Online travel firm Ixigo has reinstated the salaries of its 150 employees to what they were before the COVID-19 pandemic.
"What we saw post-lockdown and post-reopening, especially with travel happening on flights and trains is that our business has bounced back to a level where our revenues can cover at least our salary expenditure," said Aloke Bajpai, Ixigo's co-founder and CEO, in an exclusive chat with CNBC-TV18, "This was a threshold we were waiting for to bring about course-correction."
In March, Ixigo announced it was implementing a pay-cut of 25-60 percent owing to travel being suspended in the wake of the pandemic. Employees at the top-end of the pyramid took steeper pay-cuts, with many reportedly volunteering to give up part of their salary, according to Aloke.
"We have analysed the last six weeks and have reached a point where we realised that our fixed costs may be relatively lower when compared to other players in the space," said Aloke, drawing reference to the company's lean 150-member workforce. "We also felt that it was unjustified to hold those salaries back at this point given that people have made enough sacrifices for us and proven their ability to stick with us," he added.
ESOPs For All Employees
Along with reinstatement of pay, Ixigo will also issue 2.3 percent of the company's shares as ESOPs to all employees, at a steep discount. "We wanted to send out a signal that the people who stuck to the mission and worked hard in the last six months deserved to be rewarded," said Aloke, "Since we cannot reward them with cash at this point or pay back what they lost, the least we can do is to make them shareholders and feel more vested in the cause."
The Ixigo boss has now predicted a recovery in domestic travel over the course of the next six months, but is quick to insist that the decision to reinstate pay packages wasn’t based on this projection.
'Domestic Travel To Be 60 percent of Pre-COVID Levels By December'
Ixigo is bullish that the next six to twelve months could see domestic travel improve, even with existing restrictions, and passenger appetite for essential travel only. "As the new normal sets in, people will travel for reasons that are important to them. We are seeing essential travel right now, even though the last couple of weeks have seen a small trickle of travel to destinations that are typically leisure," said Aloke.
While predicting revenue guidance may be challenging, the rise in bookings, Aloke believes, could result in December witnessing domestic travel bookings to be 60 percent of what it was pre-COVID-19. "At this point, it (domestic travel) is closer to 20 percent but we remain optimistic that by December, between 50 to 60 percent of travel would have bounced back," he said, "Dussehra and Diwali could be key trigger points owing to the fact that there will be occasions for people to visit loved ones in other cities while abiding by existing social distancing norms. People will embrace the new normal, and learn to live with the virus."
Part of the reason for this belief is the fact that Ixigo is also reporting instances of several users coming back to the travel site to make bookings post-COVID. "We are seeing a strong comeback of our old users who are making their first booking post-COVID," said Aloke, "That number seems to keep rising week-on-week. People who made bookings six months ago are taking a leap of faith and making their next booking, albeit for essential travel."
Shut Hotels a Concern?
Recovery or not, the fact remains that a large part of the hospitality and tourism market continues to stay shut. Chennai for instance, has not permitted hotels to function, despite being in the middle of the Unlock Phase of the COVID-19 lockdown. Even as Mumbai saw hotels reopening, a strict set of guidelines surrounding social distancing and regulated guest occupancy has made its conspicuous presence felt.
Aloke believes that hotels, when they eventually reopen fully, will begin witnessing a change in consumer preferences too. "The travellers' choice of properties might change. We have noticed that more people are opting for staycations, and have witnessed a spike in demand for properties that have socially distant rooms," he said, "The mindset that exists right now is one of fear, but in a few months the mindset needs to become one of: 'how do we live with this virus with a set of precautions?' The sooner people embrace this, the better, given that a vaccine is 6 to 12 months away."