MakeMyTrip eyes stake in Oyo, likely to ban Treebo and FabHotels

There are no permanent friends or foe in business. The adage is justifying its relevance once again as MakeMyTrip is reportedly breaking alliance with hotel brands including Treebo and FabHotels. Interestingly, the move benefits Oyo that had recently on-boarded on MakeMyTrip after 18 months rivalry.

The ban on Oyo properties listing had been lifted in the wake of its pivot from aggregation to a franchise-based model. Unlike past, now the SoftBank-backed company is a pure-play hotel brand. Besides partnership, the new business model of Oyo also appears to be an enticing investment opportunity for Rajesh Magow-led travel major.

The CTrip-backed company is exploring to strike a strategic investment deal in Oyo, reports TOI. Citing anonymous sources, the report added that the current partnership favours capital deployment in future. The probable investment also appears likely as hotel booking offers more margin (in the range of 2.5 to 3X) than air ticketing vertical for any OTAs including MMT.

Also read: Is Paytm shutting down hotel vertical?

MakeMyTrip dominates the premium hotel aggregation space, however, despite its efforts to build and market in-house brand for budget accommodation, it has not found decent traction. An investment in Oyo that has emerged as a clear winner in the budget accommodation space will certainly beef up its stake in non-premium hotel segment.

MakeMyTrip expects the revenue share from the hotels business to go up by 70 per cent in the next three years from about 50-55 per cent now.

In October 2015, online travel providers including MakeMyTrip, Goibibo, and Yatra jointly blocked Oyo and Zo Rooms from listing its hotels on their platforms. These aggregators used to be major channels for the lead generation.

While the delisting Fab Hotels and Treebo many not impact MakeMyTrip much, it slated to hurt both hotel brands as industry observers estimate that about 25 to 30 per cent of their bookings hails from MMT. Going forward, if MMT delists them, it would be more difficult for the aforementioned companies to drive scale and survive against deep-pocketed Oyo