MakeMyTrip is one of India’s largest online travel companies, offering a wide range of travel-related services, from flight and hotel bookings to holiday packages and car rentals. Founded in 2000 by Deep Kalra, MakeMyTrip has played a key role in transforming the Indian travel industry by making travel planning and bookings more accessible and convenient through its online platform. Over the years, MakeMyTrip has grown to become a trusted brand for millions of Indian travelers, offering both domestic and international travel solutions.
But how does MakeMyTrip earn profit in such a competitive travel market? Let’s explore MakeMyTrip’s business model and understand how the company generates revenue.
MakeMyTrip’s Business Model: Online Travel Aggregator (OTA)
MakeMyTrip operates as an Online Travel Aggregator (OTA), where it connects customers with various travel service providers such as airlines, hotels, car rental companies, and tour operators. The platform acts as an intermediary, allowing customers to compare prices, read reviews, and book their preferred travel services directly through the website or mobile app.
Here are the key components of MakeMyTrip’s business model:
1. Flight Bookings: MakeMyTrip offers a comprehensive flight booking service, allowing users to search for and book flights from both domestic and international airlines. The platform aggregates flights from various carriers and provides customers with real-time price comparisons, helping them find the best deals. MakeMyTrip earns a commission from airlines for each ticket sold through its platform.
2. Hotel Bookings: Another major component of MakeMyTrip’s business is its hotel booking service. The platform partners with hotels across India and globally, offering customers a wide range of accommodation options, from budget hotels to luxury resorts. Users can compare hotel prices, read reviews, and book rooms directly through the platform. MakeMyTrip earns a commission from hotels for each booking made through the platform.
3. Holiday Packages: MakeMyTrip offers customized holiday packages that bundle together flights, hotels, and activities, making it easy for travelers to plan vacations. These packages are designed for both domestic and international destinations, catering to various travel preferences and budgets. MakeMyTrip earns revenue from markups on these holiday packages, which include the cost of travel services as well as a profit margin for the company.
4. Bus and Train Bookings: In addition to flights and hotels, MakeMyTrip allows customers to book bus and train tickets. The platform partners with bus operators and the Indian Railway Catering and Tourism Corporation (IRCTC) to provide ticketing services for both long-distance and local routes. MakeMyTrip earns a service fee or commission on each ticket sold.
5. Car Rentals and Airport Transfers: MakeMyTrip also offers car rental services and airport transfers, providing travelers with the option to book cars for local sightseeing, business trips, or airport pick-up and drop-off. The company partners with local car rental agencies to provide these services. MakeMyTrip earns a commission for each car booking made through its platform.
6. Travel Insurance: To offer a complete travel experience, MakeMyTrip provides travel insurance to its customers. The platform partners with insurance companies to offer policies that cover trip cancellations, lost baggage, medical emergencies, and more. MakeMyTrip earns a commission from the insurance providers for each policy sold through its platform.
How Does MakeMyTrip Earn Profit?
MakeMyTrip generates revenue through several channels, primarily focused on commissions and service fees from its travel services. Let’s take a closer look at how the company earns profit:
1. Commission from Flight Bookings: One of the primary sources of revenue for MakeMyTrip comes from the commission it earns from airlines for each flight booking made through its platform. Airlines pay MakeMyTrip a percentage of the ticket price as a commission for facilitating the booking. The commission rates may vary depending on the airline and the type of flight (domestic or international), but it typically ranges between 3% and 5% of the ticket value.
Additionally, MakeMyTrip often earns revenue from convenience fees charged to customers during the booking process. These fees cover the costs of providing the platform’s services and are added to the total ticket price.
2. Commission from Hotel Bookings: MakeMyTrip earns a significant portion of its revenue from hotel bookings. The company partners with hotels and accommodation providers, earning a commission on every room booked through its platform. The commission typically ranges from 10% to 25% of the booking value, depending on the hotel’s category and location.
