Indian e-commerce behemoth Flipkart has acquired Cleartrip, an online travel company for an undisclosed amount of money at a time when travel companies around the world are going through a rough patch due to travel restrictions since last year.
After the acquisition, Cleartrip will continue to operate as a separate brand and keep all its employees, it said in a statement.
Several media reports have pegged the deal at around USD 40 million which is far low than USD 75 million, the total fund the 16-year-old firm has raised from funds such as Kleiner Perkins, Sherpalo Ventures, DAG Ventures, Gund Invest, and Concur Tech among others.
With this acquisition, Walmart-owned Flipkart plans to strengthen its capabilities in online travel segment.
“The Flipkart Group is committed to transforming customer experiences through digital commerce. Cleartrip is synonymous with travel for many customers, and as we diversify and look at new areas of growth, this investment will help strengthen our wide range of offerings for customers,” Kalyan Krishnamurthy, CEO, Flipkart Group, said in a statement.
Flipkart got into online travel booking service in 2018 by partnering with MakeMyTrip, GoIbibo, and redBus. In the later years, it added several other OTA companies on its platform including Cleartrip.
Interestingly, all the flight ticket bookings on Flipkart’s rival Amazon India are powered by Cleartrip. It’s not clear if Amazon India will look for a different partner post the acquisition.
Although COVID-19-induced lockdown increased digital adoption in the country as a whole, India’s OTA companies did not get to reap its benefit. Last year India’s OTA industry was hit hard after the country went into a two-month-long lockdown. While the restrictions on air travel within the country was lifted by mid-2020, the travel booking companies were reeling due to the increase in ticket cancellations for both national and international travels.
According to the World Travel and Tourism Council (WTCC), the COVID-19 pandemic is likely to cost the tourism industry almost USD 22 billion and a loss of almost 50 million jobs worldwide. Another report by Praxis Global Alliance, a Gurugram-based management consulting firm, said travel, tourism, and hospitality will be the worst hit from the slowdown caused due to the pandemic in the first quarter of the financial year 2021.
It is to be noted that India has made temporary air travel arrangements, also called “air bubble”, with 28 countries that will allow fully vaccinated Indian tourists to travel to these countries which include Sri Lanka, Maldives, UAE, and Russia, among others.