Yatra, a renowned online travel organization from India, is formulating plans to expand its corporate travel segment. Dhruv Shringi, the finance manager and Chief Executive Officer, expressed that the organization will be prioritizing high-value and consistent corporate clients over those seeking leisure travel services primarily driven by cost. Yatra’s performance in the B2B sector dominated its gross bookings in the quarter ending June 30. About 67% of the gross bookings were accounted for by the B2B sector, and Shringi anticipates this percentage to increase close to 70% by the completion of the fiscal term.
Yatra aspires to mold itself as a conventional part of its corporate clients’ procedure thereby creating ‘switching costs.’ Switching costs imply that once a client has fully migrated to Yatra’s platform, it would demand additional efforts and resources to transfer back. Shringi pointed out the fact that most of Yatra’s rivals are still relying on conventional, offline ways to serve their customers. On the contrary, Yatra offers a deeper level of digital integration for its customers, giving it an advantage as firms modernize their travel plans.
According to Shringi, offline competitors offer a low level of integration compared to Yatra’s digital offerings. He believes a significant opportunity beckons for Yatra as the travel industry continues to digitize its operations. The company’s robust digital integration is expected to enable it to penetrate the industry’s ongoing digital transformation more effectively compared to competitors.
Sustaining long-term relationships with corporate clients is a cornerstone of Yatra’s growth strategy. Shringi attested to the company’s success in retaining clients, citing that nearly 73 out of top 100 customers have been associated with Yatra for more than five years. Once a firm’s technical integration is established, these kind of strong relationships pave the way for reliable revenue streams and operating influence.
Yatra demonstrated its uniqueness in the online travel industry by not competing for clients primarily through discounts and intense marketing. It confirmed a yearly retention rate of about 97% for its corporate clients, marking a testimony to the company’s enduring relationships with its corporate clients. Such customer loyalty significantly contributes to the high operating influence enjoyed by the company.
Yatra has strategically implemented changes that have led to improvements in the company’s margin. Firstly, they have minimized direct discounts offered to clients, opting for incentives via banking and marketing collaborations instead. This change in strategy has effectively curbed Yatra’s costs in acquiring new clients.
Secondly, they have strategically adjusted their product offering to incorporate higher-margin items, including corporate airfares, hotels, and packages. Compared to the net margins for air travel (around 3-4%), Yatra’s hotel and package bookings offer closer to 11% net margins. Shringi stated that there has been a shift from around 15% to 20% of gross bookings being attributed to the hotel and package segment.
All these strategic changes have allowed Yatra to improve revenues post-operational costs, and its net margin, even beyond the actual growth in terms of gross bookings. Yatra’s gross bookings saw a 9% rise annually for the quarter, countering previous overall volume slumps.
However, this recovery wasn’t uniform across all sectors. While the increase in air ticket bookings was moderate, hotels and package bookings witnessed a faster growth. Recognizing this trend, the company is focusing on offering hotels to its corporate clients as an immediate, high-margin growth opportunity.
Several recent corporate clients were primarily interested in hotel bookings. This sparked a chain reaction, with clients who initially sought Yatra for hotel bookings finding themselves exploring a wider array of travel services. Evidently, hotels and packages have surfaced as a highly lucrative sector for Yatra to cross-sell.
Turning towards the key figures for the quarter: operational revenues saw a noteworthy increase of 108% year-on-year, reaching INR 2.1 billion ($24 million) in the first quarter. The adjusted EBITDA experienced a 138% surge year-on-year to reach INR 249 million ($2.8 million). The net profit was up by a remarkable 296% compared to the same period last year, marking INR 160 million ($1.8 million).
Yatra’s expansion centered around its corporate clientele continued with the addition of 34 new corporate accounts during this quarter. These new additions will potentially contribute an annual billing of INR 2 billion ($23 million).
It cannot be overlooked that Yatra’s revenue growth has been backed by last year’s acquisition of Globe All India Services (Globe Travels), a corporate travel services provider. This acquisition is valued at INR 1.28 billion ($15.25 million) paid in cash.
Essentially, Yatra’s focus on capturing and retaining a loyal corporate-based clientele, through a strong digital services platform, is driving its growth in the online travel sector. By offering high-quality, consistent services that can be deeply-integrated with a customer’s existing business practices, Yatra is making it harder for customers to consider switching to a competitor.
Yatra’s move to target the corporate sector rather than individual leisure travelers is proving fruitful, especially as businesses increasingly digitize. The focus on deeper customer relationships and transaction volumes, as opposed to simply chasing growth via discounts, is proving to be a winning strategy for this business.
The post Yatra’s Strategic Push Towards Corporate Travel Services appeared first on Real News Now.
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