Yatra Aims High with Corporate Bookings Expansion Plan

Indian digital travel agency, Yatra, reveals ambitious plans to grow its segment focused on corporate bookings. The company’s CEO and Whole Time Director, Dhruv Shringi outlined a strategy that concentrates on high-valued, repeat business clients over occasional leisure users. He highlighted his observation that corporate clients bring greater value and consistent business, forming the founding pillar of their strategic direction.

For the quarter that ended on June 30th, Yatra experienced an increase in gross bookings driven by their B2B engagements. Shringi pointed out that about 67% of the total gross bookings originated from B2B transactions. He further projected that the percentage could potentially rise to 70% by the end of the fiscal year, underscoring the company’s commitment to corporate bookings.

The company has crafted its platform to become an integral part of its clients’ everyday operations. Shringi refers to this as establishing ‘switching costs’, anticipating that it would require a considerable effort for a client to transition to another platform after fully integrating with Yatra’s.

In the competitive landscape, Yatra boasts a unique advantage. They highlight their deeper technological integration and higher online penetration as key differentiators. As more companies digitize their travel processes, they argue, the edge is theirs.

Shringi emphasized the current opportunity Yatra is primed to exploit due to many of their competitors still servicing clients in an offline mode and with minimal levels of integration. Now, as more businesses turn to digital solutions, he asserted that Yatra has an open gate to penetrate the new wave of digital adoption sweeping the industry.

Last year, Yatra strengthened its corporate travel service capability by acquiring Globe All India Services (Globe Travels), a well-established provider of corporate travel services, for INR 1.28 billion in cash.

Shringi pointed out that loyal, long-term corporate customers form the heart of Yatra’s strategy. Citing the fidelity of their major clients, he stated, ’73 out of our top 100 customers have stayed with us for more than five years.’ This level of trust and commitment, the company believes, translates into predictable revenue and operating margin once technical integrations are fully actualized.

Instead of engaging in a price war and churning out discounts, Yatra switched tactics. In a surprising shift in strategy, Yatra turned to fostering relationships with corporate clients, leading to an exceptional annual retention rate for corporate travel upwards of 97%. This strategic move, Shringi pointed out, provides the business with high operating leverage.

The CEO detailed two principal elements that improve their margin. One, the company has moved away from direct discounting and now relies more on offers presented through banking and marketing partners. This approach significantly reduces Yatra’s customer acquisition costs. Two, the company saw a shift in its business portfolio towards higher-margin items like corporate airfares, hotels, and packages.

Highlighting the importance of diversifying their offerings, Shringi stated, ‘Hotels and packages have net margins closer to about 11% compared to about 3%-4% net margin for air. Our mix of hotels and packages, year over year, has changed from about 15% to about 20% of gross bookings.’ These strategic changes allowed Yatra to push its net margin and revenue-after-cost measures higher.

For the quarter, Yatra’s gross bookings marked a year-on-year increase of roughly 9%, effectively turning the tide on previous volume declines. The recovery trend saw a modest improvement in air ticketing while hotels and packages recorded faster growth. The firm recognizes the opportunity to cross-sell hotel services to its corporate clients and has prioritized this as a key short-term growth driver.

Interestingly, several of Yatra’s recent corporate procurement wins were driven by hotels – customers primarily utilized Yatra’s platform for hotel bookings before exploring its broader travel services. Therefore, currently, hotels and packages are not only higher margin products but also enticements bringing clients to their wider offerings.

Examining the key metrics for the quarter – Yatra’s operational revenue saw a surge, growing 108% year-on-year to INR 2.1 billion. The company’s adjusted EBITDA also skyrocketed, increasing 138% year-on-year to reach INR 249 million. Net profit soared by a staggering 296% compared to the same period last year, hitting INR 160 million. Additionally, the company recorded significant growth in its corporate clientele, managing to close 34 new corporate accounts during the quarter with potential annual billing estimated at INR 2 billion.