Cleartrip.com expects to achieve break-even by January 2009
Published: 01 Dec 2008
EyeforTravel.com's India Special
Over the last 12 months or so, questions have been raised about the viability of numerous online travel companies in India. Amidst all the debate about profitability and optimistic projections, and even consolidation, nothing concrete has shaped up yet.
For an online travel agency like Cleatrip.com, a firm believer in the scalability of pure online model, a critical break-through is seemingly round the corner.
"Our focus has been on healthy cash generating business and the rate at which we are going, we expect to achieve break-even by January 2009," said Stuart Crighton, CEO, Cleartrip.
Significantly, OTAs have been acknowledging that the focus has been on profitability, drifting away from the battle for market share. And one of the major transformation, which all the OTAs have been diligently working upon, has been moving towards relatively higher-margin products.
Crighton told EyeforTravel.com's Ritesh Gupta that the company has managed to bring down the contribution of domestic air revenue in the overall gross revenues to 80 percent.
"We have significant volume now cumulatively coming from international air, hotels, rail and insurance. Over the last year or so, we have grown our revenues from hotels by 25-30 percent," said Crighton, who refused to comment on earlier projected turnover of US$325 million - $350 million by end of next March.
Other than its lean cost structure, with an overall headcount of 180 people or so, Cleartrip.com has stood out for its technology and product (Cleatrip.com strives to make travel simple and its motto is aptly reflected in its clutter-free user interface. Cleatrip's focus: simplicity of UI and navigation, clutter free experience, intuitive UI using web 2.0 technology, speed of search results, and transparency of pricing).
Cleartrip.com acknowledges the challenges related to customer acquisition and sees it as a major component of operating costs in the time to come. However, it is eyeing an efficient model as it is not relying heavily on manpower but on its in-house technology and improving the level of service to justify fees for the same. The technology is ready for scaling up of operations in terms of volume of transactions, diversified product mix and especially in case of hotels, getting on aggregators like Desiya and capitalising on B2B model for generating high margin-oriented transactions.
"If typically, consumers are buying a three-star hotel for Rs. 3500 (US$70), then there is not much of differentiation. But from business point of view, the key would be margins or contracting. At the same time, other than relying on partnerships within the trade (like white label), by focusing on product (planning process be it via tools or reviews), the customer conversion (in the context of our pure online model) can result in high yield," said Crighton.
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