-25% of the value of booking.
- holiday packages: The package can be as high as 25 percent, based on package’s complexity and cost.
b. Convenience Fees
- MakeMyTrip charge customers the convenience cost for each booking that is made through its platform. The cost covers the operating costs associated with maintaining the platform as well as providing assistance to customers.
- For instance, those who book tickets for flights often have to have to pay an additional charge of between Rs200 and Rs500 per ticket. This is an additional convenience fee.
c. Hotel Bookings
- The booking of hotels is an important revenue driver for MMT. MMT earns money through:
- Commission: From hotels partners to make bookings via its platform.
- Premium Listings Hotels are paid for greater visibility and higher priority in results for searches.
d. Holiday Packages
- MMT provides curated international and domestic vacation packages and earns revenue by:
- Margins of Package Pricing: The difference between the price agreed by service suppliers and the actual cost charged to the customer.
- Customized Tours Packages tailored for family members or corporate groups that can generate greater profits.
e. Advertising Revenue
- MakeMyTrip makes money from its platform through providing advertising opportunities to hotels, airlines to tourism boards, hotels, airlines and hotels. This includes:
- Banners and Sponsored Listings.
- Seasonal promotions and co-branded campaigns.
f. Bus and Train Ticketing
- MMT earns income by facilitating train and bus reservations, charging a modest commission or a convenience fee for each ticket sold.
- The platform works with both private and government bus companies as well as railways like the Indian Railways for ticketing services.
g. Car Rentals and Airport Transfers
- The company collaborates with car rental providers as well as local companies, gaining a commission on reservations for airport transfer, local travel as well as outstation travel.
h. Subscription Services
- MMT provides MMTBLACK and MMTDOUBLEBLACK along with loyalty and subscription plans that offer benefits such as free cancellations and special deals. These programs earn recurring income by charging subscription fees.
i. Corporate Travel Solutions
- Under its Vertical B2B , MakeMyTrip provides travel management solutions to corporations that generate profits from:
- Service Fees for managing travel expenses of employees.
- Volume discounts: Travel companies and companies, which they pass to customers while keeping the margin.
Why MakeMyTrip’s Model Works
MakeMyTrip’s business model is successful due to its ability to simplify travel planning for customers while providing an affordable price and an easy experience. The reason it works is:
a. Convenience and Aggregation
- MMT offers a wide array of travel options on one roof, removing the requirement for clients to go to multiple sites or companies.
b. Wide Reach
- The platform is able to meet the needs of international and domestic travelers and has millions of users across different regions.
c. Customer Trust
- With a solid brand name, MakeMyTrip has built trust with customers through safe payments, dependable reservations, and superior customer service.
d. Personalization
- Utilizing AI along with big-data, MMT customizes offers, recommendations and itineraries, increasing customer satisfaction and generating more repeat business.
e. Dynamic Pricing
- The platform employs dynamic pricing models to provide the most competitive rates and maximize revenues from peak demand periods.
Financial Performance
MakeMyTrip has seen steady growth since its inception with solid financial metrics that demonstrate its growth:
Revenue Growth
- In the fiscal year 2023 MakeMyTrip recorded significant revenues increase, caused by a post-pandemic rise in demand for travel and the increased emphasis on non-flight categories like holiday packages and hotels.
User Base
- The platform is used by more than 40 million registered users which makes it one of the utilized online services in India.
Market Share
- MakeMyTrip has a large share of the Indian OTA market, and is competing with competitors like Yatra, Cleartrip, and EaseMyTrip.
Challenges and Opportunities
Challenges
- High Competition:
- MMT is competing with other OTAs as well as global giants such as Booking.com and direct booking channels offered by hotels and airlines.
- Low Margins in Flights:
- The ticketing industry for airlines is characterized by low margins, which makes it necessary for MMT to concentrate on high-margin areas like hotels and package deals.
- Seasonality:
- Revenue is extremely seasonal, with fluctuations occurring during periods of low-demand travel.
Opportunities
- Growing Domestic Travel:
- With a rise in disposable incomes as well as an increased infrastructure for tourism that allows for domestic travel, it is an opportunity for growth.
- Focus on Tier 2 and Tier 3 Cities:
- The expansion of services to areas that are not served will attract new users.
- Non-Flight Segments:
- A greater attention to hotels packages, hotels, and other types of travel can increase the profitability.
- Technology Upgrades:
- Investments in AI blockchain, AI and AR/VR to create personalized itineraries as well as immersive booking experiences.
Future Prospects
MakeMyTrip is set to continue its expansion as it broadens its services and adjusts to the changing habits of consumers. The key areas of focus are:
- The company is bolstering its position in the increasing its presence in 2 and expanding its presence in Tier 2 and 3 markets.
- Making investments in technology to ensure a more enjoyable user experience.
- The company is expanding its loyalty program to increase customer retention.
- Promoting relationships with local operators as well as international brands.
Conclusion
The business model of MakeMyTrip combines the latest technology, convenience and customer-centricity to build a top platform in the Indian travel industry. By diversifying revenue streams as well as making use of technology it has created an efficient and sustainable business. Although challenges such as competition and low-margin segments continue to exist and make it difficult for MakeMyTrip to compete, its concentration on growth-oriented areas such as holiday packages, hotels and subscription services will ensure that it is at the forefront of the tourism and travel sector. As demand for travel continues to increase, MakeMyTrip is well-positioned for long-term success within a rapidly changing market.
