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‘We Expect Huge Growth Potential In Hotels, Holiday Segment’
The travel industry, which was adversely impacted due to the Covid pandemic, is showing signs of recovery. Online travel company EaseMyTrip that got listed on the BSE last year continues to perform well. It reported an 84 per cent increase in net profit to Rs 40 crore, YoY, for the quarter ended September 30, 2021 and a 65 per cent jump in its gross booking revenue at Rs 1,293 crore (YoY). Prashant Pitti, Co-founder, EaseMyTrip talks to Ashish Sinha about the company's journey, reasons for profitability, travel trends and much more
Photo Credit :
Prashant Pitti, Co-founder, EaseMyTrip
How has EaseMyTrip managed to stay profitable in the past 13 years, especially during the pandemic period?
We have a resilient lean structure business model that can adapt to the changing external environment. This enabled us to maintain our growth momentum and financial health. We have been doing this for the past 13 years. We know how to maintain and sustain this cost structure.
When Covid-19 hit, the tourism industry was among the hardest-hit. The border restrictions and precautions prevented our customers from travelling, thereby halting a major part of bookings within this industry. Despite these harsh situations, EaseMyTrip still managed to stay profitable during the two waves of the pandemic. For instance, during the pandemic phase, we recorded our highest ever profitability in FY2021 by adapting to the situation, increasing our margins and commissions and reducing our operational expenses. Even during the second wave, we witnessed a four-fold jump in profit.
For saving costs, we implemented the use of technology for processes that were human resource-intensive. The company automated processes like seat booking, meal booking, cancellation, customer service, among others. The company, in fact, took this period as an opportunity to streamline its processes and added more people in the technology team.
The company has always focused on passing on savings to our customers instead of spending on marketing and operational expenses, and this has ensured the company’s consistent growth. We continue to grow by word of mouth and goodwill of our customers who act as a media for propagating our “no-convenience fees” to the target group.
What was the reason behind remaining bootstrapped instead of looking for external funding?
When EaseMyTrip was first launched, we operated solely as a B2B company and worked alongside travel agents to offer better air ticket rates to their customers. This mode of operation was implemented for three years before we decided to move into the B2C space and deliver our services directly to customers through our platform. When we were just a B2B, we did approach a few VCs for funding. However, there wasn’t a lot of interest as they did not see potential in B2B business. We did mention that we will move into the B2C space but many of them mentioned that there are already too many players in the market in this space. While we knew that we could efficiently service the market, not a lot of VCs believed that we would be able to penetrate this highly competitive space.
We slowly grew through the ranks, and, in fact, a lot of VCs who rejected us initially came back to us in 2014 when they saw our exponential growth. But by then we had set up our model and did not want to repeat the mistake that our competition was making by burning money on marketing and deep discounts. We did not want to fall into the trap of just taking money for the sake of projecting high valuations. Additionally, we were growing profitably right from our first year, so we did not even have the need to raise funds.
What led to the decision of launching your IPO during the peak of the pandemic?
Launching our IPO in 2021 has been one of the biggest milestones for our company, and we are proud to have achieved the same. We were the first online travel company to get listed on the stock exchanges and our entry paved the way for several other digital companies to follow, across a multitude of sectors.
Even though the pandemic was at its peak during our launch, we believed it was the right time for our company because of the growth that we had been experiencing. In December 2020, we witnessed a 76 per cent rise in our numbers, touching pre-Covid levels, and we realised it was a good opportunity to make our stock market debut. Additionally, our company has been profitable since inception, and we felt that it was a good fit for the IPO. We knew that launching our IPO would help build trust in the minds of our customers, which is what our entire business is based on. Earlier, internet companies used to think of only getting listed on the NASDAQ. We chose a different path and listed in India, which led to a lower valuation than what we may have got on the NASDAQ, but it helped to build a lot of trust for the company in the country.
EaseMyTrip does not charge a convenience fee from travellers unlike its peers in the online travel booking space. Why? How has this paid off?
Right from the start, our USP has been to not charge a convenience fee. We wanted to provide our customers with a service that offered them fair and lower prices as compared to other travel agencies, and wanted to stand out as a company that was able to stay true to this USP. Right from the beginning, our lean business model enabled us to stay profitable despite not charging this convenience fee. Since we have never been a marketing focused company, we focused on the unique zero convenience fee to retain customers. This has enabled us to reach repeat transaction rate of 86 per cent, which is probably the highest in the industry.
EaseMyTrip acquired three companies recently. Please expand on this.
All these acquisitions—Spree Hospitality, Traviate Online and Yolo Traveltech—will add a new revenue stream and fast-track our growth in the non-air businesses. With Traviate, we aim to further strengthen our B2B offerings and unlock new ways for travel partners to increase productivity and efficiency. The aim is to create a more robust and growth driven trajectory for the company while contributing to the revival of the global travel ecosystem. With Spree Hospitality, we believe that we are well-positioned to unlock the market potential of a recovering hospitality sector and quickly scale up the business to meet the evolving needs of the modern traveller. We aim to enable Spree to expand to 200 properties in the next five years to become one of the biggest names in the Indian hospitality sector.
Additionally, we are entering into a definitive agreement subject to closing conditions to acquire the brand name, technology, business expertise, data and team of Yolo Traveltech, operating under the name of YoloBus. We aim to leverage YoloBus’ full-stack technology-enabled platform to offer an enhanced and superior bus travel experience at affordable prices. Our patrons will be provided access to a next-generation mobility platform that offers safe, clean, comfortable and connected buses for seamless intercity travel.
Take us through your expansion plans for 2022...
While air travel bookings constitute around 95 per cent of our revenues, we are also growing our non-air travel businesses including hotels, buses, trains and holidays in double digits.
We believe that there is a huge growth potential not just in the air segment but also in the hotels and holiday segments, which we plan to leverage this year. Additionally, with our recent acquisitions in the non-air businesses, we aim to strengthen our footprint in this segment as well.
We are also present across UAE, Singapore, UK, Philippines, Thailand, and the USA. We want to establish our air ticketing business in these countries anticipating a huge pent-up travel demand. This year, we plan to launch localised travel search engine in each global subsidiary to strengthen our offerings within each country. We may also look to expand to more viable countries if we see a strong performance and value addition from our existing global subsidiaries.