In what could possibly be one of the biggest developments in the online travel ecosystem of India, two of the leading OTAs have announced to combine their businesses. MakeMyTrip has said that it would buy rival ibibo group to capture a large share of the fast growing online travel space. The transaction would combine the two under MakeMyTrip (NASDAQ: MMYT) creating one of the leading travel groups in India.

The deal covers all brands of the Naspers and Tencent backed ibibo group that include Goibibo, Redbus, Rightstay and Ryde. It is reported that MakeMyTrip has agreed to buy ibibo’s travel businesses for USD 720 million in stock.

After this development, MakeMyTrip founder Deep Kalra will continue to be the group chief executive and executive chairman of MakeMyTrip. Rajesh Magow will continue to be the CEO India of MakeMyTrip. Ashish Kashyap, founder and CEO of ibibo group, will join MakeMyTrip as co-founder and President of the organisation.

“Today’s announcement is a significant step forward for the rapidly growing travel industry in India. We expect this deal to create an even more scalable business with the expertise to transform the booking experience for Indian travellers. I am delighted to be leading such a strong team in our next chapter of high-growth in this dynamic industry,” said Deep Kalra, chairman and Group chief executive of MakeMyTrip in a statement.

Naspers and Tencent will be issued new shares in MakeMyTrip. Upon closing of the transaction, they will own 40% stake in the combined entity and contribute proportional working capital. Ctrip will have 10% stake in the combined entity.

Source: Reuters

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The German carmaker Volkswagen’s luxury car unit Audi plunged knee deep into the Chinese market by setting collaboration with the three tech titans Alibaba, Baidu, and Tencent to offer an array of digital services in the world’s largest car market.

The financial terms of the deal were not disclosed as the lux-brand and FAW-Volkswagen, VW’s joint venture with FAW Car Co Ltd signed the letters of intent with the internet technology groups at an annual summit in Shanghai.

Volkswagen has long been hobbled by scandals over emission tests, distracting it in a race of global carmakers to develop computer-aided services for drivers. The car maker asserts that it would have to remain in control of the relationship with the car user which is why it stopped interacting with the US-based ride-hailing service Uber, and technology giants Google and Apple.

As per the agreement, Baidu-Audi combination aims to provide the use of smartphone apps in its cars, Tencent-Audi includes helping drivers to make good use of WeChat communication app and Alibaba’s contribution would mainly be providing the drivers with more real-time traffic news services and 3D maps to the drivers.

This whole setup will enable the traditional carmaker to avoid being left behind in the race of ‘connected cars’ as in a recent move German rival BMW teamed up with Israeli sensor maker Mobileye to produce autonomous cars over the next ten years. Audi dominates sales in Chinese market leaving behind BMW and Mercedes which nearly accounts to one-third of the total sales.

Martin Kühl, spokesman for Audi in China believes that the carmaker has been successful in developing technology in China which is now being used elsewhere. The Touchscreen technology that got developed in Beijing is now being used by engineers in Germany. In his recent quote, he adds, “The Chinese are early adopters. If you’re not here with the latest stuff, then you can’t win.” (Financial Times).

In 2013, an R&D centre went functional in Beijing to develop technology that would first prioritise and monetize Chinese market and then export globally. Maintaining the lead in the market requires it to invest into internet- connected technology.

Source: Financial Times

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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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