NISHANT PITTI, CEO and Co-founder, EaseMyTrip.com, talks of the agency’s USP - not charging consumers a convenience fee while booking tickets (unlike its peers) – and how a lean business model has ensured profitability even in a pandemic year, when travel has been severely affected. He also spells out how travel companies need to adapt to the new normal, and seeks support for the sector
You and your brothers started EaseMyTrip out of your garage in 2008. Through the evolution of the brand over the last 13 years in a highly competitive market, what are the defining moments and learnings that stand out?
The biggest learning throughout our journey has been that if you cater to the needs of your customers efficiently, then your business will grow. We realized very early on that we should offer better pricing while maintaining low operation costs. This has been a defining move and enabled us to develop a unique, lean business model.
EaseMyTrip is ranked second among key online travel agencies in India in terms of booking volume in the nine months ended December 31, 2020, and the only profitable one in FY18-20 at that. To what do you attribute this success in spite of the COVID-19 crisis?
In fiscal FY20-21, we almost doubled our profits at Rs 61.4 crore as against a net profit of Rs 33 crore in FY19-20. This was despite halving of gross booking revenue in a pandemic-struck year. The increase in profitability despite lower income was driven by increase in margin and commissions, and reduction in operational expenses including reduction in discounts, marketing and sales promotion and employee expenses as well as gains from cutbacks in payment charges. The company’s lean business model has been the key driver in maintaining its financial health, assisted by our no convenience fees model.
What led you to adopt the ‘no convenience fee’ strategy, unlike your peers in the online travel agency (OTA) space, and how has it paid off for the company?
Since inception, EaseMyTrip’s core selling focus has been on not charging a convenience fee. The idea was to offer air tickets at a cheaper price, so that we would not have to do marketing. We have always focused on passing on maximum value to our customers instead of spending the margins on operational expenses, and this has ensured the company’s growth via word of mouth. This has paid off for the company. We enjoy a high customer retention rate of over 85%.
Ban on passenger flights during the lockdown, cancellations and refunds, people not buying fresh tickets… How did you manage the COVID crisis, and what is the situation at present?
While our gross bookings diminished by 50% during the pandemic year, we recorded our highest ever profitability in FY 20-21 due to increase in margin and commissions and reduction in operational expenses. We offered advances to our vendors, including airlines and hotels, and we negotiated harder, which enabled us to command more margins during the period. Our operational expenses in FY21 reduced by 51% whereas our total income reduced by only 17%, clearly denoting increased margins and better cost controls. Currently, there is a huge pent-up demand for the travel and tourism sector and booking numbers are picking up dramatically. The tendency of people for revenge travel has already kicked in.
What is your sense of the post-COVID travel and tourism industry as it moves to open up? What are the biggest challenges for OTAs and what are some remedial steps/policy support that could help?
We aim to cater to the huge pent-up demand for travel in the coming months. Adaptability is fundamental for survival as the behaviors and preferences of consumers have changed as a result of the pandemic. Travel companies need to keep looking at new ways to enhance safety and minimise risk, especially with the threat of a third wave. While there could be fewer flights and increased rates, we are directly collaborating with airlines and hotels to offer the best prices for travellers. It is imperative for customers to check for ticket prices from trusted travel portals such as ours, instead of third party platforms that inflate their international airfares. There is also going to be a lot of fluctuation in demand of customers in terms of destinations, and travel portals need to expand options across new destinations. Also, there is a certain set of people who are still averse to travel. Since travel forms a significant part of the economy, the Government should introduce measures that revive travel sentiment in the country.
What are some of the things that EaseMyTrip is doing to cater to the new normal in terms of products and services?
We are working pro-actively to cater to the increased demand that we foresee. To cater to the new normal, we have partnered with many airlines and hotels to ensure safety and hygiene, which will be a huge deciding factor for customers. EaseMyTrip has taken pro-active measures to curate special packages for domestic unexplored/offbeat destinations that are expected to be in heavy demand soon.
Your IPO in March this year was over-subscribed by 159 times. Looking ahead, what are your plans for the company and what will be your focus areas?
We aim to continue with the record growth in the airline ticketing vertical with increased revenue margins and market-share. While air travel has been a key component of our bookings, we are also expanding our ambit across other sub-sectors, including hotels, buses, trains and holidays. We plan to leverage our vast agent network and utilize it for holiday bookings to complement the company’s hotel and holiday business. With new avenues for growth and leveraging our existing customer base for cross-selling, we anticipate increased wallet share from our customers and enhanced revenues and profitability. Also, we aim to expand overseas via our subsidiaries and use a 360-degree marketing approach to attract customers and revenues.
Give us a sense of your personality beyond the ambit of work. What are you passionate about?
I am in the business of travel because travel has always been a passion and it has inspired me. Travel provides an avenue for discovery and learning, and adapting to new situations. Apart from travel, reading, music and gaming are some of the things that I love to do. These are not new hobbies, but now, as we are all working from home, I’m able to get some time for myself to enjoy these activities again.
“One motto that I abide by is to constantly reinvent and push oneself without obsessing about the result. If it works out, then it gives one confidence to step out of the comfort zone and aim for bigger goals. If it doesn’t, then it’s still a learning opportunity,” says Nishant Pitti.
