Home > > The world won’t take China’s money—and India’s online travel firms are benefiting

The world won’t take China’s money—and India’s online travel firms are benefiting

05/09/2019| 6:26:45 PM| 中文

The India OTA market is becoming consolidated with very few players dominating. This helps investors to scale.

Chinese investors have developed an affinity for India’s online travel agencies (OTA).

On April 26, China’s Ctrip bought a 42.5% stake in India’s largest online travel firm MakeMyTrip (MMT) from South Africa’s Naspers in a share-swap deal. Along with an earlier investment, CTrip now owns about half of MMT’s shares.

This is among the biggest moves by a Chinese investor in India’s OTA space and comes at a time when India’s online travel segment is poised to touch $48 billion (Rs3.3 lakh crore) by 2020, compared with less than $10 billion in 2014.

Besides MMT, two other leading players in the segment, India’s biggest budget hotels chains, OYO, and its rival Treebo, are already backed by Chinese investors. Even smaller companies in the segment, such as the Gurugram-based HappyEasyGo, have raised funds from Chinese investors.

But why do Chinese investors want to pump in funds into Indian OTAs, especially when they run the risk of creating formidable Indian rivals on a global scale?

“Folks who have seen growth in China know that India is the next big leap and there will be significant growth for many years to come,” said Vidhya Shankar Satyamurthi, who heads strategy, policy and corporate development at the computer software firm SecurelyShare. “…they want to replicate growth stories here and want to bet early.”

Ctrip is trying to cash in on the upward momentum in India’s online travel market, analysts say.

When MakeMyTrip set up operations in 2000—back then, it was focused on just the US-India expat travel route—Indians were still new to the internet and hesitant to transact online. But the market has evolved since.

At the end of January 2017, MakeMyTrip completed a merger with the Naspers-owned ibibo Group. Together, the two have won in terms of transactional volume and ticket sizes over the last year.

“These investors understand the growing appetite of Indian middle class to travel, people becoming more comfortable using the internet not only for browsing but for transactions as well,” Yugal Joshi, vice president of Texas-based consultancy Everest Group, said. “Moreover, the India OTA market is becoming consolidated with very few players dominating. This helps investors to scale.”

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TAGS: MakeMyTrip | OYO | India | Ctrip
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