Yatra Reinventing Corporate Travel with Its Digital Transformation

Yatra, the Indian digital travel organization, is laying out its ambitions to further develop its corporate travel offering. A commitment has been made by the company to focus primarily on corporate clients who bring in recurring and high value transactions, as expressed by Dhruv Shringi, the CEO and Director. He emphasizes the importance of nurturing such customers rather than pursuing the unpredictable and price-sensitive leisure travelers.

In the recent fiscal quarter ending June 30, Yatra experienced a significant increase in its corporate business. Shringi provided a report indicating that about 67% of the company’s overall reservations stemmed from their business to business (B2B) clientele. He projected that this proportion could potentially escalate close to the 70% mark by the conclusion of the current fiscal year.

In order to foster habitual usage among corporate customers, Yatra is taking steps towards integrating its platform into everyday corporate practices. This would result in what Shringi labels as ‘switchover costs’, which implies the additional energy and resources companies would need to expend should they choose to disengage after the establishment of the integration. He pointed out that many of the company’s rivals are still operating in an offline environment.

Yatra prides itself in delivering a more holistic technical connection with its customers and higher digital penetration. As companies continue their digital migration in travel systems, Yatra maintains its unique competitive advantage. Shringi highlighted the persistent offline operations of competitors as evidence of a significant market opportunity for Yatra’s enriched digital model.

During the previous year, Yatra went public with its procurement of Globe All India Services, also known as Globe Travels, a B2B travel service provider. The transaction was concluded for an amount of INR 1.28 billion ($15.25 million). Through this acquisition, Yatra is able to further solidify its targeted focus on servicing corporate clients.

High retention rates among long-term corporate clients is a testament to Yatra’s effective strategy, reinforcing the credibility and customer loyalty the company enjoys. Shringi reported that, within their major customer base, approximately 73 out of top 100 clients have stayed with them for over five years. Yatra interprets this customer commitment as a reliable source for generating regular revenue and operational leverage after technical integration.

Yatra’s revenue-driven business model is primarily built on retaining customers in the corporate travel space, which stands markedly in contrast to the common practices of similar digital platforms. Most of its counterparts aim to attract customers by offering significant discounts. Yatra, in contrast, takes pride in having a customer retention rate above 97% within its corporate travel segment. This is believed to be the key factor behind their strong operational leverage.

Yatra has successfully improved its margins by implementing two major strategies. Firstly, it scaled down direct discounts to customers, channeling its promotional efforts through banking and marketing partners’ offers instead. This tactic effectively lowered Yatra’s customer acquisition costs.

The second margin improvement strategy implemented by Yatra involved shifting its focus towards products generating higher margins. Among these were corporate airfares, hotel packages and accommodations. As Shringi stated: ‘Hotels and packages have net margins closer to about 11% compared to about 3%-4% net margin for air.’ Nowadays, hotels and packages contribute to about 20% of Yatra’s gross bookings.

Through these strategic measures, Yatra was able to increase its after-cost revenue and net margin comparatively higher than the total gross bookings’ growth. Despite a modest rise in the overall reservations of about 9% during the quarter, the company successfully turned around the previous volume declines. The recovery, however, was somewhat inconsistent with air ticketing showing only a mild increase as opposed hotels and packages which grew at a much faster rate.

One of Yatra’s key growth strategies is to strengthen its hotel services for corporate clients. A number of corporate achievements in the recent past have been ‘hotel-centric’. This has essentially opened wider avenues for Yatra to offer broader travel services. Shringi highlighted the fact that hotels and travel packages currently generate higher profit margins and are, therefore, easier to upsell to their corporate clients.

Key metrics from the quarter revealed spurred growth in figures: Yatra’s operational revenue witnessed a solid growth of 108% year-on-year, amounting to INR 2.1 billion ($24 million). The company’s Adjusted EBITDA recorded a surge of 138% year-on-year to INR 249 million ($2.8 million). And net profits showed an impressive increase of 296% compared to the corresponding period of the previous year, landing at INR 160 million ($1.8 million).

Continuous expansion of its corporate clientele and successful acquisition of 34 new corporate accounts has been among the notable achievements of Yatra in the last quarter. With these new accounts, Yatra anticipates annual billing to potentially reach INR 2 billion ($23 million).

Despite the upheavals the travel industry has experienced, Yatra has charted its own path, diverting from typical flashy marketing gimmicks to building lasting relationships with its corporate clients. The company’s strategy has not only proven successful in its home country, but it is also serving as an intriguing case study for rising online travel companies globally.

Yatra’s approach underscores how digital transformation in the business world can create opportunities for firms that are ready to innovate. By offering integrated solutions to corporations and focusing on relationship-building and customer service, the company has, essentially, turned ‘customer stickiness’ into a compelling business model.

In summary, Yatra’s growth strategy revolves around deepening relationships with corporate clients, digital integration, and focusing on higher-margin products. It has crafted a strong foothold in the corporate travel space, showing an acute understanding of the evolving trends and customer preferences in the travel industry. Yatra represents a new era in online travel platforms, where customer retention is prioritized over heavy discounting, and service quality reigns supreme.