The current pandemic has affected the Travel and Tourism Sector severely. Things have become quite difficult for the companies and people working in this area.
Recent Covid-19 vaccine rollout and ease in lockdown restrictions is bringing the industry on track again. Through its official statement, MakeMyTrip(MMT), the biggest online travel company in India, revealed that it raised $200 million through an issue of debt securities.
Term ‘Debt Securities’ can be redeemed by the issuer before its maturity date, within a specific time.
Current Funding, Travel Recovery, and MMT Plans
Currently, MMT is having total funds of around $227.6 million excluding the current fundraising. MakeMyTrip co-founder and Group CEO Rajesh Magow said that the total funds including the current fundraise will be used for war chest and to invest in new projects. Magow replaced Deep Kalra as Group CEO in February 2020.
With ET, Rajesh Magow discussed the current issues related to the travel industry in detail. The war chest is a term used for reserved cash kept aside for emergency use. Most of the time, War chest funds are being used for acquisition purposes. In case of uncertainty as well, companies utilize this reserved money.
Rajesh further said that the business is slowly recovering. The travel industry is coming back to good shape. The share market of the travel industry has also shown positive growth. Current funds will be used to strengthen our balance sheet.
“The full recovery is going to take some more time, although we reported a profitable quarter. The resources could be used over the years for usual expansion needs and general corporate purposes,” he said.
CEO also revealed that the company is investing in other businesses except for its travel operations. MakeMyTrip fired more than 350 employees due to a pandemic crisis last year.
The accommodation segment is one of the targeted areas of MMT. It is taking place. In the future also, it is expected to grow rapidly.
Domestic Recovery vs International Recovery, Union Budget Disappointment
As per the MMT report, domestic hotels and flight demands are increasing at a good pace. International travel recovery is very slow. It will take more time compared to the domestic market.
As per CEO Rajesh’s prediction, “If the recovery continues like this and if no new strains of covid-19 are coming then coming summer will bring things on track. Domestic travel is expected to recover fully in the next 3-4 months.”
“Currently visiting friends and family members, holiday trip segments have shown recovery. Business travel related to small and medium enterprises have also shown a positive sign. SME recovery is greater than corporates but both are showing encouraging signs for the future.” he said.
He further said that when the company looked at week-to-week recovery, it showed good growth. Room nights, signups, air travel demand, business-related booking is increasing every week. Choosing alternative accommodation has become a new trend. To avoid covid infection, people are ignoring hotels and choosing private accommodation. Since we are already dealing in private accommodation, MMT is having the first-mover benefit.
MMT’s ad tech platform is also helping its partners to target the right audience to get a better Return on Investment(ROI). MMT’s targeting tool is based on customer’s preferences and behavior. The company targets the customers through static banners, emails, notifications, social media handles, and phone calls.
The company had successfully collaborated with a number of tourism boards for ease of business. Sponsored hotels database is also rapidly growing on the MMT platform. Currently, 150 hotels have collaborated with MakeMyTrip for sponsored listing in the July ad campaign.
The travel and Tourism industry had high hope from the union budget of 2021 but it disappointed the travel sector.
As quoted on ET, he said, “Lack of immediate direct support in the budget has definitely left the Indian travel and tourism industry disappointed. I do feel dismayed that travel and tourism lie low in the pecking order of sectors that needed focus – this is a sector that contributes almost 10% to GDP and employment besides the multiplier effect on the economy,” he added.