Yatra Eyes Major Expansion of B2B Operations

Yatra, an Indian cyberspace travel agency, has been planning to further expand its business-to-business (B2B) operations. Dhruv Shringi, the CEO and Whole Time Director, suggested a strategy leaning towards the acquisition of continuous, high-value corporate clients as opposed to targeting singular, price-sensitive leisure customers.

A review of the company’s performance for the quarter that ended on June 30 highlighted a significant shift. The gross bookings segment saw the lion’s share being claimed by its B2B services. Reports indicated that approximately 67% of total bookings were business-oriented, and the company predicts this percentage could rise to 70% by the end of the financial year.

The focus of Yatra’s growth strategy is the integration of their platform into regular operations of corporate customers. Shringi referred to the concept of ‘switching costs’, which denotes the additional effort required by a business to shift away once Yatra’s platform becomes integral to their routine.

The CEO emphasized their edge over competitors who generally retain an offline approach to dealing with companies. Yatra prides itself on its high-tech integration with clients and deeper penetration in online spheres. These factors make it a frontrunner as digital transformation takes over travel processes within businesses.

Shringi highlighted the business opportunity that Yatra can seize due to the ongoing digital wave sweeping across the industry. He pointed out that many of their competitors continue using offline methods and have barely integrated these processes. He believes that this is why Yatra has an enormous potential to influence digital uptake.

In the previous year, Yatra made a significant move by acquiring Globe All India Services, a provider of corporate travel services, with a cash transaction totaling INR 1.28 billion ($15.25 million). This acquisition is central to the evolving strategy of Yatra, as it aims to increase its footprint in the corporate world.

The emphasis on maintaining long-term relationships with their corporate clients became clear when Shringi mentioned the duration of association with their biggest customers. As evidence of their business resilience, he mentioned that out of their top 100 clients, 73 have been with them for more than five years.

He underscored how such relationships pave the way for predictable revenue streams and operation leverage, especially once they have established technical integrations. In a market where online travel platforms woo consumers with discounts and aggressive marketing, Yatra has chosen a different approach focusing on corporate clientele.

Shringi proudly shared their corporate travel retention rate, which stands above 97% annually. He cited this high retention rate as the backbone of their high operating leverage within their business operations.

Yatra’s margin improvement strategy focuses on two aspects. First, they put a halt to direct discounting strategies for customers, instead, opting to collaborate with banks and marketing partners for special offers. This resulted in a decreased cost of customer acquisition for Yatra.

The second aspect of their margin improvement plan is the shift of their business mix towards products holding higher margins including corporate airline tickets, hotel accommodations, and package deals. ‘Hotels and packages contribute a net margin of nearly 11%, compared to the 3%-4% net margin from air services’, clarified Shringi.

He revealed that the mix of hotels and packages in their gross bookings has seen a significant shift, moving from 15% to nearly 20% year over year. These changes have played a crucial role in improving the net margin and revenue-after-cost values of the company, pushing them higher than mere rises in gross bookings.

For the recently concluded quarter, Yatra reported a 9% year-over-year increase in gross bookings, turning around previous drops in total volume. The improvement hasn’t been evenly distributed, though; while airway bookings saw a modest increase, hotel accommodations and package deals experienced a quicker pace of growth.

Their immediate growth lever is pinned on cross-selling hotels to their corporate clients. Many of their recent corporate engagements have been initiated through hotels, enabling them to add further layers of travel services for these companies. This, underlines their strategy to focus on products like hotels and packages that yield higher margins and are easier to cross-sell.

Looking at the key financials for the recent quarter: the revenues from operations jumped 108% year-on-year, reaching INR 2.1 billion ($24 million), while the adjusted EBITDA hiked up by 138% year-on-year to INR 249 million ($2.8 million). Moreover, the net profit soared by 296% as compared to the same quarter last year, reaching INR 160 million ($1.8 million).

The company also expanded its clientele, closing 34 new corporate accounts during the quarter with an estimated annual billing prospect of INR 2 billion ($23 million). Yatra’s strategy focuses on establishing symbiotic relationships with much larger, sustained corporate clients. This strategy has not only aided their B2B growth but is also bringing them closer to becoming a key player in the digitization of the corporate travel sector.