The travel and tourism sector, reeling under the second wave, is pinning hopes on pent-up demand for a slow revival. In an attempt to boost bookings, EaseMyTrip is incentivising vaccinated travellers, and has tied up with Justdial recently. Prashant Pitti talks to Sheena Sachdeva about what it entails to stay profitable, its ‘no convenience fee’ policy, and more.
EaseMyTrip has been growing 50% y-o-y since 2016. Will your ‘no convenience fee’ policy help scale up further?
Since 2008, EaseMyTrip has seen tough competition from companies that are deeply funded. As an OTA, we have always been bootstrapped. We had to create a lean cost centre. A convenience fee is nothing but a number that can be jotted down in the company’s books. In the last few years, companies in our industry have been increasing the convenience fee, while we have kept our policy intact. We charge a convenience fee only when a customer is using a discount coupon on the platform.
Also, our cost and expenditure on all fronts are lower compared to others on a GMV basis. In the travel and tourism industry, companies have only four costs: discounts, marketing, employees and other admin expenses. EaseMyTrip has primarily grown through word of mouth. Other companies are caught up in the vicious cycle of becoming profitable through extra convenience fees; whereas we see convenience fee as a tool to go viral and retain our customers for a long period. In the last four to five years, our repeat transaction rate has been 86%.
On other OTA platforms, customers feel cheated when after booking a ticket, including meals, seats, etc, an extra convenience fee is charged. However, from a customer’s point of view, EaseMyTrip comes across as having integrity.
What has been the pandemic’s impact on your business? How much did bookings pick up in Q3 FY21?
The second wave has impacted the entire tourism industry, though the third and fourth quarters of FY21 have been good. In FY21, our revenues were down by 31% compared to FY20, on account of travel restrictions during the first half of 2020. In the fourth quarter of FY21, EaseMyTrip recorded a net profit of Rs 30.5 crore, as opposed to a profit of Rs 3.6 crore in the same period of FY20.
How much has the dip in corporate bookings affected your business?
Corporate bookings play a minuscule part in EaseMyTrip’s business model. Overall, in FY20, 87% of our business came from consumer bookings, 10% from travel agents and 3% from corporate bookings. However, for other OTAs, 80% of the business is dependent on corporate bookings, because of which they are facing issues. We have recently launched a chatbot for consumers to book flight tickets through WhatsApp. This feature gives a notification about any surge in the price of a flight ticket, once the flight option is selected.
In 2019, you had plans for international expansion. How has that panned out?
EaseMyTrip has set up small subsidiaries in London, Singapore and Dubai — these places have a huge Indian population. Due to Covid, international travel is hit. But we are positive that it will bounce back. There is huge pent-up demand.
The travel and tourism industry expects recovery to be slow. How do you foresee the growth path for EaseMyTrip?
We have been able to go public while our competitors are witnessing losses. There is pressure on other companies to become profitable soon. In our industry, there are only a few ways to become profitable: decrease discounts and marketing costs, and increase convenience fees. We will be the beneficiaries of these phenomena in the future if our competitors move in this direction.
In FY20, we grew at 47% in terms of gross booking revenue. According to Goldman Sachs, the OTA industry is bound to grow 15-20% every year for the next five years. Due to the pandemic, people are less dependent on travel agents and tailwinds are expected as more hotels and airports are coming up. We are giving additional discounts to customers who are getting vaccinated. We are seeing a good response to that.
Furthermore, through our partnership with Justdial, we are opening avenues for serving more customers. We have also recently partnered with Intermiles.com, a platform to redeem flight points.