Earlier in September, Phocuswright published its Total India Market Report, which provides a comprehensive view of the Indian travel market, including detailed market sizes and projections, distribution trends, analysis of major travel segments, and developments. key code. Below, PhocusWire delves into Flipkart’s acquisition of Cleartrip.
When the e-commerce giant Flipkart acquired the online travel agency Cleartrip, the COVID-19 pandemic was still in India. The merger with Flipkart, Amazon’s main rival in India, turned out to be a lifesaver for the OTA. Cleartrip gained access to the Walmart-owned company’s more than 350 million registered customers just in time for the return of domestic travel this year.
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 and how the OTA is reviving their hotel 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 inform us about the acquisition. Why was this a good strategic move for Cleartrip?
I think the acquisition came at a very interesting time. It was at the peak of the impact of the COVID-19 pandemic on the industry, especially in India. We practically bottomed out just before the acquisition. You couldn’t have planned it better in terms of time.
Much of the past year was devoted to integration itself. We have integrated many of the corporate functions, but the business operations remain separate.
Month to month, the growth we have seen has been exponential. Part of that is obviously because the industry itself has made a comeback. But a lot of it is because we were able to invest in the business, we were able to launch a lot of initiatives and increase our market share. Overall our top line is about three times compared to last year. We have almost doubled our market share in this time period to become the number two player among OTAs in India when it comes to the flight market.
How does Cleartrip take advantage of Flipkart customers while maintaining Cleartrip’s customer base?
We are managing the entire travel category, which also includes Cleartrip and Flipkart. So Flipkart is one more distribution channel for us. We have customers coming into the Cleartrip app, the Cleartrip platforms, and also the Flipkart app.
In our view, all are equally our clients. And we think there’s a lot of merit in having this dual-brand strategy.
We can tap into that customer base that we haven’t traditionally had the opportunity to reach and expose them to the Cleartrip brand and products.
Aditya Agarwal – Cleartrip
Cleartrip has been on the market for 15 years; We were one of the pioneers in the industry. We have 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 most demanding customer. We believe that the Cleartrip app will continue to be the natural OTA for such customers.
The Flipkart channel allows us to reach a much larger user base. Almost all customers transacting online in India are on Flipkart. Many people may not be travelers yet, or they may just be starting to travel. So we can tap into that customer base that we haven’t traditionally had the opportunity to reach and expose them to the Cleartrip brand and products.
What products and services are you investing in and how can you introduce Cleartrip products to Flipkart customers?
In the years prior to the acquisition, we were unable to invest in the hotel product. We had reduced the hotel business to a great extent. We had started to take content from other players. So we had to relaunch the entire hotel business from the point of view of supply, the product itself and obviously also the engine of demand. It was a total relaunch. And this product is starting to gain ground.
We also launched our hotel product on Flipkart. (Editorial note: Flipkart and Cleartrip are still 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 improved our customer service experience. Many clients in the travel industry in general have had difficulties due to cancellations and other problems. We believe this is an area where we have an advantage. We can create a clear differentiator by taking the lead in terms of being best in class in customer service, in terms of response times, in terms of refunds. Now all of our refunds are processed within 24 hours.
We also launched and expanded flexibility products on the flight side of our business. We have created proprietary products, including EzCancel and Flexifly, that allow customers to modify or cancel their reservations. Different airlines have different cancellation and modification policies. Customers also want to be able to switch between airlines, not necessarily with the same airline. So that’s where this product has seen a lot of traction.
Cleartrip recently rebranded and announced Bollywood actors Vicky Kaushal and Katrina Kaif as collaborators. How do you expect these initiatives to advance the company’s overall strategy?
We have come a long way in the last year and a half since we became a part of Flipkart. We’ve been consciously trying to get back into the market and tell our customers, people who have been our customers before, as well as new customers, about Cleartrip, about what we’re doing, the products we’re launching, the deals we can think of.
We want to be able to reach out to customers and tell them about all the exciting things we’re doing. So this is a continuation of that strategy. Bollywood stars Vicky and Katrina are also a couple in real life and are very, very popular. We feel that being associated with them allows us to get our message across to our customers. We’ve launched exciting campaigns alongside these stars, and more are on the way that you’ll 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 is 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 to spend loyalty points. When the SuperCoins integration happened around this time last year, we immediately saw a very high adoption of people coming to Cleartrip and spending these coins, because there is a large cumulative base of Flipkart customers who have these loyalty points. So this has given us another hook into this huge customer base. A significant proportion of our transactions are now being made and part of the payment is made with SuperCoins.
Looking ahead to 2023, where do you see the greatest growth potential?
This year, we benefited from a recovery in the domestic travel market. Next year, international travel will start to return in a big way. It will grow disproportionately compared to domestic travel.
In our hotel business, we believe that many of the investments that we have made in that product will start to generate higher returns for us next year.
Business travel is an area where we really want to grow. And that’s another area where being a part of Flipkart is a big plus for us because Flipkart does business with a lot of big corporate houses in India. And now, many more doors are open for us to try and get a piece of that business as well.
We also came up with something we call the Cleartrip Upgrade, or CT Upgrade, which is in partnership with our partner airlines and hotels. It is a product that allows customers to make any reservation on Cleartrip and get something extra. So if you booked a hotel room, you can get an upgrade or you can get some free products in the hotel. Similarly, on a flight, you can get a free upgrade or meal. Ancillary services is a key area where we see a lot of growth potential; We will continue to incorporate new innovations in this area.
Earlier this year, Cleartrip sold its business interests in the Middle East to Wego. Why was that decision made?
There are many growth opportunities 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 has definitely caused changes in customer behavior. We see that nearly one in three customers opt for our flexibility products. It gives them much more peace of mind because they know that plans can change at the last minute.
Second, domestic and short-haul travel has recovered faster compared to international or long-haul travel. That is also due to which countries have opened their borders and made it easier for people to travel there. So we’ve seen a much quicker recovery on the domestic side. The fact that India is a very large domestic market helps because we are not dependent on the borders being opened for our business to come back.
Consumer travel has recovered faster than business travel. We all feel that business travel will take a little longer to come back.
How are you investing in mobile? A new Phocuswright report on India shows that mobile OTA bookings will account for nearly 80% of all OTA bookings by 2025, reaching $10.3 billion.
This is another area where Cleartrip is a pioneer. We launched our first mobile app for iOS back in 2012. We saw mobile as the next big acquisition channel.
Before the pandemic, 70-75% of our users used mobile channels, including both apps and mobile web. And that ratio has remained constant for about five years.
Travel is a high price category. Many other online consumer categories have much smaller average transaction values compared to travel. For that reason, we think the desktop will remain relevant. People will want to surf. People will want to take their time in the planning stage. They will come, they will search, they will return, they will return a day later. Therefore, desktop will continue to be an important category that will continue to account for 20-25% of traffic.
Is there something 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 one-week event (September 23-30). For us, Big Billion Days is another step in market disruption. In travel, this will be a never-before-seen event that we look forward to.
India Travel Market Report 2021-2025
This report provides a comprehensive view of the India travel market, including detailed market size and projections, distribution trends, analysis of major travel segments, key developments, and more.