EaseMyTrip, the country’s second largest online travel portal, is eyeing acquisitions across verticals covering hotel booking, cab services, corporate bookings, bus ticketing, among others. At least 10-odd acquisitions are on the cards in 2022, as the company looks to strengthen its non-air ticketing vertical.
Acquisitions will cover smaller, boot-strapped and/or profitable companies mostly.
Nearly 93 per cent of the company’s bookings come from individual consumers/travellers; while the remaining 7 per cent are from travel agents and corporates.
According to Prashant Pitti, CoFounder, EaseMyTrip could either use its free cash for outright purchases, or it may look at a share-swap agreement for onboarding companies. It could also explore partnerships or take up controlling stakes.
Promoters—which include the three Pitti brothers— hold 74.9 per cent stake in the online travel booking platform. The company remained boot-strapped till it went for an IPO last year and continues to remain debt-free.
“Over the last 7–8 months we spoke to 90-odd companies; as we plan to ramp-up the non-air booking segments. We are exploring verticals like cab services, corporate bookings, holiday package providers, train and bus ticketing and so on. By 2022 end at least 10-odd acquisitions are likely,” he told BusinessLine.
“In all cases, we will have a controlling stake or pick up full equity. Funding could be an outright cash purchase or we use other methods like share swap,” Pitti added.
The company has already made three acquisitions in the recent past– mostly all cash ones.
It has reported an 84 per cent increase in net profit to ₹40 crore, y-o-y, for the quarter ending September 30, 2021. The net profit in the year-ago-period was ₹22 crore. The Q3FY22 Gross Booking Revenue (GBR) stood at ₹1,293 crore, up 65 per cent, y-o-y.
The air segment booking grew 49 per cent and hotel nights booking grew 144 per cent during the December quarter.
According to Pitti, the company continues to gain market share basis increased margins and commissions and enhanced operational efficiency. Over the last few years, the difference between EaseMyTrip and the largest competitor—in terms of market size in the air travel segment—has been consistently coming down, indicating market share gains for the former.
Discounting
Discounting is also expected to taper down as demand picks up in the travel and tourism sector. At present, discounting for the nine month period is around 5 per cent of GMV (gross merchandise value); up from 3 per cent levels during pre-Covid times.
Pitti explains that the increase is discounting is because of the offers extended by airlines and hotels – which are subsequently passed on to end-users through the platform.
“I believe, as demand picks up across these sectors the discounting will taper down to the normal pre-Covid levels. Currently, it seems to be, and is most likely to be in the 5 per cent-odd range,” he said adding that bookings are witnessing an improvement post the Omicron-led disruptions.