India’s largest OTA MakeMyTrip has announced that the company is raising USD 330 million through share sale to undisclosed investors as well as Ctrip and Naspers’ arm MIH Internet. It has entered into definitive share purchase agreements for a placement of its ordinary shares. This is expected to generate gross proceeds of USD 165 million. The company will issue 4,583,334 ordinary shares in the aggregate to investors at a price of $36 per ordinary share.

Along with this, MakeMyTrip also entered into share purchase agreements with Ctrip for the issuance of its ordinary shares to Ctrip and MIH Internet for the issuance of the Company’s Class B convertible ordinary shares to MIH. The transactions will generate an additional $165 million of gross proceeds for MakeMyTrip. It will issue 916,666 ordinary shares to Ctrip at a price of $36 per ordinary share and 3,666,667 Class B Shares to MIH at a price of $36 per Class B Share. The Class B Shares issued to MIH will be convertible into ordinary shares on a one-to-one basis.

The transactions with Ctrip and MIH Internet and the placement are expected to raise USD 330 million and expected to close around coming Friday (May 5, 2017). MakeMyTrip plans to use the funds for business expansion, strategic investments, technology and product development, marketing and promotions, working capital and general corporate purposes.

Ctrip invested USD 180 million in MakeMyTrip early last year and after the merger with Ibibo Group, held 10 percent of the combined entity. Naspers and Tencent held 40 percent of the combined entity after the merger last year. It was recently reported that MakeMyTrip is eyeing more investments in India including an investment in budget hotel aggregator FabHotels. Moreover, MakeMyTrip has previously expressed its intention to go bullish on online hotel booking. Expect more such activity by MakeMyTrip as it tries to grab a bigger piece of India’s travel market.

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ibibo group, the parent company of popular OTA Goibibo, will raise USD 250 Million from internet & media company Naspers. ibibo is jointly backed by Naspers and Chinese internet group Tencent. Along with the popular OTA Goibibo, the ibibo group also operates bus ticket booking platform Redbus, B2B travel platform Travel BoutiqueOnline and budget hotel chain Gostays.

All the ibibo’s portfolio companies will benefit from the additional capital. The online travel space in India is highly competitive and despite being one of the bigger players, Goibibo faces stiff competition. In the OTA space, it primarily faces competition from MakeMyTrip, Cleartrip and Yatra. To fuel its growth in Indian market, Ctrip recently announced an investment of USD 180 million in MakeMyTrip.

The emergence of new players like Oyo rooms in Indian travel industry has started to pose new challenges for OTAs. To combat the same, Goibibo launched their own budget hotel brand called Gostays. The hotel industry offers plenty of headroom for the online travel brands and the recent investments will fuel them to take the faster lane.

“The Indian e-commerce market and the online travel segment in particular, offer exciting growth prospects for us as a group. With a talented, proven management team and exceptional technology, ibibo is well positioned to benefit from an increasing number of people using online travel services going forward,” said Bob van Dijk, CEO, Naspers Group in a release.

The hotel bookings on Goibibo crossed 1.6 million during Q3 2015 with a strong growth of 400 percent year on year. With the increased mobile penetration in the Indian market, the bookings through mobile phones contributed to over 70 percent against 42 percent a year ago. The group will use the resources to further ramp up their mobile offerings and introduce new technologies to cater to the modern traveller.

ibibo group has previously acquired and invested in promising travel technology startups. The group acquired bus analytics platform YourBus in 2014 and invested in cloud based hotel service company Djubo last year. We can expect more such announcements from the group in a bid to adopt new technologies and explore new avenues.

The recent investments in the OTA space will certainly give more momentum to this segment and it will be interesting to see how these big players use that to gain a bigger share in the market.

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Cloud based hotel booking engine RoomCentral has raised USD 2 million from investor Karanpal Singh, managing director of Nameh chain of hotels. It is primarily focused at small and medium properties as a large number of hotels still rely on conventional methods to run their business. Many of them don’t use property management systems as the investment isn’t justified to them.

RoomCentral is a light cloud based system that is specially designed for lower end of the spectrum. Usually small hotels don’t get many direct bookings because of dull websites and badly integrated payment systems. RoomCentral can be integrated neatly with a hotel website, handle payment and sync the room inventory with OTAs. It also offers front desk tools and CRS to manage records and reservations.

Ibibo group recently bought stake in Djubo, a startup operating in the same space as RoomCentral. Djubo also offers tools to manage hotel bookings, inventories and synchronisation with OTAs. Along with that they also offer various templates for hotels to build their own website if they don’t have a good web presence. This will help small hotels get online and save a fraction of the OTA spends with direct bookings.

These tools are good for both the hotel property and OTAs. On one end they are helping hotels manage the property better while on the other end, OTAs can be updated about the status of hotels and won’t face backlash for issues like overbooking.

This could be a hot segment going forward as budget hotels make the shift towards technology. Ibibo is already working on Go Stays to compete in the budget hotel segment and Djubo can help with the seamless CRS systems for the same. Sources suggest that other OTAs will follow the same path making technology providers like Djubo and RoomCentral even more relevant.

RoomCentral: Website

Djubo: Website

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