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Cleartrip Co-Founder Hrush Bhatt On Active Users, IPO Plans, Mobile & More

In an interaction with MediaNama, Hrush Bhatt, Co-Founder, and Director, Product and Strategy, at Cleartrip, one of India’s leading online travel agents talked about the company’s operations, its internet-only approach, the impact of instability in the Indian aviation sector and hike in air fares, IPO plans, and other changes in the overall landscape. Some notes from our interaction:

– On operations: Bhatt informed that in terms of revenue, Cleartrip witnessed a 45% Year on Year growth in the last quarter. Air ticketing contributes as much as 80% to the company’s revenue, followed by Hotels, and Train ticketing is in high single digit. On being asked about the difference in margins in hotels and air tickets, Bhatt responded that margin on hotels was roughly doubly than the margins on air tickets.

– Active users: Bhatt informed that Cleartrip has approximately 120,000 daily active users. However, the company does not share data on average daily transactions.

– Impact of instability in aviation and increase in air fares: Bhatt says that at a macro level, the market contracted 8-9% in terms of total passengers flown, but flight booking performance was still good at a time when Kingfisher’s operations were suspended and airfares went sky high. While the company did see a 3-4% contraction in volumes in the last quarter, revenue growth wasn’t impacted as tariffs made up for the decline.

– On Railway Bookings: Cleartrip also offers railway ticket bookings but according to Bhatt IRCTC’s directives including the one that asks users to sign-in using their IRCTC ID’s even for checking availability, on third party sites was making things worse.

– Hotel segment: Bhatt stated that the hotel segment witnessed much higher growth, almost at the levels of 65%-70%, and that Cleartrip was the number two player in the segment after MakeMyTrip. The company had launched a last minute hotel booking service, Quickeys, which was doing well, according to him. “35% of all hotel bookings are walk-ins, and we wanted to cater to that segment.” Bhatt did not share any specific numbers related to the service though.

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– Relationship with hotel properties: We asked Bhatt how Cleartrip dealt with hotel properties that did not honour bookings, to which he responded that the site builds a personal relationship with property owners, which is not limited to contracts. He said that if a hotel owner defaults more than a few times, the site disassociates with the property, but currently, only 2-3% of all bookings reportedly faced such problems.

– Not offering holiday packages & staying online-only: Unlike other OTAs, Cleartrip does not offer holiday packages. Bhatt said that the major reason for this was that it was hard to close package sales online or via phone, and required a physical touchpoint. He mentioned that customers wanted a good level of customization, and this complicated things in an online-only environment. Cleartrip does not intend to open offline outlets in the near term. “From an overhead standpoint we’d rather invest in businesses that are scaleable with technology,” said Bhatt. However, he did not dismiss the idea altogether, and said that the company might think of it at some point in time.

– On raising funding and filing for an IPO: Bhatt responded that the company is fairly well capitalised, so it’s not planning to raise funding in the near term. He said that if ever the company plans for an IPO, it would make more sense to file one in the US, from a macro standpoint, specially being an internet company. However, he clarified that the company does not intend to file for an IPO till the next 18 months, as the present conditions were not in favour of one. Also, it would need to make sure that the business is ready for a public listing and make sense for all shareholders in the business, he added.

– On cab booking service: The company had launched a cab booking service for travellers who book flights on Cleartrip. Bhatt clarified that the service was just a value add to improve the traveller’s experience and Cleartrip does not charge the customers or cab companies for the bookings.

– On the growing bread and breakfast segment, entry of AirBnB: On the entry of AirBnB and sites like Oravel in India, Bhatt felt that the segment was interesting but was not sure if it was workable in India, specifically in big cities. He  said that had personally experienced AirBnB, and found that most home owners who listed their properties had more than one property or had additional space. So perhaps it could would be interesting to explore the segment for hill stations, or weekend getaways, but the company’s not sure if it would work in big cities. He also added that AirBnB was more of a peer to peer offering and that professional home stay market, has always existed in India, even though it’s small.

– On mergers and acquisitions in the segment: Bhatt said that Cleartrip would only acquire a company if it fits into the company’s strategy from the point of view of technology enhancement or team acquisition and not just from a revenue standpoint.

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– On Mobile: Bhatt stated that Cleartrip has always looked at a mobile as a companion product, and that customers use the mobile app for things like accessing trip details, finding flights, and not just as another sales channel. He informed that booking volumes from mobile, including Cleartrip’s mobile web and mobile app, were 6% of all bookings, while search volume was 15%. He did not disclose the number of app downloads, and refused to comment on future products.

On marketing campaign: While Bhatt declined to reveal Cleartrip’s marketing spend, he did mention that it was skewed in favour of digital. This year, 70% of the company’s market spend was on digital, while the remaining was on mainstream media. Interestingly, the company has launched a TV ad campaign after a gap of almost 2 years (last one was in January 2011). The new TVCs are in the form of 10-second Video Stamps and are quick reminders for people to book for the upcoming holiday season with Cleartrip.

– On the Travelocity case: Bhatt said that the case was subjudice, and it would be inappropriate to talk about it. Note that Yatra has now acquired Travelocity. More about the case here.

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