What is MakeMyTrip Business Model? | How Does MakeMyTrip Earn Profit?

Read Time:7 Minute, 48 Second

MakeMyTrip is among the biggest travel companies online in India providing a broad range of services for travelers, ranging including hotel and flight reservations to vacation packages and car rentals. Established around 2000, in 2000 by Deep Kalra, MakeMyTrip has played a significant role in changing this Indian business of travel by making booking and planning easier and simple via its website. Over time, MakeMyTrip has grown to become a trusted name for millions of Indian travellers, providing both international and domestic travel options.

How does MakeMyTrip make a profit in a highly competitive market for travel? Let’s examine the business model of MakeMyTrip and learn how the company earns money.

MakeMyTrip’s Business Model: Online Travel Aggregator (OTA)

MakeMyTrip is an Online Travel Aggregator (OTA), where it connects its customers to a variety of travel service providers, including hotels, airlines and car rental firms, as well as tour companies. The platform functions as an intermediary that allows customers to review reviews, compare prices and make reservations for their preferred travel options via the website or the mobile app.

Here are the main elements of the business model of MakeMyTrip:

1. Reservations for Flights MakeMyTrip provides a full flight reservation service that allows customers to find flights and make reservations with international and domestic airlines. The platform aggregates flights of diverse airlines and provides users with real-time price comparisons aiding them in finding the most affordable offers. MakeMyTrip earns an fee from airlines for every ticket that it sells through its platform.

2. Hotel Bookings: Another key aspect of the business of MakeMyTrip is the hotel reservation service. The platform works with hotels in India and around the world, providing clients a range of options for accommodation, ranging from budget hotels to luxurious resorts. Users can compare hotel rates review reviews and make reservations directly on the platform. MakeMyTrip gets a fee hotel for every booking made on the platform.

3. Special Holiday Offers MakeMyTrip can customize holiday package that include hotels, flights and events, which makes it simple for vacationers to plan their trips. The packages are designed to suit international as well as domestic locations, and cater to different budgets and preferences for travel. MakeMyTrip makes money through the markups on these vacation packages, which cover expenses for traveling and an income margin for the company.

4. Reservations for Trains and Buses Alongside hotels and flights, MakeMyTrip allows customers to purchase train and bus tickets. It partners with bus companies and railway operators and the Indian Railway Catering and Tourism Corporation (IRCTC) to offer ticketing services on both local and long-distance routes. MakeMyTrip earns an fee for service as well as a commission for each ticket sold.

5. Transportation to and from airports MakeMyTrip provides services for car rental as well as airport transfers, offering customers with the ability to reserve vehicles for local excursions business trips, local sightseeing, or airport pickup and drop-off. The company has a partnership in conjunction with nearby car rental businesses to offer these services. MakeMyTrip earns an percentage for each booking completed through its platform.

6. For Travel Insurance to ensure the complete experience of traveling, MakeMyTrip offers travelers with insurance. The platform collaborates with insurance companies to provide policies that cover cancellations of trips and lost luggage, medical emergencies and many more. MakeMyTrip earns an payment from insurance companies for each policy that is sold through its platform.

How Does MakeMyTrip Earn Profit?

MakeMyTrip earns money through a variety of ways, but its main focus is around the commissions as well as service charges for its services in the field of travel. Let’s take a look at the way in which the company earns its profits:

1. Commissions on Flight Bookings: One of the major sources of income for MakeMyTrip is from the commission it gets from airlines for every flight booked through its platform. Airlines pay MakeMyTrip a portion of the price of a ticket as a commission to facilitate the booking. The commission rates will differ depending on the airline and nature of the travel (domestic as well as international) However, it generally can be anywhere between 3 to 5percent of the price of the ticket.

Furthermore, MakeMyTrip often earns revenue from convenience fees that are charged to customers when they book their tickets. These fees pay for the costs of providing services and are added onto the total price of tickets.

2. Commissions earned from Hotel Bookings: MakeMyTrip earns the majority of its income from hotel reservations. It partners with hotels and other accommodation providers to earn an commission on each hotel room booked on its platform. The commission is typically between 10 to 25 percent of the value of booking according to the hotel’s location and category.

