In early September, Phocuswright published its India
Total Market Report, which provides a comprehensive view of India’s travel
market, including detailed market sizing and projections, distribution trends,
analysis of major travel segments and key developments. Below, PhocusWire dives
deeper into Flipkart’s acquisition of Cleartrip.
When e-commerce giant Flipkart acquired
online travel agency Cleartrip, the COVID-19 pandemic was
still raging in India. Merging with Flipkart – Amazon’s main
rival in India – proved to be a lifeline for the OTA. Cleartrip gained access to the Walmart-owned company’s more than 350 million registered customers
just in time for this year’s return of domestic travel.
In a Q&A with PhocusWire, Cleartrip’s CFO and head of corporate development, Aditya Agarwal, discusses the benefits of having Flipkart as a distribution channel as well as how the OTA is reviving its hotels business.
Agarwal also explains Cleartrip’s ambitions to become a “best-in-class” customer service provider and why its flexibility products are gaining traction. The conversation has been edited for brevity.
Please bring us up to speed on the acquisition. Why was it a good strategic
move for Cleartrip?
I think the acquisition came at a
very interesting time. It was at the peak of the COVID-19 pandemic’s impact on
the industry – especially in India. We pretty much hit the bottom just before
the acquisition. You couldn’t have planned it better in terms of timing.
A
large part of last year was spent on the integration itself. We have integrated
many of the corporate functions, but the businesses operations remain
independent.
Month
on month, the growth that we’ve seen has been exponential. Obviously, it’s
partly because the industry itself has come back. But a large part of it is
because we’ve been able to invest in the business, we’ve been able to launch a
lot of initiatives and grow our market share. Overall,
our top line is about three times versus last year. We’ve almost doubled our
market share in this time period to become the clear number-two player among
OTAs in India as far as the flights market is concerned.
How is Cleartrip tapping into Flipkart’s customers while maintaining
Cleartrip’s customer base?
We are managing the entire travel
category, which includes Cleartrip and Flipkart as well. So Flipkart is yet one
more distribution channel for us. We have customers coming onto the Cleartrip
app, Cleartrip platforms and on the Flipkart app as well.
The way we see it,
they are all equally our customers. And we think that there is a lot of merit
in having this dual brand strategy.
We can tap into that customer base that we’ve traditionally not had the opportunity to reach and expose the Cleartrip brand and products to them.
Aditya Agarwal - Cleartrip
Cleartrip has been in the market for 15
years; we were one of the pioneers in the industry. We’ve been known historically
for our products, for our UI and UX. We have a very strong affinity with a
certain type of customer: the frequent traveler, the more discerning customer.
We think that the Cleartrip app will continue to be the natural OTA for those
types of customers.
The Flipkart channel allows us to reach
a much wider base of users. Almost every single online-transacting customer in
India is on Flipkart. Many people may not be travelers yet, or maybe are just
starting to travel. So we can tap into that customer base that we’ve
traditionally not had the opportunity to reach and expose the Cleartrip brand
and products to them.
Which products and services are you investing in, and how can you put
Cleartrip products in front of Flipkart customers?
In the years leading up to the acquisition, we were not able
to invest in the hotels product. We had
dialed down the hotels business to a large extent. We had started taking
content from other players. So we had to relaunch the entire hotels business in
terms of the supply side, the product itself and obviously the demand engine as
well. It was a full relaunch. And this product is starting to gain traction.
We’ve
also launched our hotels product on Flipkart. (Ed note: Flipkart and Cleartrip remain separate
apps.) On Flipkart, customers can now go and book flights and hotels. We launched
flights at the beginning of the year, and we launched hotels in the last month
or so.
We have really
upgraded our customer service experience. A lot of customers in the travel
industry overall have had a hard time because of cancellations and other
issues. We think this is an area where we have an edge. We can create a clear
differentiator by taking the lead in terms of being the best-in-class in
customer service – in terms of response times, in terms of refunds. Now all our
refunds are processed within 24 hours.
We’ve
also launched and expanded flexibility products on the flights side of our
business. We have created proprietary products, including EzCancel and Flexifly,
which allow customers to amend or cancel their bookings. Different airlines
have different cancellation and amendment policies. Customers want to be able
to change between airlines as well, not necessarily with the same airline. So
that’s where this product has seen a lot of traction.
Cleartrip
recently rebranded, and it announced Bollywood actors Vicky Kaushal and Katrina
Kaif as collaborators. How do you hope these initiatives will advance the
company’s overall strategy?
