Yatra Drives Business Growth Via Corporate Travel Focus

Yatra, a prominent name in the Indian online travel industry, has revealed its future growth strategy centered on the expansion of its corporate travel ventures. Dhruv Shringi, the CEO and Whole Time Director, stated the company’s key focus would be prioritizing high-value corporate entities that offer repeat business opportunities, compared to the price-sensitive leisure segment.

Reporting on the quarter ending June 30th, Yatra showcased a rise in gross booking primarily attributed to its B2B initiatives. Around 67% of all gross bookings were accounted for by the B2B sector, demonstrating a strong forward trend. Shringi predicts this proportion shifting closer to 70% by the fiscal year’s end, signifying the strategic turn toward corporate customers.

In a bid to secure more corporate business, Yatra plans on integrating more fully with these clients, weaving itself into their standard operating procedures. Shringi refers to this as ‘switching costs’; the more extensive the integration, the more challenging it becomes for a corporate client to move away. This approach distinguishes Yatra, as many of their competitors continue to rely on offline modes of service provisioning.

Advanced technical integration and a more substantial online presence form the pillars of Yatra’s unique proposition to corporates. As more companies move towards online travel processes, Yatra finds itself at an advantage. With many competitors still struggling with minimal offline and online integration, Yatra foresees a vast opportunity to capitalize on the digital revolution sweeping the industry.

Further strengthening its corporate offerings, last year Yatra acquired Globe All India Services (Globe Travels), a reputable provider of corporate travel services. The INR 1.28 billion ($15.25 million) cash acquisition facilitated the expansion of Yatra’s corporate footprint, providing access to long-standing corporate clientele.

Established corporate relationships are a key focus of Yatra’s expansion strategy. The company stains to evidence its ‘stickiness’ – the ability to retain large enterprise-level clients. For instance, Shringi highlighted that out of their top 100 clients, 73 had maintained a business relationship with Yatra exceeding five years. These long-term associations deliver predictable revenue streams and reduced cost of ownership, following technical integrations.

Yatra’s innovative approach to its corporate travel segment deviates from the conventional online travel platform strategies that aggressively chase consumers with heavy discounts and marketing tactics. The company boasts a high retention rate of over 97% for its corporate travel segment, a testament to its customer-like and efficient business model. Shringi firmly believes this approach provides high operating leverage in the business.

Yatra’s margin improvement tactics are twofold. First, they cut back on direct discounting to consumers, investing more in offers executed through banking and marketing partners, thereby reducing the customer acquisition costs. Second, there’s been a noticeable shift in the business mix toward high-margin products including corporate airfares, hotels, and travel packages.

The focus on hotels and packages, according to Shringi, stemmed from the higher net margins those offerings accrue. These products have net margins close to 11%, which is a considerable jump from the 3-4% observed for air travel. Year over year, the mix of hotels and packages in gross bookings has shifted from about 15% to roughly 20%, helping improve the company’s net margin and revenue-after-cost figures.

Presenting the key numbers for the quarter, Yatra evidenced healthy growth across the board. Operational revenue displayed a growth of 108% year-on-year, standing at INR 2.1 billion ($24 million) for Q1. Meanwhile, adjusted EBITDA also surged to INR 249 million ($2.8 million), reflecting a 138% year-on-year growth. The company’s net profit rose to INR 160 million ($1.8 million), marking a 296% growth compared to the same period last year.

Despite overall gross bookings growth standing at about 9% year-on-year for the quarter, bouncing back from earlier losses, the growth pattern showed variances. Air ticketing saw modest improvements, while hotels and packages had a swifter growth rate. This brings Yatra’s strategy of leaning on cross-selling hotels to corporate customers into sharp focus.

In the past quarter alone, Yatra successfully expanded its corporate client base by securing 34 new corporate accounts. These new partners represent a potential annual billing of roughly INR 2 billion ($23 million). Several of these corporate wins were said to be ‘hotel-led,’ where customers first leveraged Yatra for hotel bookings before branching out to broader travel services.

Combining its strong partnerships with core corporate clientele and leveraging the high-margin potential of hotel and package bookings, Yatra has proved its mettle in the competitive online travel industry. With such strategies, the company continues to set the bar for its competition.

A key takeaway from Yatra’s growth narrative is its focus on creating lasting, high-value relationships with its corporate clients, while actively identifying and leveraging growth levers within the industry. By focusing on strategic moves like corporate client retainment and high-margin service provision, Yatra has ensured a steady upward trajectory for its business, demonstrated by their impressive financial performance.

Entering the new age of online travel, Yatra’s growth blueprint will continue to be shaped by their commitment to fostering deep technical integration with their clients. With their adaptability and swift response to the digitizing travel industry, Yatra is set to thrive and make significant strides in the corporate travel sector.