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Indian OTA market is still pretty nascent: Cleartrip's Stuart Crighton

26 Apr, 2013

Cleartrip Travel Services Pvt Ltd, which runs the online travel booking site Cleartrip.com, is one of the top Indian OTAs and has attracted over $70 million in funding from various investors including Concur Technologies, Kleiner Perkins Caufield & Byers, Sherpalo Ventures, Draper Fisher Jurvetson and DAG Ventures. The firm claims to be doing gross bookings of around Rs 300 crore a month. In this interaction with Techcircle.in, Stuart Crighton, co-founder and CEO of Cleartrip, talks about the business, the marketing plan, views on consolidation in the market, interest in bus ticketing and more. Edited excerpts:

The OTA market appears to have matured in India with almost half a dozen large firms. Where do you see the market going forward and is it time for consolidation with small players shutting shop?

I don't actually believe that the market in India is mature, there is a lot of activity going on and it is a pretty nascent market in that sense. I think the domestic air market is relatively growing and maturing, but with regard to the other offerings it is still very nascent. There is tremendous opportunity both from a growth perspective and a consumer perspective.

With regards to consolidation, it is very hard to determine actually what is it that you are consolidating. I think the attitude of the consumer is that they already look at multiple sites, so you won't actually be acquiring a user base. The content is not ours since we are only intermediaries, so there is no natural acquisition in that sense as well. There will always be new players looking to experiment in the market but we are more focused on offering a great product instead of acquisitions.

New age OTA's have been innovating a lot with differentiated niche offerings, what is your take on that?

I think they create competition and provide a choice for consumers and choice is always good. Fundamentally, pricing is very commoditised in the market and being able to offer competitive prices is a pre-requisite of even entering the market. I think your offering has to extend well beyond just pricing and transactions, you have to think about pre-trip planning and post-transaction experiences. Most of our focus and investments are done in building a great product for the consumer.

How does your operational spread look like? What is your plan going forward, will you take on Expedia and Travelocity in their home markets or will you stick to what you are doing as of now?

Right now we are very focused on the India market, and we have also expanded into six markets in the Middle East. I think with those geographies, you are addressing almost two-thirds of the world's population. So within those markets there is an awful lot to do and we don't want to spread ourselves very thin just for the sake of expanding into new markets.

How do you stand vis a vis competition?

It is fairly early in the Middle East market and we are growing exponentially there. In India we are certainly not number one, but we are a clear number two. We don't necessarily obsess about market share, since it is not a sustainable market strategy, but we do have around 27-30 per cent of share in the airspace in the domestic market and it has been growing well, despite the challenging last year.

But I think our focus as of now is on further building out the extensive relationships we already have in the hotels and the alternative accommodation space in the country as well as in the Middle East.

How does your operations and team strength stand as of now?

We have three offices in India, one each in Gurgaon, Mumbai and Bangalore. We have an office in Dubai that headquarters our Middle East business. The current team size is around 440, including our Middle East team.

How much does India business contribute to Cleartrip's overall revenues?

It is still very significant and lies in the range of 85-87 per cent of our total revenues. We are relatively new to the Middle East market and while the growth rate there is in excess of 200 per cent, it still doesn't account for a large share. I think even going forward, India will remain the single biggest market for us at least for the next 10 years.

How many transactions are you doing as of now? And how is it spread across air tickets and your other offerings?

We are doing over 5 lakh transactions a month in India, a round trip is considered to be two transactions, which means the total number of bookings can be anywhere between 2.5 lakh and 5 lakh since some tickets are for single journey. These transactions are spread across the three biggest service areas for us- domestic air travel, international air travel and packages which is flight and hotel combos. The average transaction size is Rs 5,500-6,000.

In terms of percentage split, the combination of international air travel and hotel products accounts for nearly 35 per cent of the total revenues while the rest comes from domestic air travel.

What is your registered user base and has that been growing?

We have getting around four million unique visitors per month while our registered user base is over two million and we are growing at 30 per cent year on year.

Where have you invested the funds you raised? Also how long will it sustain you?

The money was invested for technology enhancement, platform building, hotel booking business and the Middle East expansion. However, on a day-to-day basis, the biggest expenditure happens to be marketing. Besides online marketing, we are now investing heavily in offline promotion. We started our TV commercials in November last year and have also been focusing on strategic advertising at airports across the country. As of now, we have enough capital to execute the current business plan at least for two more years.

Can you talk about the Middle East investment in a little more detail?

What we tried to do there is to take the 6-7 years of learning and building Cleartrip in India and figuring out how we can do that more intelligently in the Middle East. And perhaps also avoid some of the early stage mistakes that we made here. We also got the benefit of a very agile and flexible technology platform. All our technology is built in-house and is completely built from scratch, which helped us in a big way since it allowed us to accelerate our entry into those markets.

How have your apps been faring?

We currently have apps for the Android and the iOS platforms and 25-28 per cent of our entire search volume is generated via mobile. Moreover, 7-8 per cent of the total transactions are also happening on mobile, with more conversions happening via the Android app. In contrast, the iOS app is mostly used for search.

Bus ticketing is one missing thing on Cleartrip compared to other OTAs. Will you foray into bus ticketing?

Bus is a great product and some of the companies are already doing a great job by offering those services in India. But you won't find it (bus ticket booking) to be something that has seen a lot of transaction volume on any of the OTAs. Having said that, transportation, in general, is something consumers expect from online travel agencies. So it's definitely something that we are looking at.

For the full interview click here