Cleartrip is the second-place competitor against MakeMyTrip in India's online travel war. Its acquisition of Flyin signals a shift in its focus to the Middle Eastern market, where the price wars are less fierce.
Cleartrip, the second-largest homegrown online travel company in India after MakeMyTrip, has acquired full control of Flyin, the largest online travel company based in Saudia Arabia — where most travel continues to be booked offline.
The combined company will have more than 1,000 full-time employees, a spokesperson said.
Mumbai-based Cleartrip has been in a fierce battle for market share in India with MakeMyTrip, which is an online travel agency in a model similar to Expedia, as well as with Yatra. Companies have resorted to discounting to acquire customers, leading all three online travel players to remain money-losing in India for years.
The Middle East market has not yet seen as much competition, which means Cleartrip has a chance to grow there more profitably. Prior to this acquisition, in the fourth quarter of 2017, Cleartrip saw a 59 percent year-on-year increase in bookings in the Middle East region, though it didn’t disclose the actual volumes. It will launch its Cleartrip brand in Egypt this summer.
Cleartrip was founded in 2006 and has received investment from Concur Technologies, DAG Ventures, Draper Fisher Jurvetson, and others. The company doesn’t disclose its total funding raised, but the amount has been estimated at between $56 million and $72 million.
Given that it is suffering net losses, it may have recently received more funding to be able to afford the Flyin acquisition and to fuel its hiring spree in the past year. For example, the company has increased its technical team by 50 percent in the past year. It has also made significant changes to its senior leadership by wooing new executives.
Cleartrip claimed that the combined entity will have a more than 60 percent market share of online travel sales in the Middle East.
Correction: This article originally said Cleartrip and Flyin were metasearch brands. They’re online travel agencies.
Online Travel Looks to the Middle East
The Middle East sector is receiving growing interest from online travel players. A significant number of residents in the region are high-spending travelers. Today most of these book through offline travel agencies.
Neither Skyscanner nor Kayak is a significant price-comparison player in the Gulf region. The brands, which are giants in North America, Europe, and increasingly China, have not localized their marketing, sought out enough local inventory, or adopted many of the preferred payment methods used locally, according to industry observers. To be sure, the brands themselves say they have strong offerings and that they have simply not marketed heavily in the region yet.
From a small base, online growth in the Middle East is growing at a pace that is above the global average. Saudi Arabia, for example, saw its online flight bookings grow 14 percent in 2017, Cleartrip estimated.
Smartphone usage in several Arab states in the Gulf, particularly in the United Arab Emirates and Saudi Arabia, is among the highest in the world. But local players have struggled to develop mobile-first booking tools that are popular.
Cleartrip can bring its technical expertise in mobile that it has developed in India. It aims to shortly introduce a messaging-based booking and service experience that will be more natural to use on mobile than typing in data into text-based forms.
The company said it saw mobile transactions by residents of Saudia Arabia using its platform double last year. The majority of travel bookings in Saudi Arabia are taking place within a week prior to departure on Cleartrip’s platform, and last-minute purchases often lend themselves to mobile-first booking experiences.
Cleartrip and Flyin’s biggest rival locally is Wego. In September 2017, Wego, a price-comparison search company, received a Series C equity investment that was led by MBC Group, which owns Dubai-based satellite channel MBC, and included participation by Middle East Venture Partners, which describes itself as the largest venture capital firm in the region.
About 40 regionally-based online travel agencies serve the Middle East — an increase from roughly five only five years ago. A look at SimilarWeb found that the biggest online travel contenders to Flyin, Cleartrip, and Wego appear to be Almosafer/Tajawal, CityBookers, Rehlat, Tajawal, Holiday.me, and Yamsafer (one of Skift’s Top 20 Startups to Watch in 2018).
Cleartrip’s Unclear Trip
Diversifying away from India may help Cleartrip. The frequency of travel in India is still relatively small, with the average online customer only taking 2 or 3 flights a year, as compared to average customers in many other markets taking more than a dozen trips. Travel in the most lucrative Middle East markets is much more frequent, which can mean companies earn more repeat businesses and have to spend less on acquiring each customer on average.
Due to Indian business interests in the Gulf, many travelers cross between India and the Middle East regions. So Cleartrip may enjoy many cross-selling opportunities and growth from its existing customer base.
But the Indian and Middle Eastern markets offer different opportunities and challenges. It will be tricky for the combined company to maintain ane execute dual and somewhat conflicting strategies.
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Photo credit: Cleartrip is buying Flyin, the largest online travel company in Saudi Arabia. Visual Hunt