India’s Yatra Focuses on High-Value Corporate Travel Market

Yatra, a prominent online travel company based in India, has expressed its intention to bolster its corporate travel sector. The firm’s Whole Time Director and CEO, Dhruv Shringi, alluded to a shift in strategy that focuses more on high-value, regular corporate clients as opposed to occasional, price-motivated leisure travelers.

In the quarterly report ending June 30, Yatra demonstrated a substantial increase in gross bookings from its B2B operations. According to Shringi, approximately 67% of all gross bookings were generated through their B2B segment and he projected this could escalate to 70% by the end of the fiscal year.

Yatra is making a dedicated effort to become a regular part of their corporate clients’ travel planning processes. The vision lends itself to the establishment of ‘switching costs’, implying that companies would find it more strenuous to sever ties once their systems are intertwined with Yatra’s platform.

Shringi made a comparison with competitors’ offerings, stating that the majority still deal with companies through traditional offline methods. Yatra prides itself on having deeper technological synergies with its clients and a more profound online presence.

The superiority in technological integration is considered by Yatra as a clear competitive advantage as companies strive to transition towards digitized travel arrangements. Shringi highlighted the ongoing trend of digital adoption across industries as a substantial opportunity for Yatra to capitalize on.

A significant breakthrough was Yatra’s acquisition announcement last year of Globe All India Services (Globe Travels), a provider of corporate travel services. The company stated the transaction was completed for INR 1.28 billion ($15.25 million) in cash.

The importance of loyal, long-term corporate clients was emphasized as being pivotal to Yatra’s overall strategy. As Shringi pointed out, the company’s strong customer retention is a testimony to its successful approach. He revealed that out of their top 100 clients, 73 have been with Yatra for over five years.

Yatra regards such enduring relationships as a consistent source of revenue and operational leverage, particularly after successful technologic integrations. Shringi indicated a shift from the conventional race among online travel platforms to attract consumers through discounts and marketing. Yatra prefers to focus on maintaining a high annual retention rate for corporate travel, which currently stands at over 97%.

Shringi attributed Yatra’s improving margin to two central factors. The first being the reduction of direct discounts to customers and instead, relying on offers via banks and marketing partners. This strategic shift has significantly cut Yatra’s customer acquisition costs.

Secondly, the business operations have gradually started gravitating towards higher-margin products consisting of corporate airfares, hotels, and packages. Shringi mentioned hotels and packages ‘deliver net margins near 11%, massively surpassing the 3-4% net margin for air travel’.

According to him, the mix of hotels and packages has seen a growth of 5% as it moved from about 15% to approximately 20% of total gross bookings over the course of a year. These alterations have positively impacted the company’s net margin and revenue-after-cost measures, notably higher than the nominal growth in gross bookings.

Yatra’s quarterly report showed a jump of approximately 9% in gross bookings from the previous year, a turnaround from earlier reported volume declines. The recovery wasn’t evenly distributed across all segments. Air ticketing saw a modest rise but the hotel and package bookings outperformed.

Yatra is utilizing cross-selling of hotel services to corporate clients as a short-term growth strategy. Several recent corporate agreements were driven primarily by hotel bookings which subsequently facilitated the expansion to other travel services.

A highlight from the quarter’s figures included a 108% year-on-year growth in operation revenue, reaching INR 2.1 billion ($24 million). Adjusted EBITDA saw a 138% increase to INR 249 million ($2.8 million) while the net profit grew by 296% to INR 160 million ($1.8 million) compared to the corresponding period last year. In addition, Yatra successfully added 34 new corporate accounts to its client base with potential annual billing reaching up to INR 2 billion ($23 million).