MakeMyTrip also provides discounts on hotels last minute as well as exclusive deals which could attract more customers as well as increase the number of bookings, which results in more commissions.

3. The revenue from holidays packages MakeMyTrip creates and sells holiday packages, combining hotels, flights and other activities. It earns profits through increasing the price of the packages. The markup also includes the profit margin, which covers the costs of MakeMyTrip and contributes to its total income. These packages are popular with those looking for a convenient complete vacation packages.

4. Service Fees for Bus and Train Bookings: MakeMyTrip charges fees for service charges for bus and train reservations made on its platform. These charges are either an all-inclusive rate as well as a proportion of ticket price, and are paid by the client upon making the booking. Additionally, MakeMyTrip earns a commission from bus operators as well as railway operators and Indian Railways for each ticket sold.

The increasing popularity of train and bus travel in India gives MakeMyTrip with the opportunity to make significant money from this market, particularly with budget-conscious travelers.

5. Commission from Car Rentals and Transfers: MakeMyTrip earns commissions from its car rental and airport transfer services. When customers make reservations for cars on this platform MakeMyTrip is partnered with car rental companies and earns part of the booking price as a fee. The services are designed to cater to business and leisure travelers with ease and the flexibility to travel locally.

6. Advertising and Promotions: With a the largest customer base as well as large web visitors, MakeMyTrip generates additional revenue through advertising. The platform provides advertisements that are sponsored, banner ads and discounts for travel services, such as hotels, airlines as well as tour companies. The companies pay MakeMyTrip to increase their visibility through the platform, thereby helping to attract more customers and increase reservations.

7. Affiliate Marketing MakeMyTrip makes money through affiliate advertising. It collaborates with other websites and platforms to market the services it offers to travelers. Affiliates earn commissions from driving customers or bookings through MakeMyTrip’s platform and MakeMyTrip gets more visibility and increased customer acquisition via these collaborations.

8. Commissions on Travel Insurance: MakeMyTrip offers travel insurance policies through partnerships with insurance companies. The platform receives a fee from insurance companies for every policy purchased. In addition, offering insurance as an added-on to hotel or flight reservations aids MakeMyTrip boost its transaction volume and also provides additional security for travellers.

Challenges and Opportunities for MakeMyTrip

While MakeMyTrip has developed a solid business, it is facing a variety of obstacles as well as opportunities Indian travel market

1. Competition from other OTAs: MakeMyTrip competes with other travel websites (OTAs) such as Yatra, Cleartrip, and international players like Booking.com as well as Expedia. To keep its position as a market leader, MakeMyTrip needs to continue providing competitive pricing as well as exclusive offers and excellent customer service.

2. Post-Pandemic Recovery of Travel: The COVID-19 virus had a major impact on tourism, causing the reduction of the number of bookings and revenues for OTAs such as MakeMyTrip. But as travel restrictions are eased and the demand for domestic as well as international travel increases, MakeMyTrip is well-positioned to profit from the rebound. It can capitalize on an increase in demand for travel through attractive offers and flexible scheduling options.

3. Expanding into New Travel Segments: MakeMyTrip has the opportunity to expand into new segments of travel like the adventure tourism industry, experiential travel as well as luxury tourism. With its curated travel experience and unique packages The company will be able to attract customers with high spending and boost its revenues per user.

4. The importance of strengthening the app and mobile presence In light of the growing use of smartphones in travel, MakeMyTrip can focus on improving its mobile app as well as improving the experience for customers. A user-friendly and seamless application can increase customer engagement as well as encourage repeat bookings and improve the loyalty of customers.

Conclusion

The company’s model of business is based on providing a broad variety of travel services via its online platform that connects customers to hotels, flights holidays, vacation packages, and transportation. The company makes money mainly by the commissions from hotels, airlines and travel service providers in addition to service charges for reservations. As the travel industry continues to improve and expand, MakeMyTrip is well-positioned to remain at the top of the online travel market in India by providing easy efficient, competitive and comprehensive services for customers in the field of travel.