Cleartrip, the India-based global online travel and hospitality major, has drawn up a major expansion plan for its Middle East operations which would see the company making acquisitions as well as heavy investments for organic growth GCC markets including Bahrain, Oman and Kuwait.
The proposed expansion plans will also see Cleartrip, in which Abdullah Alromaih of Al Jazeera Paints, a Saudi Arabian conglomerate, is one of the largest shareholders along with someinternational investors such as SAP Concur and Newquest, making an entry into new markets such as Africa and Turkey.
“We are looking at a two-fold expansion, through organic and inorganic routes, in countries such as Bahrain, Oman and Kuwait which are the largest markets in GCC outside UAE and Saudi Arabia,” Aditya Agarwal, head of corporate strategy and M&A at Cleartrip, told Arabian Business in an exclusive interview.
Cleartrip is already in talks with someplayers in the GCC for possible acquisitions, he added.
“These talks are mainly in the preliminary stage, but having said that, we can move fast once we make up our min," Agarwal said.
“We have already proved that with our acquisition of Flyin in Saudi,” Agarwal added.
Cleartrip acquired Flyin, the largest OTA (online travel aggregator) in Saudi Arabia last June, which has helped the Indian start-up catapult to the number one player in the GCC region in the segment.
Though Agarwal declined to put any investment figures for its expansion plans in the Middle East region, industry sources indicated that the company’s growth plans in the region could involve $100 to $200 million in the next few years.
Cleartrip’s aggressive expansion plans in the GCC and the larger MENA regions are part of the company’s strategic plans to take its gross bookings value (GBV) to cross $2.5 billion in the next two-year period, from the current level of $1.5 billion.
The company’s net revenue stands at $110 million currently.
The online major, who is co-founded by British nationals Stuart Crighton and Matthew Spacie and Indian national Hrush Bhatt, is currently present in seven countries in the Middle East region – UAE, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and Egypt.
Cleartrip’s expansion plans in the GCC region will also include entering the segment of providing online visa services in more countries in the region, besides foraying into other segments ‘to cater to all possible requirements of the company’s travelling customer’.
The company is already present in the online visa service business in UAE.
“We will enter the online visa providing segment in countries (in Middle East) which allow private players in this activity,” Agarwal said, adding that Cleartrip will also expand its product basket in the region, depending on the requirements and potential of each market.
He added that Cleatrip believes the primary benefit of expansion in the Middle East and Africa is that it takes advantage of the natural traffic corridors that exiswt between India, the UAE, Saudi Arabia, Egypt and Turkey.
“If you are on one side of the corridor, it makes sense to be on the other side as well.” Agarwal said.
A second benefit is the level of shift from offline to online in the region. Apart from UAE and Saudi, which are at 25-30 percent, other countries in the region are below 20 percent in the offline to online shift in flight bookings and other areas, as against the 55-60 percent in online penetration in India.
“As we have already seen that shift in India and all the changes that the industry has seen, we can replicate this for other regions. Thus, early entry in the Middle East market give us the growth engine for many years to come,” Agarwal said.
As for its entry plans in Africa and Turkey, Agrawal said Cleartrip already has presence in Egypt with its Arabic customer service centre located in Cairo, and the company will soon be making plans for starting its marketing operations there.
We consider the entire North African region as one market and we can service the region from our operations in Egypt, he said, adding that Turkey will be the next on its radar.
The Middle East region currently contributes 45 percent of Cleartrip’s total turnover, accounting for about $600 million in GBV, which makes it one of the largest online businesses not just in travel but across digital businesses, along with Amazon’s Souq and Kareem, Agarwal said.
Within the Middle East, UAE and Saudi operations account for about 90 percent of the company’s revenue.
“Right now we are using our UAE base for operations in these markets. We are looking at investing a lot more for increasing our ground operations, customer acquisitions and marketing spend in other GCC countries,” Agarwal said.
However, he ruled any immediate fund raising plans by the company, including from the Gulf region, to finance the proposed expansion plans.
“With just about $150 million, we could achieve a GBV of $1.5 billion, reaching a capital efficiency of 10xGBV,” he said, adding that the company is well capitalized currently.
“While investing, we’ve always taken a very pragmatic approach, and been disciplined on capital.”For all the latest travel news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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