Oyo Rooms and Zo Rooms had barely time to recover from the blow of being taken off hotel room aggregators MakeMyTrip and Ibibo, and there’s more bad news. In direct competition to their business model, MakeMyTrip has launched its own budget brand, Value+, which will offer rooms from Rs 900 to Rs 2,000 per night.
This move will enable MakeMyTrip increase its revenue in the hotel business to 75% in the next 3 years from its current 45%. The company says that the move was inspired by customers who were dissatisfied with the quality of services provided by hotels listed under aggregator startups. MakeMyTrip Cofounder and Group CEO Deep Kalra along with a 120 member team checked out several hotels listed with these start ups over 5 weeks before taking them off the portal and deciding to launch Value+
Value+ looks at the long term
Value+ already has over 1000 hotels under its brand and plans to double this in the next 30 days. These hotels will offer basic services such as air conditioning, satellite TV, free breakfast and WiFi. Oyo Rooms has about 3,000 hotels on its portal while Zo Rooms has 1,000. MakeMyTrip has a total number of 27,500 rooms under its portal. Hotel rooms are crucial to its business as they bring in margins as high as 20%, as compared to 5% with flights.
“If they were operating like a hotel chain, we would have had no issues. But if you aggregate and pre-buy rooms, you are essentially an aggregator. It becomes very close to our business model,” said a MakeMyTrip spokesperson, adding that it made long-term strategic sense not to encourage a competitor grow.