India's Middle Class Dominated the MakeMyTrip Earnings Call

23.07.2024 - 22:54 / skift.com / Peden Doma Bhutia / Rajesh Magow

India’s rising middle class and higher disposable income have boosted spending on discretionary services, while the growing lower middle class has bolstered domestic travel, said Rajesh Magow, group CEO of MakeMyTrip, during an earnings call on Tuesday.

Magow highlighted the impact of younger generations driving a cultural shift towards more frequent breaks.

He also noted a positive long-term outlook for outbound travel from India with fast-growing pools of first-time tourists, particularly to emerging destinations like Turkey and Kazakhstan, which have seen significant increases in Indian tourists.

“For Kazakhstan, India is now the third largest source market witnessing a threefold increase in Indian tourists compared to 2021. For Turkey, the number of tourists from India has surged 34% in the first five months of 2024 compared to same period last year,” he said.

The shift to flexible working arrangements has influenced travel behavior, with more people combining work and leisure, Magow noted. MakeMyTrip has also added new travel products and services targeting specific demographics like millennials and Gen Z.

Magow expects the domestic air market to improve further in the second half of the financial year.

As per a McKinsey report, India is currently the world’s sixth largest domestic travel market by spending, buoyed by the rising middle class.

The Indian domestic market could overtake Japan and Mexico to become the world’s fourth largest by 2030, Magow said. Domestic air passenger traffic in India is also projected to double by 2030, boosted by government initiatives to build infrastructure and connect underserved domestic airports.

MakeMyTrip reported its highest-ever quarterly gross bookings, revenue, and adjusted operating profit, with gross booking value exceeding $2.4 billion, a 22% year-on-year growth in the first quarter of fiscal 2025. Adjusted operating profit grew by 30% year-on-year to $39 million for the period ending June 30, 2024.

“We delivered these strong numbers despite the late pickup of the season for leisure travel due to general elections in April,” said Magow.

“A wide spectrum of travel products is also helping us increase our share of the wallet Indian travelers overall travel spend. We now have a lifetime transacted user base of 75 million across all our 3 brands to build stronger loyalty,” Magow said.

The company has also relaunched its flagship loyalty program, MMT Black, with new benefits to boost customer retention and loyalty. The program has been relaunched with simplified 2 tiers and new benefits such as guaranteed room upgrades and meal upgrades for participating hotels and homestays.

“Although it is early days of the new MMT Black program rollout, we have already