India’s Yatra Invests Heavily in B2B Offerings
Yatra, a prominent online travel firm based in India, has unveiled plans to intensify development within its corporate travel offering. CEO and Whole Time Director Dhruv Shringi suggests Yatra will place priority on nurturing valuable and recurring corporate clientele in contrast to those pursuing leisure-based, price-orientated avenues. Following the close of the quarter on June 30, Yatra detected a healthy surge of gross bookings primarily emanating from its B2B sector. Shringi remarked that approximately two-thirds of gross bookings can be attributed to B2B, with predictions placing this figure at 70% by year-end.
An integral aspect of Yatra’s journey is to become a habitual resource within the business routines of their corporate clients. A key concept outlined by Shringi is ‘switching costs,’ or the potential added effort for a firm to realign once having settled into Yatra’s platform. Shringi investigated the competitive landscape and determined that the lion’s share of competition continues to offer services in a traditional, offline capacity. As such, Yatra asserts its advantage thanks to its in-depth technical integration with clients and a greater market penetration through digital means.
Apart from the traditional model embraced by most competitors, characterized by minimal integrations, the opportunity and value proposition of Yatra lie in solidifying the proliferating digital evolution throughout the industry. Their key market discriminator, Shringi says, hinges on their elevated level of technical cooperation with clients, which quite naturally positions them at the forefront of digitizing travel processes.
Yatra amplified its commitment to the corporate travel sector through the acquisition of Globe All India Services, a corporate travel solutions provider. The deal, sealed last year, amounted to INR 1.28 billion ($15.25 million) in cash. The company values long-term corporate customers, believing them to be instrumental to its strategic direction. The CEO points to the active life cycle of their largest clients as indicative of Yatra’s value proposition and customer retention.
To exemplify the strength of Yatra’s customer relationships, Shringi mentioned, ‘Of our top 100 customers, 73 have remained loyal to us for over half a decade’. The firm’s belief is that once technical integrations are established, these relationships will yield reliable revenues and operational advantages. As other online travel platforms busy themselves with customer lure through discounts and promotional activities, Yatra chooses an alternate approach.
Highlighting the value of loyalty, Shringi stated, ‘Our annual retention rate for corporate travel is in the vicinity of 97%’. This strategy affords Yatra a high degree of business leverage. Shringi identified two primary catalysts for margin enhancements including a lowering of direct customer discounts and a shift in the nature of products, favoring those with higher margins. Rather than aggressive price reductions, the emphasis was placed upon benefits offered through banking and marketing partnerships.
The promotional strategy shift helped Yatra in reducing the cost associated with customer acquisition. Furthermore, the product diversion towards higher-margin lines, including corporate flights and accommodation packages, fueled this development. Shringi noted, ‘Hotels and packages tend to generate net margins approximately thrice as high as air travel’. The subsequent change in Yatra’s booking mix, increasing the percentage of hotels and packages from 15% to 20%, propelled the company’s net margin and revenue figures beyond gross booking growth.
The strategic shifts implemented in the company allowed for improving both net margins and measures of revenue after cost. Due to these changes, Yatra experienced around 9% annual growth in gross bookings for the past quarter, turning around previous volume declines. Improvement in air ticket sales was moderate, however, hotel bookings and package deals represented the main drivers of growth. Crucially, Yatra plans to leverage hotel bookings to corporate customers for immediate growth.
Several of Yatra’s newest corporate associates launched their partnership with ‘hotel-led’ introductions. These businesses initially used the platform for hotel bookings, extending their relationship to cover a broader range of travel services. Given that hotels and travel packages tend to offer higher margins and they are easier to offer in packages, they currently represent the prime cross-selling products for Yatra.
Within the key metrics of the quarter, there was substantial growth in revenue from operations, increasing 108% year-on-year to INR 2.1 billion ($24 million). Adjusted EBITDA saw an impressive surge of 138% year on year to INR 249 million ($2.8 million). Yatra’s net profit enjoyed a robust enhancement of 296% compared to the corresponding period in the prior year, reaching INR 160 million ($1.8 million).
Yatra is strengthening its commitment to its corporate client-base, concluding the quarter with the addition of 34 new corporate accounts. These new partnerships promise an annual billing potential of around INR 2 billion ($23 million), adding to Yatra’s vibrant pool of corporate clients. The continuous expansion of the client base in the past quarter speaks volumes about the company’s vision and strategy.
Undeniably, Yatra’s corporate strategy speaks volumes about its focus on long-term partnerships and leveraging the digital revolution. By focusing on deep integrations and corporate client retention, Yatra’s approach differentiates it from competitors who still largely operate in the off-line domain. The companies successful shift from expansive discounts to value-based customer offers places it in a strong position for future success.
As Yatra continues its remarkable progression, its strategic alignment towards higher-value corporate clients, deep technical integrations, and robust digital penetration continues to pay dividends. Strengthened by its strategic acquisition, Yatra is not only expanding but creating a sturdy narrative for other players in the travel industry.
The company’s digital-first approach stands as an exemplar for others to follow. Its proposition, facilitating the move for companies to digitize their travel processes, is a clear differentiator and indicates the wider digital adoption within this sphere. This unique selling point, in conjunction with the strong relationships built with nearly three-quarters of its top 100 customers being loyal for over five years, places Yatra in a very strong position.
All told, Yatra’s strategy is markedly different from that of its competitors’, and results suggest it is striking the right chord. The company’s ability to retain a high percentage of its corporate clientele is a testament to their experience-driven approach, enabling consistent year-over-year growth and impressive net margin improvements.
Looking to the future, with the expansion of its base, the launch of value-led offerings, and leveraging the potential of digital penetration, Yarta’s intentions are clear. By maintaining focus on enhancing client relationships and staying committed to the high-value B2B scenario, Yatra is well poised to outpace competition and continue to deliver impressive results.