The first time that Deep Kalra made an online booking, for a trip to Phuket in 1999, it was because he wanted reduce the complexity of dealing with a travel agency. The experienced changed his life as he switched from being a banker to the founder of MakeMyTrip.com, which has become India’s leading online travel company.
“MakeMyTrip endured a rocky start, as 9/11, Sars and other developments hurt the travel industry. But business began to take off in 2005 with the emergence of budget airlines.”
The idea of setting up a travel website 14 years ago was an act of faith. Mr Kalra saw the potential power of the internet at a time when many people were still not sure what kind of impact the technology would have on the world. This strong belief drove him to quit his job as a banker and start a business that wasn’t sure would bring him success.
The story began in August 1999 when Mr Kalra and his wife planned to travel to Phuket. When he went to book a hotel online, it was a “game-changer” for him, he recalled.
“We went online to book the hotel, paid by card and wondered whether or not it would work,” he said. “Finally, I found that it worked. The hotel I saw on the website was real and the picture was accurate.”
Booking online saved money as well, he discovered — in the case of the Phuket vacation, $15 a night or $90 for six days compared with the rate quoted by an agency. Generally, he found, agency processing fees accounted for at least $5 per hotel night, which he didn’t think was very efficient economically. That’s what really got him thinking about the benefits of online booking.
When he returned home to India, he started to think about how to an internet business a reality. He thought about setting up an online stock trading site as well but the idea of a travel site won out in the end because of his passion for travelling.
Just a few months after the Phuket trip, Mr Kalra quit his job in early 2000 and set up www.MakeMyTrip.com in April the same year. He was hopeful that the business would work for both inbound and outbound travel as the many non-resident Indians who live in the United States would use his site to book flights back to India, and local residents could use it for their travel domestically.
At the time Mr Kalra had been working in corporate banking for eight years. He was vice-president of business development at GE Capital, and previously had worked for ABN Amro Bank.
He said that while banking had given him a very good opportunity, he wasn’t apprehensive about quitting the field. He was only 30 at the time and was that online travel would be a good business for him.
“I was lucky to have an MBA degree in my pocket. If the online travel business didn’t work, I could come back to the banking business,” he said.
Despite the bright prospects for internet-related business, the first five years for MakeMyTrip.com were very tough. The world travel business suffered many crises, including from 9/11 in 2001 and the Sars outbreak in 2003. As a result, the inbound travel to India that Mr Kalra expected did not materialise as planned.
“The years 2000 to 2005 were tough for me. I needed to get funding up, but it was difficult. I had to work for almost two years without a salary.”
Patience helped, as he was in it for the long haul, as did good support from his colleagues. “What inspired me to keep going in this business was my belief that we can change the world. I could not give up too easily,” he told Asia Focus.
After 2005, business started to improve, helped in part by the rapid emergence of budget airlines in Asia, which supported regional inbound travel, and upgrades to the Indian railway system, allowing passengers to book tickets online.
MakeMyTrip.com was able to increase its gross billings from around $20 million in the first year of operation to more than $1 billion in 2012. Outbound travel represents 60% of total passenger bookings of transport and hotels online. The rest is inbound travel from domestic tourists.
The golden year for Mr Kalra was in 2010 when he brought MakeMyTrip.com to list on the Nasdaq exchange on New York. Now it has become the leading online travel website for Indian tourists.
The future of the business looks good, given the growth in the number of middle-income consumers in India, in line with the trend in other developing countries. These newly affluent consumers, particularly the younger generation, love travelling abroad. Preferred destinations, as most of them are first-time travellers, are in Asia such as Thailand, Singapore, Malaysia, Hong Kong, Dubai and the United Arab Emirates. Travelling in those countries is value for money. Indian tourists travelling overseas now total around 12 million a year.
MakeMyTrip last year acquired Hotel Travel Group in Thailand, the operator of www.hoteltravel.com, for $25 million. The website offers online travel business services in Thailand, Singapore and Malaysia. It also acquired ITC Group, a hotel aggregator and tour operator in Thailand, for $3.2 million. MakeMyTrip in the future expects to grow both organically and through more acquisitions as opportunities arise.
Domestic travel is booming in India as well, so the company foresees a huge domestic market in the near future.
The way people book travel online is changing as well, as the mobile internet gains ground. Travel planning now can be done in just one click. In India alone, Mr Kalra said 120 million people have internet access. For his business, the number of customers booking via mobile channels has climbed to 12% from zero a year ago. The proportion will be bigger as mobile is the trend for the tourism industry across Asia.
Throughout the 14 years his business has been in operation, the most difficult job for Mr Kalra has not been surviving the fierce competition and rapid development of technology, but the people. Competition for him is something that will make his business stronger and help keep him and his staff sharp and focused.
However, retaining the valuable employees who have worked with him since the beginning of the business is difficult. As time passes and the technology changes, it is his duty to make sure those employees always have the skills needed to work for the company. At the same time, he makes a point of learning what motivates people in order to deal with them successfully.
As a listed company in the US stock market, the company has a mission to its shareholders to keep growing in absolute terms. But apart from financial targets, Mr Kalra has set his own goal.
“My long-term target is to have all of our customers as our brand ambassadors. This is similar to what Apple does as the company has all of its users as its brand ambassadors. I want my customers to spread the word about us,” he said.