Yatra Sets Sights on Corporate Travel for Robust Business Expansion

India’s internet-based travel company, Yatra, has announced an expansion strategy that concentrates on corporate travel. Focused extensively on valuable and long-term business clients rather than intermittent, bargain-based tourist traffic, Dhruv Shringi, the Whole Time Director and CEO of the firm, has outlined a vision that emphasizes building deeper relationships with corporate clientele.

In the quarter that concluded on the 30th of June, Yatra’s gross bookings exhibited a significant contribution from its B2B operations. Shringi revealed that approximately 67% of the gross bookings came from the B2B sector, setting a trend he believes could increase to 70% by the end of the fiscal year.

The company’s main aim is to optimally integrate its platform into the operations of corporate clients. Shringi described this strategy under the moniker of ‘switching costs’, stating that once a company is intricately interwoven with Yatra’s services, it becomes laborious for them to sever ties and move to a different platform.

Shringi highlighted that many of Yatra’s rivals still operate using traditional offline methods, whereas Yatra stands out due to its deeper tech integration with its customers and a higher online presence. The company asserts that this gives it a competitive advantage, as the travel industry is widely embracing digitization.

Shringi expressed, ‘Our competitors are providing services in a conventional offline approach with negligible integration, which is why we believe there is a vast opportunity for Yatra to capture the digital wave sweeping across our industry.’

As evidence of Yatra’s commitment to focus on corporate clients, it strategically acquired Globe All India Services, a firm that provides corporate travel services, last year. This acquisition valued at INR 1.28 billion ($15.25 million) was a move to fortify its standing in the corporate travel market.

Shringi emphasized that enduring relationships with corporate clients are the nucleus of Yatra’s strategy. The company takes pride in the fact that out of its top 100 clients, 73 have been with them for over five years. Yatra sees these relationships as a guarantee of stable revenue and operational advantage, especially once tech integration is accomplished.

Yatra took an unorthodox strategy by focusing on corporate clients while other online travel platforms were vying for individual travellers with attractive discounts. Shringi revealed, ‘Our annual retention rate for corporate travel is more than 97%, which is why we have such a high operational leverage in our business.’

Two primary factors have contributed to Yatra’s improving margins. Firstly, the company avoided direct discounts to customers, opting instead for offers through banking and marketing partners. This strategic move notably reduced Yatra’s customer acquisition costs.

Secondly, Yatra shifted its focus to high-margin items, including corporate airfares, hotel bookings, and packages. ‘The net margins for hotels and packages is around 11%, which is far higher than the 3%-4% net margin for air travel. The proportion of hotels and packages in our bookings has risen from about 15% to approximately 20% year over year,’ Shringi stated.

These strategic shifts have positively affected the company’s financial performance. Yatra reported a nearly 9% year-on-year increase in gross bookings for the quarter under review, reversing earlier downward trends. While air ticket sales showed modest growth, there was a more significant increase in hotel bookings and package sales.

The company has identified cross-selling of hotel packages to corporate clients as a fast growth opportunity. Yatra has seen several recent corporate victories where relationships started with hotel bookings and then expanded to include other travel services. Hotels and packages represent high-margin products and have proven easier to cross-sell for Yatra.

Looking at the financial figures for the quarter, revenue from operations rose by 108% year over year to INR 2.1 billion ($24 million). Adjusted EBITDA saw a 138% year-on-year increase, reaching INR 249 million ($2.8 million), while net profit surged by a whopping 296%, achieving INR 160 million ($1.8 million). The list of corporate clients continued to grow with the addition of 34 new accounts during the quarter. The potential annual billing from these new accounts stands at an impressive INR 2 billion ($23 million).