Hrush Bhatt , 39, the co-founder and director at online travel agency (OTA) Cleartrip Travel Services Pvt. Ltd is optimistic about the future despite a slowing economy. He expects Cleartrip will return to profitability by the second quarter of the next fiscal. Cleartrip fell into losses after it had its first profitable year in fiscal 2009. Bhatt, who is in love with his iPhone 5, is excited that thus far 10% of July bookings have been made on mobile devices compared with 3% last year. Bhatt says he is not losing sleep over Google Inc.’s entry into flight search but he is betting big on newly launched flight-cum-hotel holiday packages that are giving him higher margins against stand-alone flight bookings. Cleartrip will make an announcement in the next week about a strategic investment, following in the footsteps of its competitors. Edited excerpts from an interview:
Aviation is facing turbulent times. How are you doing?
Travel, and particularly aviation, has always been a cyclical business—it tends to swing up or down in line with the larger macro economic outlook. As an online travel service, we are hugely optimistic about the future. To date, the industry has only gone through its first growth bump, we are expecting more growth bumps in the years to come. Only 12% of India’s population is currently online, about 130 million people; this number is expected to be 300 million by the end of 2014. The growth of smartphones and mobile data subscribers will drive further growth.
Where do you see Cleartrip in the next three years?
We are amongst the top two OTAs in the country today with over 4 million unique visitors per month, while growing at 30% year-on-year. We have around 27-30% of market share in the domestic market and it has been growing. Right now we are very focused on the India market, and we have also expanded into six markets in the Middle East. Cleartrip had its first profitable year in the 2008-2009 fiscal year. We learned how to operate our business profitably amidst the global financial crisis. For the last two years, we have prioritized growth over profitability as the company had sufficient capital to invest in growth. We hope to return to profitability by the first or second quarter of the next financial year.
How important are mobile phones as a part of overall strategy?
Mobile is core to our strategy going forward. We think we are very well positioned in mobile with a comprehensive suite of products. We have apps for iOS, Android and Windows Phone. We are now seeing 20-25% of our search traffic coming to us from mobile. As of this month, 10% of our bookings are being made on a mobile device.
The company faces a data theft allegation.
We don’t comment on this since the matter is still sub judice.
How will Google’s entry into flight search impact the business?
It remains to be seen what the model for Google flight search in India is. In the US, only airlines are allowed to be present in the search results themselves, third-parties are excluded. This was a smart move on the part of the US airlines as it keeps them firmly in control of their pricing instead of handing that power over to Google. It also ensures that Google cannot extort the lion’s share of the value from a transaction by forcing the airlines to compete for each paid click.
What is your overall take on the rise of meta-search?
Has there been a rise in meta-search in India? We haven’t seen any data to indicate any such rise. In India, all the airlines are available for price comparison and booking through an OTA, so meta-search has never had much relevance. The future of travel research and planning is an area of intense interest for us. And we have more amazing products in the pipeline, one of which is launching next week.
Any acquisition plans?
David Packard, the co-founder of HP, once said “more businesses die from indigestion than from starvation”, and I think he was completely right. So, at Cleartrip, we have a radically different perspective on M&A. We don’t go out looking to buy revenue to drive inorganic growth, which is what we have seen Yatra and Make My Trip do. We only invest if we see a strategic fit with products we are working on or technology that could be useful to us. We have made two strategic investments so far, one of which we will be announcing next week.
Any initial public offer (IPO) plans?
An IPO is not the foremost goal of the company. It’s not the reason we wake up and come to work every day. In today’s world, there is sufficient growth capital available even in the private market; an IPO is no longer the only route.
How did the idea of Cleartrip come about?
Lots of drinks in a bar. Jokes apart, I was a designer before I started Cleartrip. Myself and a friend started a design agency called Paper Plane and the first client we ever had was Thomas Cook in 1999. We worked with Thomas Cook for over six years on their online presence and strategy. At a certain point it became clear that they were not ready to give their online travel business the kind of focus and resources it needed to become a reality. Stuart (Crighton), my co-founder, was in a similar situation. We had been friends for a long time and we finally decided that if those guys were not really interested in the online travel opportunity, we would just to do it ourselves. It took us over nine months to raise our first round of capital. We launched the business in July 2006.
Looking back, any regrets?
Regrets are a waste of time. I prefer to look forward while keeping an eye on the rear view mirror. I was a history major in college and I firmly believe the old adage— “Those who don’t learn from history are doomed to repeat it.”
What keeps you busy?
Cleartrip and my new home, which I purchased last year and am in the process of remodelling.
What devices should travellers buy in the future?
This is a tough one. So many of the gadgets that high-tech travellers may have carried in the past have now been replaced by an iPhone or an iPad—stand-alone cameras, GPS devices, portable DVD players, music devices. I hardly need anything besides my iPhone any more. What I would love to have though, is an app on my iPhone which communicates with a device in my checked baggage and tells me how far my bag is from my current location. That would make waiting at the baggage carousel obsolete.
What’s your favourite holidaying location.
In India, Goa is a perennial favourite destination. It’s a short, one-hour flight from Mumbai, it has the most relaxed vibe and you can always count on fabulous food. Overseas, I fell in love with Amsterdam. It’s a beautiful city when the weather is right and packed with great art, events and fun.