In a bid to increase the diversification of its offerings, Flipkart is all set to acquire a 100% stake in Cleartrip!
On Thursday, the Walmart-owned e-commerce giant announced that it will acquire the operations of Cleartrip, one of India’s oldest online travel booking portal.
As part of the deal, Flipkart will retain all the employees of Cleartrip and let it continue operating as a separate brand, while the latter subsequently helps the e-com major develop technology solutions.
Note here that the terms of the acquisition are yet to be disclosed. However, the deal, which is currently being expected to be a mix of cash and equity, will likely value the online travel agent at $40 million. As per media reports from earlier this week, it is being considered as a distress sale amid the fast-changing market conditions due to Covid19 which has hit the Hospitality and Travel industry the hardest.
Cleartrip was founded back in 2006 by Hrush Bhatt, Matthew Spacie and Stuart Crighton. It has been competing with rivals such as Goibibo, MakeMyTrip, and other newer entrants such as EaseMyTrip, Yatra, Ixigo and more for the past decade.
The travel booking space competition heavily intensified when Naspers merged MakeMyTrip and its portfolio company Goibibo in 2016. In the following three years, Naspers sold its shares in the joint entity to China-based Ctrip, an existing investor in MakeMyTrip, and then exited the entire travel industry.
Cleartrip finding itself amid cut-throat competition, forayed into the space of local experiences in late 2015 and started offering a range of activity to its customers such as cycle rides, food trails, workshops and more.
However, soon, when the coronavirus outbreak arrived in India last year, it severely impacted the travel and hospitality sector, which further led to shrinking revenues for Cleartrip. The online travel agent laid off close to 400-500 employees amid the thick of the pandemic. In FY20, Cleartrip incurred Rs 14 crores in losses while its revenue stood at 318 crores.
Stuart Crighton, Co-Founder of Cleartrip, in a statement, mentioned that the company has been a pioneer when it comes to capitalising on technology to simplify the travel experience for its customers. And, it is the same product drive approach that helped Cleartrip become the preferred travel partner to numerous consumers in different regions and a wide range of markets.
All in all, Flipkart’s acquisition of Cleartirp comes at a time when the Walmart-owned e-com giant and rival Amazon are aggressively invading the hotel and travel bookings space as part of a bigger mission to diversify their offerings in new growth areas such as food delivery, e-pharmacy, selling financial products and more.
Flipkart had earlier struck a partnership with MakeMyTrip to boost distribution and later announced a similar arrangement with Ixigo back in 2019. On the other hand, Amazon partnered up with Cleartrip to power their flight booking feature during the same year.
It now remains to be seen how will this acquisition plays out to Flipkart’s advantage and what will be Amazon’s new move in the same direction. We will keep you updated on all future developments. Until then, stay tuned.