As per my understanding, hotel is the capital intensive business.
How EMT will get benefit from it ? They don’t have any cash-cow nor big reserves.
Can anyone throw some light on this acquisition ?
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They’re not buying hotels as an “asset”. Spree - like OYO - lists various hotels and properties on its portal for users to book. The acquisition only adds more “keys” to the EMTs portfolio of hotel rooms.
True
Spree has a portfolio spanning hospitality verticals such as hotels, corporate guest homes and residential clubs. The company is debt-free and follows an asset-light model. Spree Hospitality has a footprint of 1220 operational keys and hotels in Bengaluru, Mumbai, Pune, Chennai, Goa, Hyderabad, Kochi, Manali, Amritsar, Dehradun, Coimbatore and Delhi, besides other locations.
"With this acquisition, we believe that EaseMyTrip is well-positioned to unlock the market potential of a recovering hospitality sector and quickly scale up the business to meet the evolving needs of the modern traveller… We will enable Spree to expand to 200 properties in the next five years becoming one of the biggest names in the Indian hospitality sector,” Prashant Pitti, co-founder at EaseMyTrip said.
Q3 travel bounces back, airline reduces the margins, competitive intensity goes up and most importantly travel mix in airline changes… the corporate travel comes back and participants which were non existent for a while starts taking the travel share away.
airline-driven discounting which was causing the margin to go up to 10% starts dwindling down. access to special fares starts going down.
Cleartrip shall become active again with new funding. Amazon entering travel shall start eating away travel share.
GMV in the airline business for OTA is a vanity metric if 80% of their earning comes from service fees.
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lesser the flight disruption, lesser other income for EaseMyTrip. more investment in a capital intensive business, higher the reduction in other income.
other income causes 50% of post-tax income…if they wish to grow in hotel, they need to spend moolah…
BTW, one of their other expense is lot of credit card bills of founders:)
Edelweiss has upped the target to 733. Full report can be downloaded from the below public link.
Most of the points covered in the report have already been discussed except I didn’t like edelweiss calling the software stack used by EMT as “high-end”. dot net is still not as good as python etc in terms of scalability so that remains to be seen imo.
Also no commentary on EMT’s overseas ops - imo - this would also be a key driver going forward cos of lean cost structure.
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Sorry jumping in with little off-topic subjects. Python is a language. No language is scalable on it’s own. It’s your product architecture which has to be scalable. .NET Core is best out there for performance and with docker support, you can scale it as much as you want. Application written in Python will also be scalable if you design architecture carefully and deploy well.
So please don’t make generic statements like “dot net is still not as good as python etc in terms of scalability”
Note - Not meant to be offensive in any way. Being a techie who has actually worked on platforms you mentioned, couldn’t resist commenting.
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I’m glad my ill informed statement brought a techie onto this thread since i’ve been struggling to evaluate the dot net (EMT) vs python / java (whatever) language used by peers.
Why do you think dot net is not popular? One of the core reasons why EMT is able to maintain its cost of tech employees is the fact that they use dot net, which doesn’t have many programmers etc.
Why is that? Non-techie and I’m trying to understand.
Again it’s misconception that .NET is not popular. .NET is 3rd most popular dev platform after Java and UI programming. There are .NET programmers in lakhs in India and aboard.
.NET was earlier tightly held by Microsoft and was Windows focused. Java started earlier, was cross platform and almost like open source. Hence Java became most popular enterprise language out there.
UI frameworks like Angular, React and many others are common place these days. While Python is used mainly in data science and analytics field.
With .NET Core, Microsoft made it open, cross platform and even better performing. So it’s gaining lot of traction.
As for EMT claiming about .NET employees coming cheaper, it’s laughable if thats actually their claim. There is not difference in salary of a .NET, UI or Java programmer.
@luckbychance : I think we are hijacking EMT thread with this off-topic discussion. Let’s move it to direct messages if you please.
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Hi everyone. I have been an investor in Ease My Trip since the IPO.
Does anybody have any views on how their collaboration with Justdial can help them as Justdial itself has more than 150 million users as per their website? After Reliance’s acquisition of Justdial, there was some speculation that Reliance is going to use Justdial to make their super App.
It will be same as how Amazon uses Cleartrip for flight bookings. Easemytrip will earn some commission when someone books flight on Justdial.