We’ve
come a long way in the last year and a half since we became part of Flipkart.
We’ve been consciously trying to go back out into the market and tell our
customers – people who’ve been our customers before, as well as new customers –
about Cleartrip, about what we’re doing, the products we’re launching, the
offers that we’re coming up with.
We want to
be able to go to customers and tell them about all the exciting stuff we are
doing. So this is a continuation of that strategy. Vicky and Katrina, the
Bollywood stars, are a real-life couple as well, and they are very, very
popular. We feel that being associated with them allows us to get our message
across to our customers. We’ve launched very interesting campaigns along with
these stars, and there are more on the way that you will see in the coming
months.
How has the merger affected Cleartrip’s loyalty program?
We are
participating in SuperCoins, which is Flipkart’s loyalty currency. It happens
to be the largest loyalty program in the country, with hundreds of millions of
participants. People can earn SuperCoins on Flipkart and spend them on
Cleartrip, or vice versa.
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Travel
is a very natural category for spending loyalty points. When the integration of
SuperCoins happened around this time last year, we immediately saw a very high
adoption of people coming on Cleartrip and spending these coins, because there’s
a large accumulated base of Flipkart customers who have these loyalty points. So
this has given us another hook onto this large customer base. A significant
proportion of our transactions are now happening with part of the payment being
made with SuperCoins.
Looking ahead to 2023, where do you see the most potential for
growth?
This
year, we benefited from a recovery in the domestic travel market. Next year, international
travel will start coming back in a very big way. It will grow
disproportionately compared to domestic travel.
In our hotels
business, we feel that a lot of investment that we’ve done in that product will
start to deliver greater returns for us next year.
Business
travel is an area that we want to really grow. And that’s another area where
being part of Flipkart is a big advantage for us because Flipkart does business
with a lot of large corporate houses in India. And now, a lot more doors are
open for us to try and get a part of that business as well.
We’ve
also come up with something which we call the Cleartrip Upgrade, or CT Upgrade,
which is in partnership with our airline and hotel partners. It’s a product
which allows customers to make any booking on Cleartrip and get something extra.
So if you booked a hotel room, you may get an upgrade or you may get some free
products at the hotel. Similarly on a flight, you may get a free upgrade or
meal. Ancillary is a key area where we see a lot of potential for growth; we
will continue to bring in new innovations in this area.
Earlier
this year, Cleartrip sold
its Middle East business interests to Wego. Why was that decision made?
There is a lot opportunity for growth
in India. We want to focus all our energies here.
What trends are you seeing among Indian customers? How have
demands changed since the pandemic?
I think
the pandemic definitely has led to changes in customer behavior. We see almost
one in every three customers opting for our flexibility products. It gives them
a lot more peace of mind because they know that plans may change at the last
moment.
Second, short-haul
and domestic travel has recovered faster as compared to long-haul or
international travel. That’s also driven by which countries have opened up their
borders and made it easier for people to travel there. So we’ve seen a much
faster recovery on the domestic side. India being a very large domestic market
helps because we are not dependent on borders opening up for our business to
come back.
Consumer
travel has recovered faster than business travel. We all feel that business
travel is going to take a little bit longer to come back.
How are you investing in mobile? A new Phocuswright report on
India shows that OTA bookings on mobile devices will account for nearly 80% of
all OTA bookings by 2025, reaching $10.3 billion.
This
is another area
where Cleartrip is the pioneer. We launched our first iOS mobile app way back
in 2012. We saw mobile as the next big channel of acquisition.
Before the pandemic, 70 to 75% of our
users were coming on mobile channels, which includes apps as well as mobile
web. And that ratio has remained steady for about five years.
Travel is a high-ticket price category.
A lot of other online consumer categories have much smaller average transaction
values as compared to travel. For that reason, we feel that desktop will remain
relevant. People will want to browse around. People will want to take their
time in the planning stage itself. They will come, search, go back, come back a
day later. So desktop will remain an important category which will continue to represent
20 to 25% of traffic.
Is there anything
else new happening?
We are participating in Flipkart’s Big Billion
Days sale, which is like Amazon’s Prime Day or Singles’ Day in China. It is a
weeklong event (from Sept. 23 to 30). For us, Big Billion Days is another step in
disrupting the market. In
travel, this will be a never-before-seen event that we are very much looking
forward to.
India Travel Market Report 2021-2025
This report provides a comprehensive view of India’s travel market, including detailed market sizing and projections, distribution trends, analysis of major travel segments, key developments and more.