Ecommerce major Flipkart is in the final stages of acquiring online travel aggregator Cleartrip, a deal which is likely to value the latter at around $40 Mn.
Adding to the speculation about the acquisition that emerged early last month, fresh reports on the deal claim it would be a distress sale for the 15-year-old Mumbai-based online ticketing agent and hotel booking portal. One of the oldest ticketing platforms in India, Cleartrip is facing a severe downturn amid the Covid-19 induced lull in the travel and hospitality sector, according to an ET report.
Founded in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton, to date, Cleatrip has raised $56.4 Mn in six funding rounds from six investors. The company last raised funds in a venture round in January 2019.
The travel business has been on a recovery trajectory since lockdown restrictions were lifted last year. In December 2020, Ixigo cofounder Aloke Bajpai told Inc42 that the number of flyers has been increasing since July and Ixigo has seen up to 55% pre-Covid demand back in flight bookings.
However, as Covid-19 infections spread rapidly again across the country, several states have begun imposing lockdown and night curfew restrictions, plunging the travel and hospitality segment into further uncertainty. Further, international travel restrictions continue to hamper revenues.
Add to that the fact that Cleatrip did not perform very well in the year preceding the pandemic. In FY20, Cleartrip reported a 2.5% year-on-year drop in revenue at INR 318.8 Cr for the year ended March 31, 2020. The company’s operating income of INR 273.5 Cr fell by a drastic 10% in the fiscal, ahead of the lockdown which severely impacted the operations since April 2020. Cleartrip’s expenses dropped 6.8% to INR 333.2 Cr, whereas its loss was cut in half to INR 14 Cr.
Amazon, Flipkart Bank On Travel In Super App Race
There are clear advantages for Flipkart if the acquisition goes through. Given that Cleartrip also offers train bookings as an official partner of the Indian Railways Catering and Tourism Corporation (IRCTC), Flipkart would be able to directly offer train bookings through its platform, something which it currently does not.
Flipkart first entered the online travel segment in 2018 by offering MakeMyTrip’s travel services on its platform. As of today, the travel page on Flipkart’s website is powered by ixigo and allows customers to book flight tickets and has integrations for bus and hotel bookings. Amazon too launched travel bookings in the same year as Flipkart, with its flight booking feature incidentally being powered by Cleartrip.
The two major players in India’s ecommerce segment, Flipkart and Amazon, have of late, embraced the super app strategy, by assimilating a range of offerings within their parent brand, which has a strong recall value among customers.
Both platforms also launched online grocery offerings near-simultaneously in 2019 and rapidly scaled up the same amid the lockdown last year. The two companies have since entered the online pharmacy segment as well. In digital payments, while Flipkart’s parent Walmart also owns UPI market leader PhonePe, Amazon enabled UPI payments through Amazon Pay in 2019.