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This I understand. What I wanted to know is that what percentage of commission do they get as compared to a normal transaction on their own app or website?
Secondly, what percentage of their bookings currently come from this route? I think that this could be a major factor in their growth story as JD has 150 mn users as compared to their 10mn users. Reliance acquiring JD makes it even more interesting.
Could be a question that we can ask in the next concall. I wanted to ask this question in the current concall, but it seems that they dont’t entertain retail investors.
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Should be good for EaseMyTrip. Ticket sizes are larger when it comes to international flights.
In my view, revenue from this stream should be very less but a good question to ask in the concall. JD is not big player in travel domain but these type of integrations will help Easemytrip in the long run. Adani bought a stake in cleartrip and they will be using cleartrip in the super app.
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I wouldn’t agree that “people coding in Python or Node.js or Java” is a small pool of population. Among professional developers, the most commonly used programming language - Python > Node.js > Java > C#
The below statement is from the recent concall.
Hi @shivammitra - if what you’re saying is true - it should have reflected in wage pressures for EMT, right? But it is not. So there’s a disconnect somewhere. Also, why are most programmers going for python over dot net? I’m still trying to understand that if the tech stack are roughly similar, why is it that EMT is able to control its costs so well?
You can checkout the above link to understand which language is most common among developers. I am not sure how they are able to maintain their margins but I wouldn’t agree with the statement that talent pool for C# is larger than that of java, python and node.js.
November figures are out and the pax traffic has crossed 10mn. (https://www.business-standard.com/article/economy-policy/domestic-air-traffic-crosses-10-mn-in-nov-omicron-can-derail-recovery-121120701253_1.html) So for Q3, cumulative traffic is at 18.8mn right now. December is likely to follow November. Assuming another 10mn month, we have 28mn pax traffic.
Easily looking at around 40 to 50% QoQ growth in GBR for EMT which translates to a Q3 GBR of 1260crs to 1350crs. At 4% of GBR, PBT should hover between 50crs to 54crs. This is ofcourse assuming no market share gains - which I assume will also accrue due to relatively higher brand visibility for EMT in Q3 vs Q2.
Key monitorables should be the take rate and how other segments (hotels, international ops) are shaping up for them.
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GMV is vanity:) you will get this in a while.
Q3- focus on airline margins:) see if the margins sustain because airlines pulled back special fares. Wait for airlines to refuse to give up the special fare because the demand is coming back. EMT gave 350++ crore to airlines to pre-buy seats at a special Price. Q2 airline needed money, Q3? not so sure.
Hotel: where is the money in selling online hotels for them? only GMV increase
Market share: Quite possible
Other income: one day it will go bust. till that time, let the party happen.
Other income due to interest: will decrease if the money is used in the acquisition.
who is back in marketing? cleartrip:) a fresh set of capital.
only solace is that their salary expenses wouldn’t have grown which adds to net profit percentage but expect overall airline margins to come down due to the nature of the industry.
And another quarter, the domestic industry comes at almost 100% pre covid… what then… difficult to grab more market share and revenue stagnates:) all investment will go in hotels which would need discounting to gain as well as will reduce earning from interest given reserves will be used in discouting.
Finally you make a coherent post and not a post akin to election sloganeering 
Aside, my thoughts:-
EMT gave 70crs. Not sure where the figure is 350crs is coming from? They don’t have that amount of cash on their BS. Further, it is rotational money. All they were doing it is to pay it a week in advance to airlines in return for slightly better take rates. Q2 con call noted that take rates would remain the same for the foreseeable future. Lets see how Q3 comes out. Revenue from ops in Q2 was 4.9% of GBR.
Who even said that this segment is profitable yet? Neither the management nor me. It was very clearly communicated in Q2 concall that they’re currently operating the hotel segment on a net zero basis.
“Other” is contingent on the revenue from operations. Unless the claim is that OTAs will disappear or aviation is dead - I find that claim hard to believe or hard to pass the smell test. OTAs will live, profitable OTAs will accumulate cash and then it’ll boil down to management capacity to do good capital allocation decisions.
Good. Lets see how the market shapes up. Unless Cleartrip wants to go about burning cash and acquiring customer, I don’t see them putting any other OTA out of business.
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