Exclusive: Is Paytm shutting down hotel vertical?

Paytm seems to have given up on hotel aggregation business. The SoftBank-backed company has stopped showcasing hotels on its app for about two-three weeks. The hotel booking feature also hasn’t found a place in the recent app update.

According to two sources - currently, there has been an internal debate about whether doing hotel is meaningful for the company or not. “Paytm never had a decent traction in hotel segment. Though, flights, bus and train tickets are fairly performing well in overall travel marketplace,” says one of the above sources on condition of anonymity.

Since the hotel aggregation is a matured (more than 20% of overall transaction happen via online) as well as high margin vertical in online space, Paytm sensed a big opportunity in the segment. It had started aggregations third part inventories in October 2015.

Importantly, Nitin Misra, who was looking after hotels vertical at Paytm is now heading Consumer Lending and Digital Gold divisions. Misra had led hotels from May 2017 to March 2018.

Also read: Paytm sold 52 Mn entertainment tickets in 2017, claims 6X growth but how

Meanwhile, Paytm has denied shutdown of hotels vertical. “We’re revamping and launching updated version,” said Paytm Spokesperson via WhatsApp text.

On contrary to Paytm’s claim, Entrackr’s sources have emphasized that company will probably shut down hotels. Interestingly, the hotel feature has disappeared from Paytm’s app at a time when Flipkart is planning to enter travel segment. The company will reportedly offer bookings for flights, trains, buses, and hotels.

Besides movies and entertainment, flight and bus ticketing segment Paytm was bullish on hotel segment until late last year. The Noida-based company was even considering acquiring Cleartrip and Via. As per TOI reports, it held discussions with both companies during September-October last year.

However, the acquisition talks with aforementioned companies appear to have faded.

While the disappearance of hotel booking feature on Paytm app may be temporary (as company claims), it’s exclusion indeed worth raising a question. Since Paytm is saying it will relaunch hotels - is acquisition talks with Via still on?

A quick look at online hotel booking segment

According to a report by Deutsche Bank AG, hotel bookings, which stood at $7.2 billion in 2016, are slated to touch $10.9 billion by 2020.

Over the years, hotel vertical has been a major source of revenue for OTAs who have experienced margin erosion in air ticketing segment. MakeMyTrip along with ibibo (MMT and goibibo merged last year) has a pole position in both segments.

At present, MakeMyTrip has about 41 per cent marketshare in hotel vertical while Yatra, Cleartrip, and Expedia have about 16, 7 and 5 per cent marketshare.