A file photo of Ashish Kashyap, founder and chief executive officer, Ibibo Group. Photo: Mint
New Delhi: Indicating a huge opportunity in the travel and hotel booking space, South African media company Naspers Group on Wednesday announced its plans to invest an additional $250 million in online travel venture Ibibo Group, which owns and operates bus ticketing platform redBus.in and hotel booking site Goibibo.com.
“The Indian e-commerce market and the online travel segment in particular, offer exciting growth prospects for us as a group. With a talented, proven management team and exceptional technology, Ibibo is well positioned to benefit from an increasing number of people using online travel services going forward,” said Bob van Dijk, chief executive officer, Naspers Group in a statement.
Naspers has an 80% holding in Ibibo Group. Naspers also owns majority stake in PayU Global, an international online payment solution company which operates in 12 countries.
PayU was rolled out by Ibibo as its payment gateway in 2011 in the Indian market. It sold this business to Naspers for a stake in the global payments business of the South Africa-based company. The move was seen as Naspers strategy to consolidate all the local payments business into global payment group PayUglobal.
Goibibo, the hotel booking site of Ibibo Group, currently has over 40,000 hotels across different categories. The company said it will focus on alternative stay segment besides budget hotel accommodation after the funding. It aims to have 100,000 accommodation options by March 2017. “25-30% of this would account to budget accommodation and 10-12% alternate stay such as beach hut and forest cottages,” said Ashish Kashyap, founder and chief executive officer, Ibibo Group.
The funding will also be utilized on technology innovation, he added. The group claims that Goibibo’s hotel bookings jumped five-fold to 1.6 million room nights during the December quarter from a year earlier. It also added that bookings through mobile phones contributed to 71% of the bookings in December compared with 42% a year ago.
Ibibo Group claims to be generating almost 2.5 times more transactions against its nearest competitor.
The group competes with MakeMyTrip, which currently claims to have around 25,000 hotels on its platform and is trying to grow this number fourfold in the next two years. MakeMyTrip also announced a $180-million fundraising from China’s Ctrip.com International Ltd in January.
Ibibo Group would also be competing with Softbank-backed budget hotel accommodation provider OYO Rooms which recently acquired smaller rival Zo Rooms in an all-stock deal. In August last year, Ibibo Group acquired a minority stake in cloud-based hotels solution provider Djubo for an undisclosed amount. Ibibo also runs YourBus (vehicle tracking application).
“Our objective is to solve problems for the transportation and accommodation providers and to connect them to the travelers. The commitment from both Naspers and Tencent to Ibibo is testimony to the strength of our platforms and the opportunities ahead,” added Kashyap.
“India is the last unconquered market on the planet. When it comes to the accommodation market, the level of penetration by most of the players is very low. The travel segment for both, MakeMyTrip and Naspers is doing well. However, there are segments where in they will need regular capital inflow for their growing business. The group also needs to take on to the combined entity of Oyo and Zo. They will clearly need capital to expand their presence especially in low cost accommodation space and compete against Oyo which is burning huge cash in hoarding substantial chunk of inventory,” said G.T. Thomas Phillippe, associate partner at law firm Khaitan & Co.
After a successful stint in China by acquiring 46.5% stake in Chinese Internet company Tencent Holdings Ltd early on, Nasper is looking to imitate its success story in India by backing companies in the online consumer domain.
Nasper, which holds stake in India’s largest e-commerce firm Flipkart, has so far pumped in more than a billion dollars in India and has been active in the country since 2006. Other than China and India, Naspers has a strong presence in Eastern Europe, Latin America, Africa and Middle East.