BENGALURU: On the back of raising $1.4 billion from SoftBank, Paytm is making aggressive moves to challenge existing players in verticals like movie ticketing, travel and hotels with the help of deep discounts.
The payments firm has also transferred a senior executive Nitin Misra, who was head of products for its core payments business, to lead the hotels and packages segment. Misra, a former Airtel official, is in active discussions with stakeholders in the online hotel business, including internet-based startups in the hospitality space, multiple people aware of the development said. These businesses are being allocated bigger budgets, which will be largely used for discounting and marketing to garner shares from players like MakeMyTrip, BookMyShow, Oyo Rooms and others. Paytm has been using cashbacks and discounting to get a footprint into the travel and movie ticketing sector.
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TOI reported earlier that Paytm was in talks with events ticketing platform Insider.in for a majority stake, a move aimed at countering BookMyShow’s event business. Paytm wants to generate about $1 billion from these businesses and adding the online hotels business would improve its chances.
A Paytm spokesperson confirmed the new role of Misra in the company. “After two years as head of payment products, Nitin is now looking forward to setting up the hotels and packages vertical in Paytm,” the spokesperson said. Sources aware of the company’s plans pointed out Paytm wants to aggressively penetrate these new businesses as it would also mean higher volumes of transactions on the platform. While incumbents like MakeMyTrip and BookMyShow have been investing in discounts, their quantum too has increased as Paytm is trying to disrupt the market with freebies. To be sure, MMT spent almost 50% additional funds for marketing and sales promotions in the quarter ending March 2017 at $78.8 million compared to $53 million a year ago. MMT also recently raised $330 million to take on the likes of Paytm and Oyo Rooms.
“Paytm has been in talks with us as they want to have a significant play in the hotels and packaging business. With SoftBank on board now, they are ready to invest the capital just like they did for travel and movie ticketing. Being in the travel business, it’s a natural extension for the company to foray into the hotel booking space,” aa executive of a hotel booking platform said.
Another person aware of Paytm’s plan said that BookMyShow’s model is not based on pure discounting while Paytm’s differentiation has been multiple promotional offers. “Paytm’s continuous discounting has prompted BookMyShow to counter with freebies as well despite having a much larger share of the movie ticketing market,” the person added.
Deep Kalra, founder and group CEO, MMT, said, “It is understandable to see newer players foraying into this segment. That said, travel is a complex industry and requires undivided and focused efforts in order to become successful. We believe that specialisation and focused attention are key to winning customers’ confidence in this space. Travel is our primary business and we have developed deep expertise in this space.” Online hotel booking as part of travel business is still less penetrated compared to airline tickets, say industry executives and analysts.
While a BookMyShow spokesperson refused to comment, an executive at the firm said that the company has been in the business with long-term plans and sudden discounting by a new player cannot be the solution to win the market. “Paytm’s wide user base has helped it gain share in non-metro cities,” another person added.