Tnooz, Martin Cowen - China’s biggest OTA Ctrip is investing US$180 million in MakeMyTrip, India’s biggest OTA.
China's top OTA Ctrip invests in India's top OTA MakeMyTrip
Part of the deal, when approved, sees Ctrip getting a place on the MakeMyTrip board. Ctrip has also been given the all-clear to buy MakeMyTrip shares on the open market and will be allowed to own up to 26.6%.
The immediate reaction to today’s announcement was a 30%+ hike in MakeMyTrip’s share price. In July, its shares crashed by around 20% in a single day when it said in its Q2 earnings statement that it had made the strategic decision to concentrate on growing market share.
At the time of writing, MakeMyTrip was trading at $21.94, closer to its 52-week high of $28.19 than its 52-week low of $11.97
Ctrip is down by nearly 4% at $45.99 , although this could reflect concerns generally about China, rather than a specific reaction to the MakeMyTrip deal.
As well as the equity investment, the pair are now “beginning a strategic relationship” with Ctrip’s CEO James Liang adding that “Ctrip has now gained exposure to India’s fast growing online travel market.”
Liang is chairman of Ctrip, but, interestingly, he is also chairman of Qunar. This week Liang oversaw a management shake-up at Qunar (in which Ctrip has a 45% stake) which saw Qunar’s head of mobile promoted to CEO.
Of note is the following statement from MakeMyTrip. It is noteworthy not only because of what it says but also the fact that this appears in MakeMyTrip’s official announcement and not in Ctrip’s.
“[MakeMyTrip] will focus on further strengthening its leading market share in the Indian online travel market by offering customers the best mobile booking experience across its full service travel products platform, especially as rising smart-phone penetration is driving an inflection point in India’s online travel opportunity.”
The extent to which Qunar’s mobile expertise will inform the strategic relationship between Ctrip and MakeMyTrip will become clearer over time.
Any conversation about Ctrip’s expansion horizon also needs to mention its equity and commercial relationship with Priceline Group. Less than a month ago Priceline put another $500 million into Ctrip. So when Ctrip talks about entering India, it also means that Priceline is getting an additional route into India.
Finally, it is worth remembering that, in 2022, India will overtake China to become the world’s most populous country.
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