30 Minute Interview

'OTAs are relevant only if they continue to innovate'

The OTA space is on the forefront of a major revolution where only the best will survive. Stuart Crighton, COO of Cleartrip.com discusses the challenges of the OTA space in the near future. By Chetan Kapoor

Stuart Crighton COO, Cleartrip.com

What potential does the offline space hold for the OTAs?

I think that if an OTA is run sensibly it can sustain and grow. Today in the OTA world, we are growing at a very fast pace and all of us are chasing a US$ 2 billion market. But why should we restrict ourselves to targeting just US$ 2 billion, when there is a US$ 20 billion market out there? We offer a great product and understand the consumers better than a traditional travel agent.

Being based in metros like Mumbai, Delhi, Bangalore and Hyderabad, the cost of consumer acquisition is going through the roof. It is imperative, therefore, to reach out to the B and C cities in India as well, in order to make a model evolve correctly. In case of constraints in reaching these cities, we will have to build a brand, raise awareness, increase customer adoption, get people to enter into transaction and we will also have to understand their buying habits a lot more, for which retail is a great option.

How do you deal with competition from TTAs?

The challenge is to integrate back end technology and bring innovations into the offline world, and there are a number of ways to do that. The TTAs today, don't go out and target customers, like those in the online space. The kind of information we get allows us to target the customer segment in order to bring them into the offline world. We are very aggressive as far as selling is concerned, unlike TTAs who sit and wait for customers. Buying travel has always been a premeditated decision made by the consumer. However, we want to take that premeditation away and instead make a decision for them. This is based on the way one talks and targets consumers, ultimately giving them a variety of different channels to cover and experience.

The TTAs are facing the brunt of IATA's e-ticketing initiative with respect to commissions, what happens to the OTAs?

Airline websites have always been a step ahead. In North America, the OTAs came out first and the airlines followed later but in India, it was the other way around. If the OTA's only mandate is to sit and be an intermediary between airline and consumer, I would say that their model is very dodgy and not very defendable. On the other hand, with an OTA, I think the airlines will get a better understanding of what consumers want and will create much better experiences for them to come online.

An airline has proprietary ownership of content and inventory and we should fully respect it, never thinking that we could go in there, cut their prices and hold them to ransom. The approach that we have to take is to find middle ground, add value to the airline and ultimately deliver value to the consumer.

Is there a fear brewing up over consolidation and mergers in the near future?

The difficulty with mergers and acquisitions is that one doesn't own inventory. In the OTA space, if there is a buyout there is no guarantee that the 1,00,000-1,50,000 people that come to your site today will all come back with the acquisition. You are not buying the network and cannot buy the consumer. This however, changes with maturity and growth in the market. As far as the Indian players are concerned, this is probably not really relevant. If you go and buy for reasons such as content, product, technology, then it is different; but in the core space I don't think there is any sense in looking at that right now.

Another concern is the larger players coming in, which would be a larger issue. A bunch of us now are pretty mature, well-known and have a great consumer adoption so they will have to weigh how effectively they can do business here, taking into consideration the cost of building their businesses and teams here and getting the right competency in their teams; and ultimately the decision maker will look at how long will it take to build his business at a certain cost or accelerate that by going in for some kind of agreement with somebody else.