Yatra Pursues Corporate Client Expansion, Shifts Focus from Casual Vacationers

Yatra, a prominent online travel enterprise in India, is focusing on expanding its corporate travel sector. Dhruv Shringi, its CEO, revealed the business’s intention to captivate high-valued and regular corporate clients, prioritizing these over casual, price-oriented vacationers.

Emerging statistics indicated a robust growth in the company’s B2B gross bookings in the quarter ended on June 30. Shringi disclosed that about two-thirds of the total gross bookings, approximately 67%, originated from the B2B segment, with a potential rise to 70% by the fiscal year-end.

Yatra seeks to embed its platform within the digital practices of its corporate clients. This integration strategy is aimed at creating ‘switching costs,’ representing the supplementary effort a client would have to make to switch platforms once interconnected.

Shringi noted that most counterparts in the market rely predominantly on offline models to cater to corporations. He distinguishes Yatra on the basis of its deep technical integration and higher penetration in the online landscape.

Yatra propounds that its extensive level of digitization gives it a competitive edge. The company is confident that it can seize the proliferating digital transition happening across industries. ‘There exists a significant opportunity for us to leverage the digital adoption currently transforming the industry on a large scale,’ asserted Shringi.

Yatra revealed that in the previous year, the company had acquired corporate travel service provider Globe All India Services (Globe Travels). They secured this asset at a cost of INR 1.28 billion ($15.25 million) paid in cash.

Regular, longstanding corporate clients lie at the nucleus of Yatra’s evolving strategy. The company’s ‘stickiness’ is evident from the loyalty displayed by major clients, Shringi pointed out.

He shared an insightful fact, ‘Looking at our top 100 clients, it is worth noting that 73 out of those have opted for our services for a duration exceeding five years.’ Such sustained partnerships, the firm believes, ensures consistent revenue and operating leverage once the technical integration is accomplished.

The business strategy Yatra has adopted deviates from the usual consumer-centered approach of online platforms. Instead of using discounts and promotional marketing means to attract consumers, they’ve focused more on corporate loyalty. ‘Our corporate travel retention rate annually lies above 97%. This high retention affords us significant operating leverage’ added Shringi.

The company cites two primary operational shifts that have enhanced its profit margins. Primarily, Yatra has pulled back from direct customer discounting and instead focused on promotional offers via banks and marketing partners. This maneuver has led to lower customer acquisition costs.

Secondly, they have shifted towards offerings with higher profit margins such as corporate airfares, hotels, and package deals. ‘Net margins for hotels and packages are around 11% as opposed to 3%-4% for airfares. The composition of hotels and packages in our gross bookings has increased from 15% to 20% year over year’ underscored Shringi.

The changes mentioned above have significantly boosted the company’s net margin and revenue measures, surpassing the total growth in gross bookings. Yatra recently posted a 9% rise in gross bookings for the quarter on an annual basis, marking a recovery from past slumps in overall volume.

The company’s recovery pattern was varied: air ticketing witnessed subtle improvements, while growth in the hotels and packages sector was more prominent. Yatra is capitalizing on its hotel booking service to drive growth among its existing corporate customer base.

Several recent business triumphs were ‘hotel-led’. Initial hotel bookings by corporate customers lead to the utilization of Yatra’s wider range of travel services. Hence, hotel bookings and packages are currently considered high-profit and easily cross-sold products.

Turning attention to key figures for the quarter, Yatra recorded a considerable 108% year over year revenue increase from operations, to INR 2.1 billion ($24 million). Moreover, adjusted EBITDA rose by 138% year over year to INR 249 million ($2.8 million), and net profit swelled by 296% compared to the same timeframe in the previous year, hitting INR 160 million ($1.8 million).

To conclude, the company has continued to broaden its corporate client base. It successfully added 34 new corporate accounts during the quarter, with an anticipated annual billing potential of INR 2 billion ($23 million).