MakeMyTrip also offers last-minute hotel deals and exclusive offers, which can attract more customers and increase booking volumes, leading to higher commission earnings.
3. Revenue from Holiday Packages: MakeMyTrip designs and sells holiday packages, bundling together flights, hotels, and activities. The company earns profit by marking up the prices of these packages. The markup includes a profit margin that covers MakeMyTrip’s costs and adds to its overall revenue. These packages are popular among travelers looking for convenient, all-in-one vacation solutions.
4. Service Fees from Bus and Train Bookings: MakeMyTrip charges service fees for bus and train bookings made through its platform. These fees are either a flat rate or a percentage of the ticket price and are paid by the customer at the time of booking. In addition, MakeMyTrip earns a commission from bus operators and the Indian Railways for each ticket sold.
The growing popularity of bus and train travel in India provides MakeMyTrip with an opportunity to generate significant revenue from this segment, especially among budget-conscious travelers.
5. Commission from Car Rentals and Transfers: MakeMyTrip earns commissions from its car rental and airport transfer services. When customers book cars through the platform, MakeMyTrip partners with local car rental agencies and takes a percentage of the booking value as a commission. These services cater to both leisure and business travelers, offering convenience and flexibility for local travel.
6. Advertising and Promotions: With a large customer base and high website traffic, MakeMyTrip generates additional revenue from advertising. The platform offers sponsored listings, banner ads, and promotions to travel service providers such as airlines, hotels, and tour operators. These companies pay MakeMyTrip for increased visibility on the platform, helping them attract more customers and increase bookings.
7. Affiliate Marketing: MakeMyTrip earns revenue through affiliate marketing, where it partners with other websites and platforms to promote its travel services. Affiliates earn commissions for driving traffic or bookings to MakeMyTrip’s platform, and MakeMyTrip benefits from increased exposure and customer acquisition through these partnerships.
8. Travel Insurance Commissions: MakeMyTrip offers travel insurance policies in partnership with insurance providers. The platform earns a commission from the insurance companies for each policy sold. Offering insurance as an add-on to flight and hotel bookings helps MakeMyTrip increase its average transaction value while providing additional protection for travelers.
Challenges and Opportunities for MakeMyTrip
While MakeMyTrip has built a strong business, it faces several challenges and opportunities in the Indian travel market:
1. Competition from Other OTAs: MakeMyTrip competes with other online travel aggregators (OTAs) like Yatra, Cleartrip, and global players such as Booking.com and Expedia. To maintain its market leadership, MakeMyTrip needs to continue offering competitive prices, exclusive deals, and exceptional customer service.
2. Post-Pandemic Travel Recovery: The COVID-19 pandemic significantly impacted the travel industry, leading to a decline in bookings and revenue for OTAs like MakeMyTrip. However, as travel restrictions ease and demand for domestic and international travel rebounds, MakeMyTrip is well-positioned to capitalize on the recovery. The company can tap into pent-up travel demand by offering attractive deals and flexible booking options.
3. Expansion into New Travel Segments: MakeMyTrip has the opportunity to expand into new travel segments, such as experiential travel, adventure tourism, and luxury travel. By offering curated travel experiences and exclusive packages, the company can attract high-spending travelers and increase its revenue per customer.
4. Strengthening Mobile and App Presence: With the increasing use of smartphones for travel bookings, MakeMyTrip can focus on strengthening its mobile app and improving the user experience. A seamless and user-friendly app can enhance customer engagement, encourage repeat bookings, and increase customer loyalty.
Conclusion
MakeMyTrip’s business model revolves around providing a wide range of travel services through its online platform, connecting customers with flights, hotels, holiday packages, and transportation. The company earns profit primarily through commissions from airlines, hotels, and travel service providers, as well as service fees for bookings. As the travel industry continues to recover and grow, MakeMyTrip is well-positioned to maintain its leadership in India’s online travel market by offering convenient, competitive, and comprehensive travel solutions to its customers.