When the pandemic started causing ruckus worldwide around March/April of last year, one of the very first industries that felt the pain was travel and tourism. Most others struggled too, but none like tourism. A year later, while much of the rest of the world has learnt to live and cope with the virus, the tourism industry has not.
Few companies had it worse than Airbnb which was almost on the brink of a collapse. Brian Chesky, its CEO, orchestrated a phenomenal turnaround. This article on the Wall Street Journal has the full story.
Airbnb reimbursed almost all of the bookings that had to be cancelled, set up a fund to help struggling hosts and rolled out generous termination support to all employees who were fired. And where did they find the money to do it? Well, they went to the bond market and raised funds at rather high-interest rates. With that money, Airbnb looked after its customers, its suppliers and its employees – extremely tactfully. Chesky turned a nightmare into an extraordinary PR opportunity (Read this letter if you haven’t already) which eventually led to Airbnb’s stock listing at a 113% premium to its IPO price on day 1 of trading. A story almost straight from an unwritten Harvard Business School case study.
Closer to home though, Makemytrip decided that they’d go in exactly the opposite direction. First things first, they felt the pain of the pandemic big time and they continue to do so. Revenue and bookings were down by about 82% during the 9-month period ended in December 2020 compared to the same period a year ago. And for that, they have my sympathies.
To cope up with the downturn, in May 2020, the company fired close to 5,000 of its employees. This review on ambitionbox.com confirms this.
Everybody had to do it to survive. So, that by itself wasn’t a bad thing. What was bad was that most of these employees were recruited through external agencies as contractors and were fired with neither notice nor termination support. Check out this review.
Now, what kind of employees do you think they fired? This statement from MMT’s quarterly results release gives us clues.
All call-centre employees were fired. Every one of them. Lower sales meant fewer calls to the call centres and fewer calls meant lesser capacity would be required. Right? No! You see, customers needed call centre support more than ever. Flights were cancelled like never before and holidays had to be called off due to government restrictions. Getting a refund through the website/app was not so straight forward. So, customers who wanted to get refunds simply got locked out. So they took to Twitter.
We gathered about 3,000 tweets in the month of November 2020 and last week. We used simple machine learning models to find out tweet sentiments. They were overwhelmingly negative. Here is a word cloud showing the most frequently mentioned words in these tweets in the month of November 2020.
Check out some of the most frequently mentioned words – flight, cancelled, please, help, refund, money, asap. Put these together in a sentence and the meaning is quite straight forward isn’t it? Check out some of the other equally prominent terms – still (in the context of ‘still not refunded’), unabl (in the context of ‘unable to contact’). There are some smaller, but extremely negative words too in the wordcloud – loot, cheat, court, worst.
Here is a bar graph showing the actual count of the most-mentioned words on these tweets.
Here is the same word cloud built from about 3,000 tweets we collected last week. The sentiment score on these tweets is actually worse.
Take a look at the most frequently mentioned words – book (as in booked), flight, cancelled, please, refund, money. Look at another big fat term there – boycottmmt. #boycottmmt was the 6th highest-ranking tweet hashtag in mid-December.
Some of the other extremely negative terms are still there and are growing – loot, worst, fraud, never, shame (in the context of ‘shame on you mmt’), pathet (in the context of ‘pathetic’), complaint. The disgruntled customer mob started posting complaints in MMT’s Youtube videos post which MMT disabled public comments on their videos.
Now, the question is, why don’t they just roll out the refunds and control the damage? I started by hypothesizing that they probably don’t have the money to do it. And boy was I wrong! Here is how much money they had in cash at the end of December 2020. (From their investor presentation).
$226 Million! And their cash position has only improved through the year. Take a look at this note from their most recent conference call invite.
I then thought perhaps they are preserving cash to sustain themselves through this pandemic. And boy, was I wrong. Their adjusted operating profit turned positive for the first time ever in the quarter ending December 2020. Sure enough, gross bookings and revenues are down. But cost reduction has way more than offset this reduction in revenue.
Earlier in February, they raised another $230M in debt. With that, I estimate that their current cash position is around $450M! Compare that to their yearly sales of about $550M in FY20. They almost have about a full year’s revenue’s worth in cash.
Why don’t they just roll out the refunds then? I honestly don’t know. I can only speculate. My theory is that Deepak Kalra, the CEO of Makemytrip, has decided that he is going to screw his customers and employees over. And why? Because customer or employee loyalty does not have a monetary value for him or for the business. He knows that when things are back to normal, he can splurge on marketing and advertising to win us back. He knows that when the world starts travelling again, he can roll out discounts and woo us. In a cost-conscious market like India, he knows that low-cost offerings win loyalty. Nothing else matters – not good customer service, not the-best-employer award. He will throw a Rs.2,000 cashback and we will go to him running.
Here is my suggestion for you – It may cost a few hundred bucks more to book directly on the airlines’ website. But it will save you a lot of heartache later. #boycottmmt