Amsterdam-headquartered Booking.com, one of the leading OTA globally, claims to be the world's third-largest e-commerce company with 1.5 million room nights being booked on its platform every single day.
"If you look at India as a landscape, we think we are well positioned to continue to build our business," said Ritu Mehrotra, Country Manager - India, Sri Lanka & Maldives at Booking.com.
In an interview with The Passage, the Harvard alumni spoke about how Booking.com has scaled in India since its entry in 2012, tech as a major driver of growth and its customer-first, competition-aware business model.
The Passage: How has Booking.com been able to become one of the top OTAs, given the segment was already dominated by five players -MakeMyTrip, Yatra, Cleartrip, GoIbibo and Expedia - when you entered India?
Ritu Mehrotra: We started in India about six years ago with a team of two who came in to explore the market. India is large. The pace at which the GDP is growing; the internet penetration, which is still low compared to not only developed markets, but also developing markets; the growing smartphone penetration along with the data cost, which is the cheapest globally, make India a very lucrative and exciting market.
At the same time, it is very challenging as well. The country speaks 26 languages and is extremely multi-cultural. Every region you go will have a different dynamics for business.
Today, we have 55,000 properties onboard and the range varies from villas to resorts. We have 30 different types of accommodations. We have 8,80,000 listings or keys, of which 140,000 are alternative accommodation.
India is a fairly discount-driven market. We are proud of the way we have built the business ground up by actually giving the power to our partners to be able to decide the price; not giving discounts, but the most compelling prices to the users.
With Booking.com, users don't have to pay when the booking is made but when they actually go and stay.
These things worked beautifully for us in India.
Also, a large number of our properties do not need a credit card to book, because very early on, we realised credit card penetration was only 1% in India.
We use artificial intelligence (AI) and machine learning (ML) very aggressively. To give you an example, we have 55,000 properties on our platform and that could be overwhelming for a person looking for a property in Goa, where we have properties in thousands. So the moment you log on to Booking.com, the machine is learning your behaviour, your pattern, where you stayed last, and within the session, what kinds of properties you are looking at. And then we throw very relevant options at you. Today, over 60% of the queries in English are answered by our chatbots within seconds.
The Passage: How did Booking.com survive the price wars which precipitated in the merger of MakeMyTrip and GoIbibo and led to the consolidation of the market in 2016?
Ritu Mehrotra: We did not just survive, but we managed to grow, and grow exponentially within that time and from thereon.
Booking.com brings the largest number of foreign tourists to India. We are the only platform that allows a small hotel to compete with Marriott on the same screen and going to the global audience. We have also consciously built a domestic play.
Secondly, we have been the good boys of Indian (online hotel) ecosystem.
Here is what we tell our hotel partners. You run a hotel, and ideally, you should be the one setting the price. You should not be dictated by anybody, who says whatever price you give me, guess what, I will discount this property by x% and showcase. Because what it does is, the kind of users you are expecting, you won't get that. We always allow our partners to fix their own prices.
We give them the tools so that they know what the competition is doing and what the competitive pricing is and work on their pricing. But we will never go all out and say we would discount from our side, and now your prices are x and y. Our partners really appreciate that.
From the users' perspective, we do not indulge in discount wars. We have been very sincere providing users compelling prices.
When users are coming to the platform, apart from the price, they are also looking for choice. They are also looking for experience.
We are an unbiased platform. For instance, because 10 partners have given you discounts, the general tendency would be to put them on the front row. In our case, it's the reviews and your property scores that will identify what should be your positioning.
So those are the things that have gained us a lot of success. We have 170 million reviews on our website, which users go through.
Though a lot of companies replicate our strategy of pay at hotel model, our share of the business is still very high, in terms of people who are booking and staying at the hotels.
In India, it is important to have a lower price as much as to have an option to cancel if need be. We would like to give that choice to our users.
The third is the breadth of our supply. On a single platform, you will have the largest supply of hotels, resorts, alternative accommodation--hostel, beach huts, villas etc.
It was the combination of these things from the partner side and from the user side, and with technology playing a big role--we have been able to reach this scale.
The Passage: Which are the top segments for you in India?
