Yatra Shifts Focus Towards Corporate Travel for Accelerated Growth
Yatra, the prominent Indian online travel services firm, has mapped out a plan to tap further into the realm of corporate travel. Keying in on the business of regular, higher-value corporate consumers, Yatra aims to shift away from the more unpredictable, price-oriented leisure travel sector. CEO Dhruv Shringi expressed confidence that this directed approach would speed up the company’s growth and bolster its reputation as a go-to platform for corporate travel needs.
Notably, in the quarter leading to June 30, the company saw a surge in the share of gross bookings from its B2B operations. Within this period, 67% of overall bookings came from the B2B arena according to Shringi, a figure he expects to edge closer to 70% as the fiscal year closes. This shift indicates the company’s deliberate effort to position its platform as an essential part of corporate travel scheduling.
The commitment to their corporate customers is so embedded that Shringi coined the term ‘switching costs’ to describe the extra effort required by a company to switch from their already integrated system. The truism that change is costly is emphasized here, as once corporations are woven into the fabric of Yatra’s operation, deflection becomes more complex and less appealing.
Yatra has taken a distinct route in business development compared to its competitors by deepening its online integration with customers. The firm notes, majority of its market rivals have minimal digital integration and still provide services in a rather traditional, offline manner. Building on this divergence, Yatra has amplified its digital connectivity as a competitive edge; a move that puts them in pole position to capitalize on the ongoing digital transformation within the travel industry.
In line with its focus on corporate clients, last year, the travel services provider announced the acquisition of Globe All India Services (Globe Travels). This notable purchase, which was worth INR 1.28 billion ($15.25 million), helped expand Yatra’s corporate client base and further fortified its position in this niche.
Furthermore, Yatra’s growth strategy is highly centered on the retention of its long-standing corporate customers. In illustrating the steadfastness of the company, Shringi mentioned that 73 out of their top 100 customers have been committed to their services for over five years. This impressive client retention showcases the level of trust and dependability associated with Yatra’s brand.
Contrary to the typical model where online travel platforms battle for consumers with discounts and incessant marketing, Yatra continues to excel by maintaining the loyalty of their corporate client base. And the biggest testament of success lies in the company’s 97% annual retention rate as pointed out by its CEO, Shringi. This remarkable rate ensures a stable and recurring revenue stream for the company.
The journey to increased profitability has been achieved through two primary tactics according to Shringi. First, the company moved away from direct, heavy discounting for customers. Instead, they opted for specialized offers through banking and marketing partners; an initiative that has significantly trimmed down Yatra’s cost of acquiring new customers.
The second strategy involved a shift towards higher-margin offerings like corporate airfares, hotels, and packages. Interestingly, they discovered that the net margins for hotels and packages were closer to 11%, compared to 3-4% for airfare. Additionally, the mix of hotels and packages in gross bookings has increased from 15% to 20% over the past year, reflecting a change in customer preference and a potentially lucrative revenue direction for Yatra.
The implementation of these strategies has resulted in marked improvements in the company’s gross bookings. Yatra recorded an approximately 9% year-on-year increase in gross bookings for the quarter, bucking a trend of recent reductions in total volume. Whilst the recovery wasn’t consistent across all areas; air ticket bookings saw a modest rise while hotels and packages experienced a more substantial growth.
Cross-selling of hotel bookings to corporate clients is a significant area of immediate growth for the company. Yatra has already seen great outcomes from getting customers onboard with hotel bookings first, which then opens up opportunities for broader travel services. Indeed, ‘hotel-led’ corporate achievements have been a major contributor to the company’s growth.
As the company continues to strategically respond to the market, Yatra recorded important figures in its quarterly report. Operating revenues soared by 108% to INR 2.1 billion ($24 million) year-on-year for the first quarter. Adjusted EBITDA similarly bolstered to INR 249 million ($2.8 million), marking a 138% increase compared to the same period in the previous year.
Net profit also saw a significant uptick of 296% compared to the same quarter the previous year, rising to INR 160 million ($1.8 million). As a testament to the success of Yatra’s strategy, the company added 34 new corporate accounts during the quarter, with an expected annual billing of INR 2 billion ($23 million).
Barring its achievements, Yatra remains committed to growth and innovation, with the continued expansion of its corporate client base at the heart of its business strategy. As it leverages digital integration and dedication towards higher-value corporate clients, this seems just the beginning of its accelerated growth journey.