Cleartrip Launches Train Booking; Service Fee; 10-20% Topline Contribution

Around 30 minutes ago, Cleartrip launched online rail ticketing, becoming only the second OTA after Thomas Cook to roll out the services.

To understand the significance of this rollout, sample this - the Indian Railways did $102 million in online transactions last month. It’s the scale that excites OTAs like Cleartrip. Hrush Bhatt, co-founder of Cleartrip told MediaNama that at over 160,000 transactions per day, the Railways does double the transactions that the Airlines do in a day. The opportunity is also othere because of fewer points of sale for Railways. Comparing the two: flights have their own sites, an agency facing site, third parties, affiliates and downstream distributors.

Service Fee
The monetization is going to be by charging an additional service fee to customers. IRCTC charges Rs. 13-25, based on the fare class, and Cleartrip intends to charge a similar service fee on top of that. In fact, that’s a model that’s being considered for the flight ticketing as well, if the zero percent commissions model is imposed, though the IATA and the airlines haven’t finalized anything yet.

Contribution to revenues
Cleartrip has estimated a topline contribution of 10-20 percent from rail ticketing, which Bhatt says is a conservative estimate, with a bottomline estimate of 5-10 percent. Bhatt says that it’s still a very large number, if the top 3 OTAs to account for even 20-30 percent shift in IRCTC transactions - of around 40,000 - 50,000 transactions per day. By the end of the year, the company expects a topline contribution to be split as follows: 75 percent from Flights, 15 percent from trains and 5-10 percent from Hotels.

Cleartrip piloted a train search earlier this year, and Bhatt says they got 2500 visits/day without really spending anything at all on promotions. They’ve upgraded their search several times, based on user feedback. The OTA doesn’t intend to launch a TV campaign for train ticketing - “The margins here do not justify such large investments in marketing.” They do have plans for online marketing, though.

Bhatt also added that Hotels are a nascent market still, currently contributing 10 percent to revenues. They offer a margin of between 12-25 percent, depending on the deal with the hotel.

Related:
- Not Surprisingly, Cleartrip To Launch Rail Ticketing; Rs.30-35 Margins
– Cleartrip Promotes Crighton To CEO; Lays Off 42
– IRCTC Does $102 Million In Online Transactions In August; Payment Trends
– Yatra Launches In US, UK; Impact Of Zero Percent Commissions

Not Surprisingly, Cleartrip To Launch Rail Ticketing; Rs.30-35 Margins

Online Travel Agent Cleartrip is planning to launch Railway ticketing today according to LiveMint, thus becoming only the second OTA to offer the service after Thomas Cook. The launch isn’t surprising, since Cleartrip was among the first OTAs to launch a Railway ticket search earlier this year, sans the booking capability. I just gave it another go, and they haven’t allowed users to book tickets just yet. We’ve written to Cleartrip for a confirmation that the launch is planned for today. Not unexpectedly, MakeMyTrip, Yatra and Ezeego1 also plan to start rail bookings.

Cleartrip co-founder Hrush Bhatt offers some insight on the margins - which are around Rs. 30-35. While that is low, it’s still better than the 0 percent commission that the Airlines will be enforcing by the 1st of November. That said, crude oil prices fell below $92 to the barrel yesterday, down from a high of over $140. It’s too early to tell - the fall was rather drastic, so might recover, but if Aviation Turbine Fuel (ATF) drops as well, one just might see Airlines go back on their plans. At least the agents (both online and offline) will now have a case for a commission.

Over the next few months, we’ll track the impact of the increase in online outlets offering Rail ticketing on the IRCTC numbers. Some details for July and August:

Much more here.

Other Developments in the Travel Space

– Zoomtra Goes International: Smile Interactive promoted travel meta-search engine Zoomtra has launched international flight ticketing. They’ll also be launching specific portals targeting inbound traffic from Singapore, US, UK and Canada. Details in the release here.

– Ixigo Adds Bus Services: Another travel meta search engine, Ixigo, has launched bus ticketing services covering 500 towns and 2300 routes. Details in the release here.

Related:
– Cleartrip Promotes Crighton To CEO; Lays Off 42
– IRCTC Does $102 Million In Online Transactions In August; Payment Trends
– Yatra Launches In US, UK; Impact Of Zero Percent Commissions

Cleartrip Promotes Crighton To CEO; Lays Off 42

Cleartrip, an Online Travel Agency (OTA) has appointed Stuart Crighton as CEO, taking over from investor Sandeep Murthy of Sherpalo Ventures and KPCB. Murthy is now Chairman. Crighton is one of the founders of Cleartrip. The company has also laid off 42 of its 300 employees - around 11 percent. VCCircle has the details.

Over the past few months, OTAs have come under tremendous pressure because of a decline in their commissions. That situation is expected to worsen with zero percent commissions from October onwards.

There is hope, though: crude prices have been gradually declining from their peak, and are now near $100 a barrel, down from over $140 a barrel in June, which is when Airlines went in for cost-cutting, citing high Aviation Turbine Fuel costs. With a decline in crude Oil prices, airlines might just go back on their decision to cut commissions. More on the impact of Zero percent commissions here.

Related:
–Yatra Launches In US, UK; Impact Of Zero Percent Commissions
– IRCTC Does $102 Million In Online Transactions In August; Payment Trends; HDFC, ICICI, Cash Cards Significant

Updated: Expedia Acquires India OTA TravelGuru: Report; TravelGuru Denies

TravelGuru CEO Ashwin Damera’s response to Medianama.com regarding the story about the company being acquired by Expedia:

Dear Nikhil,
I’m disappointed that mere speculation is being published in the form of a “story”. Many people have called me based on this hearsay and what they have read online.

There are many inaccuracies in these reports – the biggest being – there has been no deal signed!

What more is there to deny?

Warm regards,

Ashwin

Translation: The valuations reported were completely out of whack. No deal has been signed yet, but that doesn’t mean one will not be. It will be difficult for me to deny anything else on the record, so this is all I have to say.

Original Story: Online travel portal TravelGuru has sold a majority stake to Expedia, the largest OTA in the world, reports VCCircle. We had also heard that TravelGuru had been acquired, but weren’t able to confirm this last week. BCCL also had a Private Treaties investment in TravelGuru, and I’d asked Private Treaties CEO S. Sivakumar about the TravelGuru being bought by Expedia last week, but he offered no comment. As per the report, the majority stake has been acquired for $17 million, at a valuation of $30 million for the combination of TravelGuru and Desiya.com.

Something about these numbers doesn’t seem to be correct. If you go by earlier news reports, TravelGuru had acquired hotel aggregator Desiya for $25 million. So either the Desiya acquisition was overstated by a significant margin, or the $30 million combined valuation for TravelGuru and Desiya is understated. Either way, this doesn’t seem to be a good sign for the OTA business, which has attracted significant VC Funding.

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