Yatra Refocuses on Corporate Travel and Sets New Heights for its B2B Model
Famed Indian e-travel firm, Yatra, is setting its sights on boosting its sphere of corporate travel. Dhruv Shringi, the CEO, articulated the firm’s focus on establishing a robust clientele of corporate repeat customers, in contrast to fleeting consumers enticed by competitive prices. The firm’s objective for the upcoming quarter is to bolster its shares of gross bookings via its B2B business model.
In the preceding quarter which culminated on June 30, Shringi revealed that approximately 67% of the gross bookings were courtesy of their B2B entity. Shringi is optimistic that the company can inch towards a 70% share by the close of the fiscal year. Yatra is eyeing to incorporate its platform into the daily modus operandi of corporate clienteles, driving a hard bargain for businesses considering divestiture.
Yatra thrives on the concept of ‘switching costs’, a deterrent for companies to change steadfast routines. In a landscape where rivals are still riding the wave of offline business to service corporates, Yatra’s technological prowess provides it with an upper hand. Its claim to fame lies in its extensive digital integration with clients and its deeper online incursion than most of its competitors.
Shringi takes an anticipatory view of the digital landscape, asserting that most rivals still engage customers using traditional offline methods, offeringminimal integration. This steadfast traditionalism, according to Shringi, leaves a window of opportunity for Yatra to bridge the gap and propagate digital adoption in the industry that is currently witnessing substantial digital expansion.
Just last year, Yatra unveiled its plans to acquire Globe All India Services, a corporate travel services provider, in a 1.28 billion INR ($15.25 million) cash deal. Shringi believes that nurturing long-standing relationships with corporate customers is the cornerstone of Yatra’s growth strategy.
He praised the firm’s solid client portfolio and the extended tenure of its key clients as proof of Yatra’s enduring appeal. ‘Taking a glimpse at our top 100 clients’, he said, ’73 have retained their association with us for a period exceeding five years.’ Yatra sees these enduring client relationships as a steady source of revenue, enhancing their operating leverage once the technology integration is firmly in place.
Online travel firms are known for attracting customers through discounts and aggressive marketing. But Yatra is switching gears by shifting its focus towards corporate travel. The company boasts an impressive annual retention rate of over 97% for their corporate clientele. This focus on clientele retention is viewed by Yatra as a lever to improve operating leverage.
Shringi highlights changes in strategic implementation that have bolstered the company’s margins. Firstly, Yatra has toned down the straightforward discounts offered to customers. The company now favors bank and marketing partner offers, which has helped decrease customer acquisition costs for Yatra.
Secondly, Yatra aims for a revenue mix that leans towards higher-margin commodities such as corporate flights, hotels, and associated packages. Shringi explains that hotel and travel packages boast net margins of roughly 11%, in stark contrast to the 3%-4% margins for airfare. Yatra’s strategy changed over the year, with the proportion of hotel and package tours in its gross booking portfolio increasing from 15% to 20%.
Such strategic modifications have successfully boosted the company’s revenue metrics, pushing both net margin and revenue-after-cost measures beyond the raw growth seen in gross bookings. The firm reported an overall increment of nearly 9% in gross bookings year-over-year for the previous quarter, thus reversing past volume decrease trends.
The revival wasn’t uniform across all sectors, however. While ticket sales observed a moderate boost, the company observed a more significant surge in hotels and package sales. In an attempt to maintain this momentum, Yatra is banking on bundling hotels for corporate clientele as a catalyst for swift growth.
Recently, Yatra reported several ‘hotel-led’ corporate victories, where clientele initially engaged with Yatra for hotel bookings before transitioning to wider travel services. At the moment, hotel bookings and packages prove to be the most lucrative and easily maneuverable products for Yatra.
Insight into Yatra’s financial performance for the quarter: Its operational revenue experienced an exponential surge by 108% year-on-year, totaling 2.1 billion INR ($24 million). Adjusted EBITDA zoomed 138% year-on-year to 249 million INR ($2.8 million), while net profits soared up by 296% compared to the same period the previous year, hitting a total of 160 million INR ($1.8 million). Yatra remained persistent in expanding its corporate clientele, closing the quarter with 34 new corporate accounts, paving the way for a potential annual billing of 2 billion INR ($23 million).