Morpheus Research, an activist short-seller, has leveled serious accusations against MakeMyTrip, an online travel aggregator. The firm claims that MakeMyTrip engages in anti-competitive practices and employs questionable accounting methods to inflate its profits while failing to ensure customer safety at hotels.
In its findings, Morpheus conducted interviews with over 100 industry insiders, including former employees and hotel chain managers. Despite these allegations, MakeMyTrip has chosen not to comment on the report.
In 2022, the Competition Commission of India (CCI) imposed a fine of approximately $26 million on MakeMyTrip for anti-competitive behavior, specifically for enforcing price parity clauses with hotel partners. These clauses prevent hotels from offering lower prices on their own websites or on competing platforms. Morpheus asserts that MakeMyTrip continues to violate these regulations.
According to former employees, the company conducts daily price parity checks and assigns hotels a “parity score.” Additionally, Morpheus claims that MakeMyTrip removes hotels from search results if they list cheaper rates elsewhere or do not comply with exclusive agreements.
Financially, Morpheus argues that MakeMyTrip has not adequately reserved funds for the potential $34 million fine related to the 2022 CCI penalty. The report also highlights that MakeMyTrip has a $20 million receivable from the now-defunct Go First, with the company only provisioning half of that amount.
Morpheus criticizes MakeMyTrip’s reporting methods, noting that the company uses “adjusted” metrics that exaggerate its financial performance. For instance, the gap between reported profits and adjusted profits has reached $212 million since 2021. In the latest quarter, a reported profit of $7.2 million was adjusted to $51 million, significantly higher than competitors like Booking Holdings and Expedia.
In terms of market competition, Morpheus disputes MakeMyTrip CEO Rajesh Magow’s claim that there is minimal competition in India. The report cites that MakeMyTrip’s market share for Marriott bookings has declined from 38% in 2022 to 31%, while competitors like Booking.com have increased their share to 36-38%.
Morpheus also analyzed customer reviews of 3,679 budget hotels and found numerous reports of safety concerns and extortion. Despite these issues, many problematic hotels remain listed on MakeMyTrip’s platform.
Furthermore, the report highlights instances of deceptive practices, such as hidden fees and misleading messages regarding travel insurance and cab bookings, despite the company’s public commitment to eliminate such tactics.
These allegations emerge as MakeMyTrip considers a potential listing on Indian stock exchanges to attract domestic investors.
