Prashant Pitti, co-founder, EaseMyTrip
Image: Amit Verma
Mumbai, 2016. The message was clear. Cleartrip was switching gears. Born in 2006, the online travel player started galloping at a furious pace. It posted a heady revenue of ₹253.7 crore in FY16 as against ₹192 crore in FY15, existing backers—US-based Concur Technologies and Gund Investment—infused a fresh round of capital at a valuation of $300 million, the travel ticketing biggie took its overall funding tally to around $75 million, and boasted of 14 million app downloads till 2016.
Interestingly, Cleartrip’s paltry loss of ₹64.6 crore in FY16—it was ₹29 crore in FY15—fell on the blind spot of every stakeholder. The name of the game was land grab, and the rules were clear: Growth at all cost. Loaded with cash, the Mumbai-based online travel platform rolled out ‘Local’, a service which enabled urban dwellers to explore cities by offering a host of activities such as adventures, tours, workshops, events and fitness. It also launched a new TV commercial with a tagline: ‘There’s a lot happening around you’.
Meanwhile, in Delhi, the message was clear. There was nothing much happening around EaseMyTrip, which was stuck in the first gear. Founded by the Pitti brothers—Nishant, Prashant and Rikant—in 2008, EaseMyTrip started as a platform for travel agents to sell air tickets and posted sedate growth till 2016. It remained bootstrapped as venture capitalists (VC) didn’t find any merit in backing Cleartrip’s insignificant rival, which had not even touched the ₹50 crore-revenue mark by FY16. “We were never on the radar of VCs,” quips Prashant. “For them, we had missed the bus.”
What matched the placid pace of EaseMyTrip’s growth, though, was the speed at which it flexed its arms. From a one-room, 200 sq ft office in an obscure part of East Delhi—from where EaseMyTrip was born and operated during the first three years—the company graduated to a 450 sq ft headquarters. Not all were thinking and acting small, though. In 2012, much bigger global rival Expedia shifted its India team to a new office in Gurugram which was spread over a staggering 42,000 sq ft. And in 2016, EaseMyTrip graduated to a 1,200 sq ft workplace. Now the homegrown laggard, which had been consistently posting pony profits from the first year of operations, started to trot.
A lot was happening in 2016 as far as the big boys were concerned. In February, ecommerce major Ibibo Group raised $250 million from its major backer Naspers. The group, which then operated hotel and flight booking platform Goibibo, redBus and YourBus, too, was growing aggressively. From October to December 2015, it claimed to have processed over 6.5 million transactions, and bookings of 1.6 million hotel rooms. The backers were bullish and backing the challenger brand to the hilt in its cash-guzzling fight against the leader, MakeMyTrip, which posted a revenue of $336 million, and a loss of $88.5 million in FY16.
Another ‘hero’ in the travel segment—the Salman Khan-endorsed Yatra—was also dashing at a brisk pace. The online travel major, which started in 2006 and reportedly clocked net revenues and net loss of ₹354.4 crore and ₹88.9 crore, respectively, in FY15 was getting ready to get listed on the Nasdaq. Another player—B2B travel platform Travel Boutique Online (TBO)—too had shown remarkable growth. The company reportedly had 45 offices in India, a presence in Dubai and revenue of over ₹200 crore in FY16. In fact, by the end of 2016, almost all kinds of online travel players were much bigger than EaseMyTrip. Though the Pitti brothers were in the fray, they were nothing more than a fringe player.
Fast forward to 2022. Goibibo was bought by MakeMyTrip in 2017; Via.com was acquired by Ebix the same year; Cleartrip was snapped up by Flipkart in 2021; Yatra has become a fringe B2C player; battered by the pandemic, global biggie Expedia has drastically shrunk its India operations; and MakeMyTrip is still in losses, though it keeps talking about its intent to post profit. And there is EaseMyTrip, which has emerged as the dark horse. Also read: Adjust focus: How Peyush Bansal built Lenskart into a profitable unicorn
After surviving the bloodbath of the last decade and the pandemic onslaught, the Pitti brothers listed their bootstrapped company in March 2021. Last September, EaseMyTrip entered into the unicorn club when its market cap crossed $1 billion. The underdog continued with its unbeaten profitable streak, and notched up a gain of ₹105.73 crore on an operating revenue of ₹235.37 for FY22. “Our valuation was decided by the public market. They made us a unicorn, not the VCs,” says Prashant, who has emerged as an unlikely hero.
Prashant offers an explanation for what is apparently inexplicable: How on Earth, EaseMyTrip survived, flourished and emerged as the second-largest OTA player in India? “I have read my obituary countless times,” he smiles. The survival logic is simple. “More organisations die of indigestion than starvation,” the founder quotes David Packard. The biggest superpower of EaseMyTrip, Prashant stresses, is that the company was always an underdog. “We were never under pressure. We fell on the blind spot of everybody, except the users,” he smiles. The company never had a rival because nobody considered EaseMyTrip as a worthy competitor. ”We only had ourselves to contend with.”
The second positive—a blessing in disguise—was a bootstrapped journey. “Nobody gave us money. So we didn’t have money to burn,” he laughs. The financial discipline inculcated by the reality that the company was not dependant on outside money helped in a couple of ways. First was that emphasis on in-house talent became the norm. Costly hires were not possible and the ones working were trained in all functions. Over half of the headcount, Prashant underlines, was taking care of call centre operations. The ones who did well in all aspects were promoted to managerial levels.
A third enabling factor was running its own call centres. While most of the rivals outsourced, EaseMyTrip decided on the contrary. “Customers want two things: Cheap price and better service,” he contends. Though the Pitti brothers could never match the high discounting game played by their deep-pocketed rivals, what gave them an edge was the decision to charge zero processing fees. “We never did and still don’t do it,” he says.
Spending the first few years in the B2B business and focusing on travel agents was yet another plus. What this meant, he lets on, was that when the big boys were bleeding and fighting, EaseMyTrip was growing slowly
. With most of the rivals disappearing or losing sting, the discounting war too tapered out. This helped EaseMyTrip in getting value-focussed customers and not bargain hunters. Look at the numbers. Revenue jumped from ₹131.19 crore in FY19 to ₹235.37 crore in FY22. “Others kept losing value… and our value started getting more appreciated,” says Prashant. EaseMyTrip could never match the high-discount game in the industry, but stood out with their decision to charge zero processing fees
After the listing, the value got noticed by everybody. “Their focussed, capital-light, low-cost, and no-frills approach sets it apart from the rest of the OTA business in terms of profitability and cash flow,” underlines Monarch Networth Capital in its latest brokerage report on EaseMyTrip. The ‘no convenience fee’ policy worked quite well for the company, and with word-of-mouth, they started getting more users on their platform. “The company has had an over 80 percent repeat transaction rate in the last five years,” the report released in August points out, adding that from 2016 to 2020, EaseMyTrip grew at more than 50 percent per year in the B2C business.
The challenge now for EaseMyTrip is to stick to its frugal DNA. While the company generated adjusted revenue of ₹131.51 crore in the quarter ended June 30, an increase of 169 percent over the corresponding quarter last year, and also more than doubled its net profit to ₹33.76 crore during the same period, it has to keep a firm eye on cost. The marketing and sales promotion expenses increased by 276.1 percent to ₹10.38 crore from ₹2.76 crore.
Prashant contends the company will always stay true to its core. “Growing profitably is a habit,” he says. “One can’t learn it or unlearn it quickly.”
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(This story appears in the 23 September, 2022 issue of Forbes India. To visit our Archives, click here.)