Two of the big guns of Indian Online travel agencies, NASDAQ-listed MakeMyTrip and GoIbibo, are going to merge under the MakeMyTrip brand over the coming days, bringing together a whole bunch of travel brands, including MakeMyTrip, GoIbibo and Redbus. This is perhaps the largest transaction in the Indian Travel space, with the combined entity valued at USD 1.8 Billion in total.
Following the transaction, which is expected to complete by the end of 2016, Deep Kalra will be the Group CEO of the combined entity, and Ashish Kashyap, who was the CEO of Ibibo, will join the team as a co-founder. GoIbibo was owned by Naspers, a South African technology company, and they will now be the single largest shareholder in the combined entity.
The consolidation of the two companies will perhaps lead to a better outcome for the companies, but not for the customers. While airfares were already at a multi-year low, the OTAs used to even discount these even further and make them cheaper. Perhaps this will stop, or slow down now, given the sector now has one less major player. The other major Indian OTAs now will be ClearTrip and Yatra, which is in the process of getting listed on NASDAQ as well.
MakeMyTrip was traditionally strong in the packages business, along with its presence in domestic and international hotels. On the other hand, GoIbibo had also built a nice franchise in Air ticketing, but also bus ticketing (via RedBus), and hotels.
This also means the consolidation in their position on hotels. Both of them were spending aggressively on hotel discounting, and now this should slow down and also should give them a better position to deal with the sellers of this inventory.
The transaction is still a few months away from closure, since it will need regulatory approval as well.
For you as a customer, discounts and promotions will definitely reduce. So brace to pay a little more money for your flights and a lot more for your hotel rooms. I’m waiting to see what more information is going to be made public at this point of time, and will update this post accordingly.
What do you think of this move? Are you ready for MakeMyTrip v2 and how do you think it will impact you?