NewsVoir | 30 Jun, 2015
State Bank of India, the countryâs largest Bank and MakeMyTrip.com, Indiaâs leading Online Travel Company today signed a Memorandum of Understanding, identifying areas of cooperation to expand the market for online travel services in India. This strategic association will enable both partners to capitalize on the opportunity presented by Indiaâs burgeoning internet economy that is driven by boost in adoption of e-commerce and m-commerce. The two partners seek to unlock the array of business opportunities available in this segment across various spheres, by becoming integral to all the segments of the consumersâ lifecycle. SBI is aiming towards driving synergies between banking and various other aspects of a customerâs lifecycle including the travel segment and positioning SBI as the âgo-toâ bank for all of customersâ needs. MakeMyTrip is focused on expanding the travel market opportunity by driving the offline-to-online adoption in the Hotels & Packages business, and meeting the travel aspirations of Indian customers.
Speaking on the association, Smt. Arundhati Bhattacharya, Chairman, SBI highlighted, âTravel forms an integral part of a customerâs lifecycle and comprises almost 65% of the total e-Commerce market today. Our alliance with MakeMyTrip will work towards providing value to each of the stakeholder along the entire value chain of travel and tourism business, starting from hotels, travel agents, tour operators besides the end-consumers and our customer-base. SBI aims at becoming a âOne Stopâ solution provider for the entire range of financial needs of e-Commerce players as well as our customers in the market. In the digital era, it is very important that we stay ahead of the curve and such strategic alliances are steps towards the right direction.â
Deep Kalra, Chairman & Group CEO â MakeMyTrip, elaborated, âThe overall macro sentiments are positive and we believe this is the right time to identify and execute opportunities to unlock the market potential. We already command nearly 50% of the online travel market-share in India. The key lever of future growth will be offline-to-online, or rather, offline-to-mobile shift. We believe our association with SBI, the trusted banker for millions of Indians, will help catalyse this shift and bring us closer to our target set of consumers. Our network of over 24,000 hotels, expanded service and product portfolio of Rail & Bus bookings and technology innovations of mobile bookings in local languages will further aid our adoption in Tier 2 markets.â
The levers of this alliance include:
Partnership with Personal Banking Unit for consumer facing propositions â including EMIs on purchase of holidays & international travel, customized travel products like Forex cards and travel products that inspire SBI customers to travel.
Partnership with SME & Acquiring Business: MMT suppliers, such as 2-3 star hotels, franchisees, Trade & Travel partners will get access to SBI products, loans, bank guarantees, PoS payment instruments at preferential rates.
Partnership with Cards for promoting card usage which will help in pushing the agenda of a âless cash economyâ
With increasing disposable household incomes, consumers are undertaking more frequent travels and vacations. In addition, with growth in e-commerce and smartphones, the online travel segment is expected to grow at a much faster rate. According to PhocusWright, India is forecasted to have 1 billion online users by 2030. This growth, led by one of the youngest global populations who love their smartphones, is expected to add 300 million new online shoppers in the same time frame. At the same time, Indiaâs travel market is forecasted to grow to US$ 27.5 Bn by 2016 (at a CAGR of 12% from 2014-2016), with growth of online markets at 1.5x the total market. PhocusWright also estimates MakeMyTripâs market-share at 47%. Domestic travellers are expected to contribute around 84.7% of total tourism revenue by 2024 according to a report by Corporate Catalyst (India) Pvt. Ltd.
SBI expects the alliance to strengthen its existing business portfolio by leveraging the relationship between MakeMyTrip and its partners. MakeMyTrip customers will also be able to access special offers from SBI on debit/credit cards and personal financing.