Ixigo Business Model | How Does Ixigo Make Money
🔍Insights
Le Travenues Technology Ltd., which operates under the trade name "Ixigo," is a prominent online travel agency (OTA) that was founded in 2006. Aloke Bajpai and Rajnish Kumar started the company so that people in India could easily book hotels, trains, buses, and flights. The Bangalore-based company has a massive consumer base all over India.
Ixigo Business Model
How Ixigo Makes Money
Ixigo Key Features
Ixigo IPO
Way Forward
Ixigo Business Model
Ixigo has proven its operational prowess in a very competitive market. In FY23, marketing and promotional costs were for just 18.6% of revenue, well below the 35.8% average for the industry. With 25 million users active every month, Ixigo has made great strides in acquiring new customers. Also, with an expense-to-revenue ratio of 0.97 in FY23, the corporation has kept its costs modest. The strategic expertise and market agility demonstrated by Ixigo in the online travel business can be seen in these figures.
The company runs on a strong commission-based business model. It runs a meta-search business that enables travelers to get all the necessary services required under one roof.
The creative combination of technology and solutions focused on the consumer is key to Ixigo's success. By utilizing AI, ML, and data analytics, Ixigo has created customized vacation packages that are highly popular among tech-savvy millennials. AbhiBus and Confirmtkt are just two examples of the strategic partnerships and acquisitions that have helped Ixigo grow its business, enhance its products, and attract more customers.
For example, in 2022, according to data.ai (formerly App Annie), two of the most popular travel applications in India were ConfirmTkt and Ixigo Trains, with ConfirmTkt coming in at number seven and Ixigo Trains at number two.
There aren't many profitable Indian tech businesses in the tourism industry, but Ixigo is among them. Impressive financial gains were achieved by the company while facing challenges like the COVID-19 pandemic and a very competitive OTA market. In the first nine months of FY24, the company's revenue was INR 497 crores and its net profit was INR 65 crores. This is a significant rise from FY23 when the company's revenue was INR 517 crores and its net profit was INR 23 crores. The company's fiscal performance demonstrates its strong growth trajectory. In FY23, the company achieved an expense-to-revenue ratio of 0.97 and an EBITDA margin of 7%, demonstrating enhanced efficiency. The commitment to long-term growth and fiscal responsibility is evident in these figures.
Rishabh Rathi
How Ixigo Makes Money
Ixigo generates revenue from various sources, including:
Commission from Train, Bus, Flight ticketing, and Cab booking: Indians rely on trains for their daily commutes, with a higher proportion opting for long-distance rail travel. This is particularly true for a developing nation like India, where flying is still out of reach for the majority of the population. The train booking process on Ixigo is quite straightforward to use. However, Ixigo is only allowed to charge commissions between INR 20 and INR 35 per booking, and the Indian Railways do not permit surge pricing. Similarly, the company charges various commissions on bus, flight, and cab booking too, charges vary depending on the distance traveled.
Hotel Reservation Commission: For hotel reservations, Ixigo collects some extra fees in addition to the booking prices for its services offered on the site. These fees are called "Additional Fees" and are meant to cover the cost of providing convenient services to clients.
Revenue through Advertisement: As the website and app of Ixigo have a massive viewership and downloads, the company is utilizing this development to generate revenue. Now several brands have been putting their promotional advertisement on Ixigo's website. Brands associated to travel and leisure industry are constantly opting for Ixigo's website for their promotional activities.
E-bus ticketing via FreshBus: In preparation for the introduction of electric bus services between cities in India, Ixigo put INR 26 crore (about $3.1 million) into the Bengaluru-based startup FreshBus. Now company charges a hefty commission through its e-ticketing service on every booking of FreshBus.
Ixigo Financials FY23
| Ixigo Financials | 2021 | 2022 | 2023 |
|---|---|---|---|
| Operating Revenue | INR 136 crore | INR 380 crore | INR 501 crore |
| Total Expenses | INR 136 crore | INR 402 crore | INR 484 crore |
| Profit/Loss | INR 7 crore | INR -21 crore | INR 23 crore |
In the first nine months of the fiscal year 2023–24 (FY24), Ixigo made INR 65.7 crore. Its total profit for FY23 was INR 23.3 crore, therefore this represents an almost threefold increase. Additionally, it should be mentioned that the startup lost INR 21 crore in FY22. Operating revenue for the first nine months of FY24 was INR 491 crore, according to the company situated in Delhi NCR. Ixigo recorded sales of INR 501.2 crore in FY23, up 32% from INR 379.5 crore in FY22.
Ixigo Key Features
With Ixigo, customers can search and book flights, hotels, trains, taxis, and destinations from over 120 different suppliers and OTAs. Initially, the company's focus was on serving customers in tier-I cities with its primary product, an app that allowed users to book flights and hotels. Ixigo gradually recognized the necessity of concentrating on tier II and III cities. A separate rail app was developed as a result, aimed at low-cost travelers hailing from those cities. The company's commitment to innovation and its goal of resolving even the most minor consumer pain points constitute its greatest competitive advantage. Ixigo has introduced new features such as live running status, Siri shortcuts, and an augmented reality tool that lets users find their coach positions at over 7,000 railway stations in India.
Ixigo IPO
In the wake of its initial public offering (IPO), Ixigo is well-positioned to shake up the industry. With an estimated valuation of over INR 6,000 crore, the initial public offering (IPO) represents more than simply a chance to invest; it reflects faith in Ixigo's lucrative and cutting-edge business strategy. Investors' faith in Ixigo's future growth is evident in the IPO's target valuation of around INR 120 crore, which establishes the firm as a strong contender among IT IPOs.
Just one day before the anchor book opening, the company finalized a pre-IPO secondary placement of over Rs 176.2 crore. Madison India, Elevation Capital, Micromax Informatics, and Peak XV Partners sold 18.9 million shares at the upper end of the IPO price band of Rs 93 apiece during this secondary sale. Ashoka India Equity Investment Trust, Bay Capital, Tata Mutual Fund, and Steadview Capital are among the new investors who bought shares. Shares of the company debuted strongly on June 18, 2024.
Way Forward
The internet travel industry has its share of hurdles, but Ixigo is up for the challenge. New services and products from the company include Ixigo Money, a loyalty program that gives customers discounts and cash back, and Ixigo Assured, a premium travel product that gives customers priority support, free ticket modifications, and guaranteed refunds. For a more tailored and satisfying experience for its customers, the business has also put money into cutting-edge tech like data analytics, AI, and machine learning. Through these efforts, Ixigo has been able to grow its user base, market share, and income while tackling all the business operations' difficulties.
Sakshi Jadhav
FAQs
What is Ixigo?
Le Travenues Technology Ltd., which operates under the trade name Ixigo, is a prominent online travel agency (OTA). With Ixigo, customers can search and book flights, hotels, trains, taxis, and destinations from over 120 different suppliers and OTAs.
When was Ixigo founded?
Aloke Bajpai and Rajnish Kumar founded the company in the year 2006.
What was Ixigo's profit in FY23?
In the first nine months of the fiscal year 2023–24 (FY24), Ixigo made INR 65.7 crore. Its total profit for FY23 was INR 23.3 crore.
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