Understanding the MakeMyTrip Business Model: How It Works

MakeMyTrip is a prominent player in the tourism industry, established in 2000 as a highly sought-after Indian travel firm. Ever wondered how they make money and how their business operates? Simply put, MakeMyTrip generates its revenue entirely from its online travel services.

MakeMyTrip allows users to book tickets for vacations, flights, buses, cars, and trains, significantly simplifying the ticket booking process for Indians. Moreover, it has improved travel conditions and arrangements across India.

This article explores the MakeMyTrip business model , a remarkable travel company. Therefore, let's begin!

MakeMyTrip uses a direct-to-consumer approach through a Business-to-Consumer (B2C) model to offer its products and services to customers. The company works with a large number of suppliers including airlines, hotels, bus and train companies, and car rental agencies, enabling them to offer customers a variety of travel services.

MakeMyTrip business model relies on these essential components:

Revenue Streams: MakeMyTrip earns money from different avenues such as selling tickets, booking hotels, planning vacations, renting cars, and displaying ads. The company receives a fee from its vendors for every reservation completed using its portal.

Value Proposition: MakeMyTrip provides a variety of travel services at affordable rates, serving as a convenient and economical choice for travelers. The company delivers value to its clients with its easy-to-use website and mobile app, providing a smooth booking process, price comparisons, and around-the-clock customer assistance.

Segment: MakeMyTrip caters to a diverse clientele, which includes solo travelers, families, couples, and business travelers. The main focus of the company is on internet users and young people who like to book and plan online. MakeMyTrip's corporate travel services also cater to a considerable customer segment, specifically small and medium enterprises.

Customer Relationships: MakeMyTrip's main goal is to create lasting connections with customers by offering personalized services that prioritize the customer's needs. The business provides different services like trip suggestions, trip support, and trip finances to help customers with their travel preparations and choices.

Channels: MakeMyTrip utilizes a variety of channels like its website, mobile app, call centers, travel agents, and distribution partners to connect with customers. The main platforms for bookings and inquiries are the company's website and mobile app, with customer support and assistance being offered by call centers and travel agents.

What unique aspects of the MakeMyTrip business model set it apart from other companies in the industry?

MakeMyTrip goes far beyond just crafting incredible experiences for customers. MakeMyTrip provides customer testimonials in the competitive market, which give solid feedback on the company's customer service managers. The company benefits the most from an excellent customer experience.

Furthermore, MakeMyTrip utilizes a variety of strategies and technologies to enhance its offerings. This provides a significant added benefit for the company, particularly in comparison to its target market. In addition, MakeMyTrip integrates a sophisticated MakeMyTrip business model area in its retail stores to display the company's products effectively and attractively.

How does Make My Trip generate revenue?

Make My Trip generates a large portion of its income from ticket sales to customers. Make My Trip purchases tickets in large quantities from different private airlines at a discounted rate, and then resells them to customers at a lower price than the airlines, with an additional commission included. It makes approximately 66 percent of the revenue generated by Make My Trip. 34 percent comes from sources other than air.

The commission rates are high for airlines and low for railway tickets due to the presence of only one supplier. Tata, Kingfisher, and Spicejet are among the top companies in this category. Make My Trip frequently displays e-banners featuring products from these brands.

Some revenue also stems from commissions earned from hotel bookings. However, this does not generate a significant amount of revenue as it lacks popularity in India. Individuals in India prefer to directly contact hotels and make their own reservations to steer clear of the higher commission fees of 10 to 15 percent charged by make my trip.

In essence, MakeMyTrip business model revolves around leveraging its bulk purchasing power to secure discounted airline tickets, selling them to consumers with added commission, while also offering hotel booking services albeit with lower impact on overall revenue.

Revenue of MakeMyTrip Limited from financial year 2018 to 2023

FAQs

Q. What type of business model is MakeMyTrip working under?

A. MakeMyTrip has a B2C business model which is highly customer-centric and very strategic. MMT's primary concern is to save as much time and effort for its users as possible. To achieve that, MMT provides the customers with great holiday packages, arrangements for hotels, cabs, and travel guides in just a few clicks.

Q. How does MMT make profit?

A. MakeMyTrip purchases flight tickets in bulk at a discounted rate from airlines and sells them to customers at a slightly higher price, earning a profit through the price difference. The company charges a commission ranging from 5% to 10% of the ticket price.

Q. Where does money come from MMT?

MMT is essentially a balance sheet approach to macroeconomics that sees government spending accomplished through money creation, and not through raising taxes. Another major difference is that mainstream theory posits that deposits create loans, whereby MMT suggests that loans are what create deposits.

Q. Is MakeMyTrip a profit or loss?

A. MakeMyTrip reported a record quarterly profit of Rs 1,423 crore in Q4 FY 24, up 3,062% YoY. Co-founder Rajesh Magow is optimistic about future growth in domestic and international travel sectors.

Also Read: Snap launches AI tools for advanced augmented reality