There was no desperation,” says Deep Kalra, the CEO of MakeMyTrip. “From either side.”

He is referring, of course, to MakeMyTrip’s decision to acquire the Ibibo group from its parents, South-Africa’s Naspers and China’s Tencent.

“In some deals, one side is desperate. So the deal might get done quickly, but the other side will squeeze it out. Ours took a long time because neither side was desperate. Naspers has deep pockets. So it took a long time because of the push and give,” he says.

It was sometime last year that Kalra and Rajesh Magow, MakeMyTrip’s CEO (Kalra is Chairman and Group CEO), first broached the topic of a potential merger with Naspers’ CEO Bob van Dijk. It didn’t lead anywhere as Naspers didn’t appear interested in either a sale or merger.

Why would they? In the space of just a few years Goibibo had gone from being a company that didn’t exist; wasn’t a travel company; and didn’t merit a market share figure of its own (up till 2015 it was clubbed under “Others”, after MakeMyTrip, Yatra and Cleartrip) to becoming the second largest OTA (online travel agency) in India and finally, becoming number one in the lucrative hotels booking space.

Meanwhile, MakeMyTrip, though the pioneer and consistent market leader in the OTA space, was going through the woes of being an internationally listed company and quarter after quarter of losses. From a peak valuation of $1.2 billion (yes, it was a “unicorn” before the term became popular), it had fallen to $500 million.

Taking advantage of MakeMyTrip’s apparent weakness, Goibibo had opened the discount taps to steal further market share.

Using GoCash, its virtual wallet, it was giving discounts of 50%, 60%, 70% and even 80% on hotel bookings. Customers were able to book 3-star hotel rooms in Goa for rates as low as Rs.1000 a night.

“During the first 6 months of 2015 Ibibo took away market share from MakeMyTrip,” says Alok Bajpai, CEO of travel search engine Ixigo (in which MakeMyTrip is incidentally an investor). This was especially true in the budget hotels (zero to three stars) space.

And at an internal town hall meeting in India around the middle of 2015, van Dijk reassured his group employees that neither resources nor money were an issue when it came to making it big and winning in the market.

Having pushed the knife into MakeMyTrip’s leadership, perhaps Naspers felt it had a chance to twist it too.

How quickly things change, though.

In January MakeMyTrip announced that it had raised $180 million from Ctrip, China’s leading OTA via a convertible offering. And with that, the gloves were off.

MakeMyTrip started offering discounts aggressively to match Goibibo, eye for an eye, tooth for a tooth. It started to claw back some of the market share it had lost.

AUTHOR

Rohin Dharmakumar

Rohin is co-founder and CEO at The Ken. He holds an MBA from the Indian Institute of Management, Calcutta and an engineering degree in Computer Sciences from the R.V.C.E., Bangalore.

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