Why Did MakeMyTrip Acquire EasyToBook?

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makemytrip logoIndian Online Travel Assistance Company MakeMyTrip confirmed acquisition of a group of companies that included another online travel portal EasyToBook (ETB).

In an interesting development of events, Gurgaon based MakeMyTrip successfully completed buying an Amsterdam based company that owns ETB. Apparently MakeMyTrip had to put up US$ 5 Million for the acquisition of associated shares and web–properties, apart from investing into the same too.

Why did MakeMyTrip invest in another travel portal? MakeMyTrip has been growing quite healthily in India as far as users are concerned. Listed on the NASDAQ stock exchange, the company made US$ 228 Million last year. With employee strength close to a thousand, the company has been gaining organic traction in India.

However, the Indian Travel Scenario, albeit healthy, is proving tough to operate in, owing to the curtailment of Commission these Online Travel Agents (OTAs) were entitled to make after ever sale of Tickets. The Commission pay–out was quite liberal earlier, but has been bought down significantly to encourage transparency and assist struggling airlines, recover.

But this has put a strain on the revenue potential on OTA. This should explain why these OTAs are swiftly exploring newer avenues of ticketing like Bus, Trains and Taxis. Fortunately, the Packaged Deals and Hotel Bookings segments have been growing well for MakeMyTrip. Last Year, these segments contributed about 38.4% of the total revenue.

Perhaps this is the primary reason that the company is hedging its bets on International Expansion in the same domain. EasyToBook allows MakeMyTrip direct access to hotel inventory in geographies like Europe, which needless to say has always been one of the most favored tourist destinations, especially for Indians. With almost 10 years in existence, EasyToBook offers online hotel reservations for customers in Europe, North America, Dubai, Singapore and other key global travel destinations.

More importantly, EasyToBook closely matches the expectations of Indian travelers by offering a mix of luxury, budget, boutique and economical hotels worldwide. With more than 1,20,000 hotels, EasyToBook is capable of offering a range of accommodations suitable for every pocket, like B&B’s, hostels, holiday houses, short stay apartments and many others.

Having a strong reach across European Markets, coupled with the ability to offer flexible packages are certainly important features that MakeMyTrip saw within EasyToBook. What do you think?