MakeMyTrip is suffering an Operating Loss in Q3 2020
Online travel aggregator MakeMyTrip reported an operating loss of around 11 million dollars on Q3 of the year 2020. They are down from 19 million dollars in the previous quarter in the same fiscal. Notably, the company also witnessed a steep in its revenue to around 146 million dollars from approximately 118 million dollars in the previous quarter.
MakeMyTrip has registered over 50% lower losses in Q3 compared to the same period in the financial year 2019. In FY2019, it reported a loss of approx. 22.2 million dollars. If we see on a year-on-year basis, the revenue of the company grew by 15.9% to approximately 146 million dollars from 124 million dollars in quarter 3 of the financial year 2019.
Sharp Decline in Hotel Bookings in February
With growing fear amid Covid-19 breakdown, many travelers have canceled or postponed their travel plans. This situation is severely hampering the revenue of MakeMyTrip and other online travel aggregator platform. Most popular hill stations, beaches, and other tourist destinations have reported a massive decline in the number of visitors.
MakeMyTrip is suffering from hotel bookings along with cancellations of flights and visas. The coronavirus impact on the business of MakeMyTrip led to a significant fall in its share price. Its share price declined from 29.95 dollars on February 12 to 10.8 dollars as of March 18.
Further Sore due to Various Waivers
MakeMyTrip recently announced that it would not charge any cancellation or processing fee for rescheduling or cancellation of domestic and international flights till April 30. The losses of this online aggregator platform are expecting more losses with this announcement.
Notably, the company is trying to accommodate travel requests arising out of these perilous times. They are also trying to pass on waiver benefits to their customers whenever applicable seamlessly.
MakeMyTrip is Reducing its Operational Costs
MakeMyTrip’s founder and executive chairman Deep Kalra (1) and CEO Rajesh Magow shared a revival plan in response to the current situation to its employees. MakeMyTrip is reviewing its operating costs and is planning to undertake multiple stringent measures. According to them, the situation demands that they take a hard look at their fixed costs, including people’s prices, to minimize the company’s overall expenses.
Some measures include reducing costs like advertising, sales promotion, and gateway costs. Along with reducing variable costs, they have also planned on lowering costs for optimizing IT infrastructure and other expenses related to the office functioning and establishments. The company is canceling all the scheduled events, training, and the likes as well.
The sharp drop in bookings and the latest restrictions on domestic travel have brought MakeMyTrip to a virtual standstill.
MakeMyTrip Top Management Giving Up their Salary
MakeMyTrip is also working on reducing the costs of employees. Both Karla and Magow are not taking any salaries effective from April 2020. Other members of the leadership team have also offered to take only around 50% of their salary.
Fingers Crossed for Quater 4
MakeMyTrip noted that the company saw a short-lived improved performance in Quater 3 of the financial year 2020. The performance of the company is suffering from a sharp reduction due to the rapid spread of Covid-19 in India.
In Quater 4 of the financial year 2020, the numbers of MakeMyTrip are going to fall sharply. MakeMyTrip is attempting vigorously to navigate through this incredibly tough time.