“We’re not going global”, asserts Rajesh Magow. Here’s why.

Firstly, Rajesh Magow, CEO and co-founder of MakeMyTrip, would like to clarify that his company is not going global, as was reported in various media outlets yesterday. Instead, it’s doubling down, even tripling down on its core market of India to build a comprehensive one-stop travel shop, selling everything from flights to hotels, to homestays, and cruises and tours and activities.

Rajesh Magow: “We will continue to do whatever it takes to milk this market.”

Rajesh told WiT, “There is no reason for us to go global at this time when there’s so much going on in India. The only geography we’ve ventured into is the GCC, where there is heavy India diaspora traffic.”

The misunderstanding arose from a press release issued April 8 when it announced it had achieved a significant milestone – by becoming General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) compliant – which means its services are now accessible to its customers, primarily the Indian diaspora, in over 150 countries.

It was mis-interpreted by news outlets that it was expanding its services and operations in 150 countries.

In many ways, it doesn’t make sense for this leading Indian OTA to expand at this time. After more than two decades of working away at growing the Indian online travel market, and with the Indian market finally delivering on its promise, it could be considered bad timing to dilute resources at this moment.

In fact, Rajesh is looking far more relaxed today than he’s done in a long time. One reason, he’s having to travel less on investor roadshows, and to visit customers. Today, they are all coming to India.

“Everyone’s visiting, everyone’s interested in India,” he said, smiling. And there are four ways in which conversations have changed.

One, a positive macro story – stable political climate and GDP growth. “India’s done a good job of managing global conflicts, to have good diplomatic relations with everyone and is positioning itself as welcoming of everyone, investors and multinationals,” said Rajesh.

Two, booming Internet economy. “We are marching ahead in 5G connectivity, we are a world first in payments innovation with the UPI interface that even Singapore is looking at it, and there are ambitions to take the UPI, built on an Indian tech stack, globally. All the bottlenecks to e-commerce have been removed.”

Three, the push through the middle class, from lower to middle, middle to upper, and upper to high network. “The $40,000 annual income households will rise from 8m in 2018 to 30m; $8,000 annual income, considered inflection point, will go from 60m in 2018 to 160m by 2030; and less than $4,000 is shrinking from 157m in 2018 to 50m in 2030.

“Rising incomes mean changing consumption patterns, and that’s relevant for the Internet economy. Further, in the next five years, a total of 90m households will be headed by Millennials born in a liberalised India – their outlook and buying behaviour is digital by nature.

“And last but not least, the ratio of essential spend to discretionary spend will go from about 80/20 currently to 60.40 by 2030 – that’s phenomenal.”

“Execution will be nightmare but we want to be a comprehensive travel shop”

Against this backdrop, Rajesh said MakeMyTrip would “continue to do whatever it takes to milk this market”. Travel is still under-penetrated, he said, flights at 60% with other verticals even lower.

Doing whatever it takes does not require the company to raise funds, “we have a strong balance sheet”. What it does involve is leveraging the tech investments it has made in its platform to understand different customer segments, monetise better and operate more profitably.

During the “lull period” of the pandemic, Rajesh said MakeMyTrip invested heavily in building out several avenues of growth, other than its main B2C brand. Its corporate travel arm, MyBiz, is growing very nicely, said Rajesh. “This unit has been focused on the SME market, to be tech-led, no people implant and its UI is similar to the B2C product.”

It’s built a travel agents’ affiliate network – MyPartners; a fintech arm called TripMoney; a BookMyForex product, selling forex online; a third party advertisement platform; and a standalone RedRail app, on top of its Red Bus brand.

It’s expanded accommodation to homestays “which is growing in India finally”. It now has 27,000 properties listed and it’s seeing 40% growth, albeit on a lower base.

“Our focus over the next three years is to scale all these avenues that we have built,” he said. “Besides continuing to innovate on our tech platform, we will also expand to cruises and tours and activities, becoming a full one-stop shop.

“Execution will be a nightmare,” he laughed, “but we want to be a comprehensive travel shop.”

Specific to targeting the next generation of travellers – the Millennial heads of households, Rajesh said it would look at different content and different marketing channels for this segment. “They are very influenced by social media, and they love to travel with friends and for celebrations. We see a higher use case here for personalisation so that we can recommend the right experiences for them, based on the data collected.”

Productivity gains through Gen AI – no ramp-up in hiring

Amid this expansion, Rajesh does not see the need for a massive ramp-up in hiring. “The back end tech stack has been platformised on the supply side, the heavy lifting has been done, and it’s serving different business lines. Other than cruises and tours and activities, for which we may build new platforms, there’s not a lot more heavy tech work to be done.

“We have seen gains in productivity due to Gen AI. Co-Pilot is resulting in 20-25% more productivity in programming with the new code. We will keep the headcount growing but marginally.”

As for the competitive environment in which several of its competitors are headed for the public markets, Rajesh said that’s also matured. “Pre-pandemic, there were lots of private capital jumping in because everyone was talking up the size of the Indian market and the potential. So people were burning money by offering deep discounts to acquire customers.

“Investors are more matured and asking more questions. There is no dearth of capital or liquidity but it’s not easy money.

“Companies too headed for the public markets have learnt lessons, and the level of scrutiny goes up.”

Asked though if the current hype about the Indian travel market could lead to a similar bubble happening – as investors come a-calling and companies go a-raising, Rajesh said, “It’s a fair point. Why I don’t feel there is a bubble now is – if you look at the performance sheets of companies last few years, they’ve been pretty robust. The fundamentals are stronger. Of course, anything can happen, no one can predict, but as things stand today, this phase feels more real than a bubble.”