How has EaseMyTrip managed to stay profitable over the past 13 years, especially during the pandemic?
We have a resilient lean structure business model that can adapt to changes in the external environment. This allowed us to maintain our growth momentum and our financial health. We’ve been doing it for 13 years. We know how to maintain and sustain this cost structure.
When Covid-19 hit, the tourism industry was among the hardest hit. Border restrictions and precautions have prevented our customers from travelling, halting a large proportion of bookings within this industry. Despite these difficult situations, EaseMyTrip still managed to remain profitable during the two waves of the pandemic. For example, during the pandemic phase, we achieved our highest ever profitability in fiscal year 2021 by adapting to the situation, increasing our margins and commissions and reducing our operating expenses. Even during the second wave, we saw a quadrupling of profits.
To reduce costs, we have implemented the use of technology for human resource intensive processes. The company has automated processes such as seat reservation, meal reservation, cancellation, customer service, among others. In fact, the company took advantage of this period to streamline its processes and add more people to the technology team.
The company has always focused on passing the savings on to our customers instead of spending on marketing and operating costs, which has ensured the company’s steady growth. We continue to grow through word of mouth and the goodwill of our customers who act as a medium to spread our “fee without convenience” to the target group.
What was the reason you stayed primed instead of seeking external funding?
When EaseMyTrip was first launched, we operated purely as a B2B company and worked alongside travel agents to offer better airfare prices to their customers. This mode of operation was in place for three years before we decided to move into the B2C space and provide our services directly to customers through our platform. When we were just a B2B, we approached a few VCs for funding. However, there wasn’t much interest as they didn’t see potential in B2B business. We mentioned that we would be moving into the B2C space, but many of them mentioned that there were already too many market players in that space. While we knew we could serve the market effectively, few VCs believed we would be able to enter this highly competitive space.
We slowly rose through the ranks and, in fact, many VCs who initially rejected us came back to us in 2014 when they saw our exponential growth. But by then we had our model in place and didn’t want to repeat the mistake our competition was making by burning money on marketing and deep discounts. We didn’t want to fall into the trap of taking money just to project high valuations. Plus, we had profitable growth in our first year, so we didn’t even need to raise any funds.
What led to the decision to launch your IPO at the height of the pandemic?
Launching our IPO in 2021 was one of the most important milestones for our business, and we are proud to have achieved the same. We were the first online travel company to go public and our listing paved the way for several other digital companies to follow, across a host of industries.
Even though the pandemic was at its peak when we launched, we felt it was the right time for our business due to the growth we had experienced. In December 2020, we saw a 76% increase in our numbers, reaching pre-Covid levels, and we realized this was a good opportunity to debut on the stock market. In addition, our company has been profitable since its inception and we felt it was a good fit for the IPO. We knew that launching our IPO would help instill trust in the minds of our clients, which is what our entire business is based on. Previously, internet companies only thought about getting listed on NASDAQ. We took a different path and got listed in India, which resulted in a lower valuation than we could have gotten on NASDAQ, but it helped boost the company’s confidence in the country.
EaseMyTrip does not charge convenience fees to travelers unlike its peers in the online travel booking space. Why? How did it pay off?
From the start, our USP has been to not charge a convenience fee. We wanted to offer our customers a service that gave them fair and lower prices compared to other travel companies, and wanted to stand out as a company that could stay true to this USP. From the start, our lean business model allowed us to remain profitable despite having no convenience fees. Since we have never been a marketing-driven company, we have focused on one-time zero convenience fees to retain customers. This allowed us to achieve a repeat transaction rate of 86%, which is probably the highest in the industry.
EaseMyTrip recently acquired three companies. Please expand on that.
All of these acquisitions – Spree Hospitality, Traviate Online and Yolo Traveltech – will add a new revenue stream and accelerate our growth in non-airline businesses. With Traviate, we aim to further strengthen our B2B offerings and unlock new ways for travel partners to increase their productivity and efficiency. The goal is to create a more robust and growth-oriented trajectory for the business while contributing to the revival of the global travel ecosystem. Together with Spree Hospitality, we believe we are well placed to unlock the market potential of a recovering hospitality sector and rapidly scale the business to meet the ever-changing needs of the modern traveller. Our goal is to grow Spree to 200 properties over the next five years to become one of the biggest names in the Indian hospitality industry.
Additionally, we enter into a definitive agreement subject to closing conditions to acquire the brand, technology, business expertise, data and team of Yolo Traveltech, operating as YoloBus. Our goal is to leverage YoloBus’ comprehensive technology platform to deliver an enhanced and superior bus travel experience at affordable prices. Our customers will have access to a next-generation mobility platform that offers safe, clean, comfortable and connected buses for seamless intercity travel.
Tell us about your expansion plans for 2022…
While air travel bookings represent approximately 95% of our revenue, we are also growing our non-air travel business including hotels, buses, trains and double-digit vacations.
We believe there is huge potential for growth not only in the airline segment, but also in the hotel and vacation segments, which we plan to tap into this year. In addition, with our recent acquisitions in non-air activities, we also aim to strengthen our presence in this segment.
We are also present in the United Arab Emirates, Singapore, United Kingdom, Philippines, Thailand and the United States. We want to establish our airline ticketing business in these countries anticipating huge pent-up travel demand. This year, we plan to launch a localized travel search engine in each global subsidiary to strengthen our offerings in each country. We may also seek to expand into more viable countries if we see strong performance and added value from our existing global subsidiaries.