The Hindu Business Line : `e-travel sites to multiply, but equity finance may dry up'

However, the going would not be easy for some of these new entrants, Mr Deep Kalra, Founder and CEO, MakeMyTrip.com, said. Investors, who have been interested in the segment, were bound to get more wary of investing in a market that was fast crowding, he said.

MakeMyTrip, which was targeted at the US-based NRI when it launched in 2000, entered the Indian market last year, and has in seven months of operation notched up a turnover of Rs 200 crore. Mr Kalra has targeted a turnover of Rs 450-Rs 500 crore in the year ending March 2007.

The new players are likely to eat into the market share of the offline players, he says, shrugging off fears of MakeMyTrip's share coming down as a consequence. On the other hand, he says, competition keeps you on your toes.

Earlier this month, Reliance Capital, Norwest Venture Partners, and TV 18 invested in Yatraonline, a venture initially promoted by Mr Dhruv Shringi and Mr Manish Amin. Mr Shringi and Mr Amin were earlier managing Ebookers, an online travel Web site, which was bought out by Cendant for $410 million in 2004.

Mr Kalra said MakeMyTrip hoped to use the IPO route or a strategic sale to raise funds. The site has, itself, secured an investment of Rs 43 crore ($10 million) from SB Asia Infrastructure Fund (SAIF).

According to him, one needs to have deep pockets to enter the segment and the brand-building effort in the initial years is expensive. MakeMyTrip spent nearly Rs 4 crore in the first six months of its domestic launch. The marketing spend would slow down this year, with the budget for 2006-07 pegged at Rs 4 crore.

About 20 per cent of the Indian travel market would go online by 2010, as against 2.5 per cent, valued at Rs 2,500 crore currently. In the US, over 50 per cent of tickets are sold online.

The market's response to MakeMyTrip and its acceptance of the online mode have surprised him. Mr Kalra says his site sells between 500 and 600 domestic air tickets and around 100 international tickets, all inbound from the US.

Interestingly, nearly 70 per cent of the transactions on the site are by male buyers, and 70-80 per cent of the buyers are professionals in the 27-42 year age group. Most of the transactions are conducted between 10 a.m. and 5 p.m., suggesting that travel reservations are finalised during office hours!

Hotel bookings are an important business segment, with MakeMytrip booking about 50 room nights each day.

Currently, it has the inventory of around 400 hotels online and hopes to raise this to 500-600 hotels in the coming year.

Going forward, the site would look at new strategies including enabling B2B2C business in the smaller cities.

The site was currently working with travel agents to go online in `B' and `C' cities such as Ludhiana, Amritsar, Nashik, and Kolhapure, he said.

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