Indian Online Travel Giant Yatra Pursues Corporate Business Expansion
Yatra, an Indian online travel entity, is charting a course to enlarge its corporate travel sector. The principal stratagem, as elucidated by Whole Time Director and CEO Dhruv Shringi, would be roping in high-value corporate clients who provide reliable business rather than sporadic, price-sensitive vacationers. This shift in focus was evident in the gross bookings for the quarter concluding on June 30, manifesting a dominant segment of B2B transactions.
The CEO magnified that approximately 67% of gross bookings were constituted by B2B interactions, an impression which he conjectures could escalate to around 70% at the conclusion of the fiscal year. An aspect of Yatra’s planned growth encompasses embedding its platform into its corporate patrons’ habitual operational paradigm, a strategy dubbed as ‘switching costs’. This model, Shringi affirms, causes additional exertions for companies to divest from Yatra after they are rooted in the system.
Presently, most rivals operate on an offline mode and cater to businesses in a conventional approach. A key differentiasm of Yatra is its profound technical synchronization with its customer base and superior online infiltration. The firm staunchly maintains that these features position them advantageously as firms increasingly adopt digitized travel arrangements.
Shringi elucidated the noticeable gap in the industry’s digital evolution stating that the majority of competitors retain their clientele through traditional, offline practices with only cursory levels of integration. This outdated approach has unleashed a significant opportunity for Yatra to catalyze the rampant transition towards digital adoption within the travel sector.
In the past year, Yatra expanded its repertoire by acquiring Globe All India Services, a company providing corporate travel services. The procurement, costing INR 1.28 billion ($15.25 million) in cash, strategically helps Yatra gain leverage in the corporate world. Long-term partnerships forged with corporate clients form a critical cornerstone of Yatra’s business strategy.
Shringi brought to light the loyal patronage among significant clients as an illustration of Yatra’s strong business foothold. He shared, ‘Out of our leading 100 clients, 73 have shown consistent allegiance beyond a span of five years’. Yatra believes that such sustained relationships dictate predictable revenue flows and operational leverage once technological coherence has been effectuated.
In the midst of online travel platforms attracting consumer attention through substantial discounts and promotional activities, Yatra has consciously chosen to deviate from the norm. Shringi mentioned that Yatra’s yearly retention rate for corporate travel surpasses 97%, which substantiates their solid operational leverage.
Yatra’s enhanced business margins can be attributed to two significant changes it implemented: a reduction in direct customer discounting and a shift in business portfolio favoring high-margin products. Replacing substantial discounts, the firm opted to bank on special promotions circulated through banking partners and marketing associates, thereby diminishing Yatra’s customer acquisition costs.
The second factor contributing to the improved margin was the conscious accentuation on high-margin products like corporate air tickets, hotels, and package deals. ‘Our product mix of hotel bookings and packages has increased year over year from about 15% to approximately 20% of total bookings’, Shringi explained. These diversified revenue streams have improved net margins and profit post expenses, surpassing the raw boost in gross bookings.
Throughout the concluded quarter, Yatra reported a nearly 9% year-over-year augmentation in gross bookings, signifying a reversal from previous periods’ volume contraction. This growth trajectory, however, has not been evenly distributed; air ticketing showed modest progress while hotels and package deals exhibited more vigorous expansion.
The firm is tactfully leveraging the sale of hotels to their corporate patrons as an immediate growth catalyst. Several recent corporate synergies were hotel-centric, implying those clients initiated their business relationship with Yatra through hotel bookings, which subsequently expanded to broader travel services. Presently, hotels and packages offer higher margins and are simpler to promote, making them particularly attractive for Yatra.
Discussing the quarter’s performance highlights, Shringi disclosed that revenue from operations expanded by 108% year-over-year, amounting to INR 2.1 billion ($24 million) in the initial quarter. Secondly, the adjusted EBITDA swelled to INR 249 million ($2.8 million), a staggering 138% increase compared to the same timeframe last year.
The net profit for the company surged to INR 160 million ($1.8 million), a substantial 296% uptick relative to the prior year. Simultaneously, Yatra’s expanding corporate client base added 34 new business accounts in the last quarter, implying prospective annual billing worth INR 2 billion ($23 million). Thus Yatra’s strategic pivot towards corporate travel might well be the harbinger of a promising avenue for its future growth.