Ritu Mehrotra: Alternative accommodation saw one of the highest growth for us. We also have the largest supply for the segment. We are seeing a lot of growth within the northeast segment in terms of tourist arrival, purely because of the Buddhist circuit.
Our luxury and top of the end segment has been growing consistently.
The budget hotel also grew very fast for us as well as for the entire industry.
The Passage: Do you see online hotel aggregators such as Oyo, Treebo and Fab as competitors?
Ritu Mehrotra: We absolutely do not see them as competition. They are our partners, and we both are consistently trying to make sure how we can give a better experience to users. When companies go global (like OYO), then it becomes a deeper partnership because of the kind of presence Booking has in all other markets.
The Passage: What are your thoughts on the rise of hotel companies in India with in-house technology to help independent properties?
Ritu Mehrotra: We still have a lot of scattered supply compared to developed markets.
It's very important for the supply to be consolidated somehow. And technology is one single driver that can do it at scale. More tech platforms and tech-enabled companies will continue to come up as there is a very large gap between demand and supply. We have low internet penetration compared to any other market. An average online shopper here spends way less than an average user in China or the US.
India still has a long way to go. And therefore it is important that more technology comes into play that fuels growth and increase the overall funnel of users transacting. It will benefit every company across the board.
The Passage: Cleartrip seems to be focussing more on Middle East. And of late, Ebix has acquired Yatra. Do you think the Indian online hotel landscape is in a transition phase?
Ritu Mehrotra: As a strategy, we are customer first, competition-aware kind of company. What it means is, at any given point in time, Booking.com is running thousands of A/B testing. We really rely on what our users are telling us.
We have a lot of competition around the globe, including in India. And we are here for good. We have been investing so much in the market and constantly upskilling initiatives for our partners. We run sponsorships in India. We are here to build a long, sustainable business. Competition will always be there. As long as we are focused on consumers’ needs and wants, that's going to be the winning strategy.
The Passage: How do you view new players entering the market like Paytm and HappyEasyGo?
Ritu Mehrotra: India is a very lucrative market. Because the market is huge and potential is big, a lot of players are eyeing that. But it is also a diversified market. There are no easy wins here. The key is execution--how do you execute your day-to-day operations, how do you continue to excite your partners, how do you continue to give more choice, preference, transparency to your users. That's what we will have to do to win the market.
We will continue to focus on our users, and we are seeing that kind of growth coming in anyway.
The Passage: What’s Booking.com’s strategy to overcome the language barrier to tap the vernacular market?
Ritu Mehrotra: We already have a customer service in Hindi and also partner services in multiple local languages, which help us to sort out issues in local languages instantaneously with the partners. We have four offices in India where people speak local languages. That's one way we are trying to solve the problem. A large part of India still speaks English. As long as people understand, and you have the right value proposition--you are able to build that trust.
If you see, some of the large e-commerce companies are working through Hindi. And like others, we are also going to be working at some point in time on other local regional languages as well.
The Passage: Tell us about your roadmap for India in the next few years.
Ritu Mehrotra: We will continue to build the supply. That remains a key focus area for us. Second, we always have and will continue to invest in technology, like how we are using AI/ML to help our users and take the friction out of travel.
We already have a lot of local partnerships in place. We work very closely with likes of HDFC Bank and Ixigo to build our business. We also make sure there are equal opportunities given to women in any place, company or otherwise. So we launched a program to offer sponsorship to women for their studies within STEM--we have offered this to two colleges so far in India. We also run a program called Booking Booster, where we offer grants to companies. In the last three years, six companies have taken non-equity grant toward sustainable tourism.
The Passage: How do these non-equity investments fit into Booking's grand plan?
Ritu Mehrotra: You will only be able to explore places till they are worth exploring.
We are looking at tourist places--like Shimla and Missouri--where we are having issues with water supply and so on. We believe these places are worth restoring. Apart from the non-equity grants, we also invite these companies to our office in Amsterdam and let them talk to different teams like marketing or revenue or supply so that they can learn how to build and scale their companies. And really, we are not asking anything in return. We just want them to continuously work on the agenda of building sustainable tourism.