Skift Take
Wait-and-watch? Not anymore! Ixigo’s CEOs tell Skift that they’re ready to dive into what they’re calling the “golden era” of online travel. With ideal market conditions for growth, the Indian OTA is moving forward with an IPO, aiming to use tech-driven customer experiences to strengthen its position.
Having raised INR 3.33 billion ($40 million) from anchor investors on Friday, Ixigo opened its initial public offering (IPO) on Monday.
The decision for the IPO launch follows a period of what its management calls “phenomenal growth” and strategic positioning of the company and the promising landscape of the travel industry, which they believe is entering a “golden era.”
Having first filed for an IPO in 2021, Ixigo received regulatory approval in December 2021. However, the company chose to delay its market entry in 2022 due to unfavorable conditions for tech stocks. “Most tech-listed names were trading below their IPO price in 2022, it was not the ideal environment for us to launch an IPO,” Aloke Bajpai, chairman, managing director and group CEO of Ixigo, told Skift.
The company instead focused on growth, transforming to what its CEOs call the “second-largest online travel agency in India by revenue.”
Why Ixigo Decided to Refile?
The decision to refile in mid-February 2024 came after two consecutive profitable years that boosted the company’s confidence. Investor enthusiasm during roadshows in March and April further reinforced this decision, culminating in the Securities and Exchange Board of India’s (SEBI) approval in mid-May, said Bajpai.
This time, however, the online travel agency (OTA) is looking to raise less than half of the INR 16 billion ($192 million) it was looking to launch in August 2021. The current IPO size is INR 7.4 billion ($89 million).
Ixigo’s financial performance has been a key driver of its renewed IPO plans, said Rajnish Kumar, director and group co-CEO of Ixigo. “The company reported consistent profitability, with fiscal 2023 seeing nine months of profits and fiscal 2024 showing even stronger financial health. This allowed us to reduce the primary portion of fundraising. We didn’t need that much money,” Kumar told Skift.
Leveraging AI and Technology for Customer Experience
The IPO will fund key areas including working capital requirements, the vision to create the best customer experience through technology and fund future acquisitions, said Bajpai. “We are seeing unparalleled growth in transactions, which increases our working capital requirements,” he noted. Also, INR 258 million ($3.1 million) is earmarked for technological investments to support the growing user base and enhance customer experience through artificial intelligence (AI) and cloud infrastructure, he said.
Both Bajpai and Kumar feel that Ixigo’s strategic focus on technology and AI to solve customer problems sets it apart in the competitive OTA landscape. The company’s investments in AI models aim to automate and improve various aspects of the travel experience, Kumar said.
“Ixigo’s platform can automate check-ins, provide real-time flight updates, and offer seamless post-booking services, enhancing overall customer satisfaction and retention,” he said.
Organic Acquisitions
This tech-driven approach has been pivotal in acquiring and retaining users, especially from tier-three and tier-four cities, according to Bajpai. “Ixigo’s user base boasts of 77 million monthly active users and 429 million annual active users as of fiscal 2023, with most new users discovering the app organically. We had about 2.48 million monthly transacting users and had around 108 million downloads in fiscal 2023,” he said.
A cornerstone of Ixigo’s success has been its ability to acquire around 90% of its customers organically. According to Kumar, a relentless focus on customer experience is responsible for this. “Our playbook of creating the best customer experience by being the most customer-centric travel company will remain,” he stated. “The way we’ll solve those problems will obviously be through tech, AI, and by creating that operating leverage business.”
Strategic Acquisitions and Market Expansion
Ixigo’s growth strategy also includes strategic acquisitions to deepen its market presence.
While no specific acquisition targets are currently identified, Kumar said the company has allocated funds for future opportunities, staying open to strategic moves that align with its long-term goals.
The OTA also aims to expand its market share in the bus and hotel segments. As the second-largest player in bus bookings, Ixigo focuses on converting offline bus bookers to online users, addressing trust and brand awareness issues through targeted marketing campaigns.
Marketing and Brand Building
Ixigo’s marketing strategy balances organic growth with strategic brand investment.
Historically relying on word-of-mouth, Ixigo is now increasing its marketing spend to build and reinforce its brand. Recent campaigns include celebrity endorsements and strategic advertising during high-visibility events like the Indian Premier League (IPL).
Despite increased marketing investments, Ixigo remains prudent in its spending, reflecting a long-term view on brand building, according to Bajpai. The company continues to leverage its in-house creative teams to produce viral content, maintaining its unique approach to marketing.
The co-founders of Ixigo express strong optimism about the future of the travel industry. “Post-Covid, travel has accelerated across OTAs, airlines and hotels, marking what we believe is a golden era for online travel,” they noted. The positive investor response to travel stocks, as demonstrated by successful listings like TBO, which opened last month, highlights the industry’s strong potential.
Indian Travel Companies Report Record-Breaking Quarters
According to Saniya Zanpure, research analyst at Skift, India’s travel market presents a significant growth opportunity considering the growing market share of online booking channels, which accelerated through the pandemic. “Unlike countries such as China, India is a unique market with parity in the preference for direct and third-party booking platforms for travel booking. The younger population and rising smartphone usage and internet adoption have set the stage for substantial growth in online travel in India. This bodes well for Ixigo’s business expansion,” she said.
However, with large international players such as Booking.com and Agoda gaining market share in India, Ixigo will need a strong strategy to differentiate itself, Zanpure said.