And why ClearTrip is supporting India’s offline travel agents and wants to stand by them?
Very recently, I covered how Indian OTAs are under a serious threat because of the vanishing commission from flight booking. It seems ClearTrip is realizing this fast and is now displaying following message on it’s site:
Cleartrip supports India’s offline travel agents and stands by them in their time of need.
Screenshot:
Aren’t these online portals ’supposed’ to kill (in corporate speak: compete) with the offline players? I mean that was the entire premise behind bringing things online. Right?
Why this sudden love?
It’s expected that around 35,000 agents and sub-agents will be forced to shut shop (by October), because of commission erosion in flight bookings – so ClearTrip might want to partner with these agents and gain network/distributors (ClearTrip can sell packaged tours/international tickets/hotel bookings etc).
ClearTrip raised $18.75mn and has enough cash reserve to stay in the game (remember, they said “we raised more cash then we needed?”).
But the basic question is on the model itself – unlike matrimonial/job players that are banking on ‘information’, travel players are supposed to bank on new media’s low cost and high scale.
I have raised this question earlier and somehow, it doesn’t makes sense for an online player to go offline and play the same game, especially when online play’s core differentiation is to bring in dis-intermediation.
What’s your opinion?
The above pic was spotted by Saurabh and he sent an interesting message along – Supporting the very people who you are trying to oust from the market!
Your take?
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Related posts:
- Travel Industry Roundup : iXiGo launches Bus Search, ClearTrip lays off 15% employees
- Travel Industry roundup: ClearTrip launches Train Booking, France-based Sprice enters India
- Indian Travel Industry: Witnessing Penguin Effect?
- ClearTrip receives third round of funding
- ClearTrip launches Travel Videos
Ashish–Cleartrip is also a travel agent, albeit an online travel agent. This makes us a part of India’s travel industry and we genuinely sympathise with the offline agents.
With respect to “killing” the offline travel agents, we’ve never believed that at Cleartrip. Travel agents all over the world are still thriving and growing, so it would be a little naive for us to think that online travel agents would “kill” the offline travel agents in a country where less than 5% of the population is online.
The whole point of internet is to reduce information hoarding by so called experts (as Steven Levitt explains in Freakonomics). Internet sites make it easier for end users to get hold of information and take informed decisions. E.g using cleartrip or yatra or whater we have got, users can compare their options and take decisions. This is not very transparent when done by a offline travel agents. Afterall, their main onjective is to make more commission than care for customer’s benefit.
It is not very difficult to see why offline travel agents are difficult to beat in India as pointed out above and to that extent offline agents can be partners for online business. But what is this sympathy thing going on..Difficult to understand. Cleartrip is a business where they can pass on benefit to end user by scale of thier operation…not to show sympathy (genuinely sympathise )to other players. Would they show same sympathy to yatra.com if they have some problems in future!
Cleartrip is passing a message by putting that text on their website. Its imminent that there is a problem offline TAs would face. I would agree with Ashish, that the OTAs might be looking at the powerful distribution network, and the addressbooks of the agents.
Gaurav–Cleartrip competes with the offline travel agents inasmuch as it competes with Yatra, but that doesn’t mean we have to be unsympathetic.
I’ve posted our view over at the Cleartrip blog:
http://blog.cleartrip.com/journal/2008/8/14/in-support-of-offline-travel-agents.html
Correct me if I’m wrong (and please do – I might be off the page completely!) but I was under the impression that while travel agents can be competition, many online ticket booking sites such as Cleatrip, in fact have tie-ups with these very travel agencies – e.g. exclusively use these sites to make books and receive a kickback? So while their shutting shop forces more people to go online, they’ve also lost a distribution mechanism?
Gautam Kshatriya
gautam.kshatriya@moneyvidya.com
http://www.moneyvidya.com
Hrush
Thanks for sharing your comments. Essentially, I am not against the goodwill (and let me share that I love CT and the work you guys are doing! ).. But I am trying to understand the basic business model that OTAs are implementing.
I guess there are other distribution channels too that can be leveraged, but if an OTA gets into offline business – aren’t they doing the same thing (and can they really achieve economies of scale?)?
And that translates to operational cost which gets passed on to the customer.
Am I missing something? I’d like to know your views.
-Ashish.
Ashish–I’m not sure where you picked up the signal that we are trying to get into operating an offline business, we simply stated our sympathies for those agents that are operating offline businesses.
We think it’s unfortunate that a very large number of people stand to lose their livelihood.
There could be opportunity in doing what Amazon did to mom-n-pop booksellers (i.e. provide an online front and generate leads). So I go to cleartrip to book a travel package – and end up buying it from a local TA with Cleartrip-backed service guarantees. Cleartrip takes a cut for making the connection.