Yatra, a prominent player in India’s online travel space, is intending to ramp up its B2B operations. The company’s CEO and Whole Time Director, Dhruv Shringi, highlighted that the primary objective for the corporation will be to cater to high-value, repeated business patrons, rather than focusing on sporadic, price-conscious leisure travellers.
In the quarter that ended on June 30, Yatra indicated a shift in the distribution of gross bookings attributed to its B2B business. Shringi revealed that around 67% of gross bookings were made by businesses, a figure he expects to rise to 70% by the conclusion of the fiscal year.
Yatra is making efforts to integrate its platform into the daily operations of its corporate clients. The intention is to foster what Shringi referred to as ‘switching costs’, where a company would have to exert more effort if they wanted to divert from Yatra once fully integrated within their own system.
Shringi laid emphasis on the fact that while many of their competitors still engage corporate clients through offline modes, Yatra stands out due to its more profound technical integration with clients and higher digital penetration.
The company maintains its edge by aiding businesses in digitizing their travel transactions. Shringi pointed out that the massive shift towards digital adoption across the industry presents a sizeable opportunity for Yatra as many of their rivals still rely on offline service provision with limited integration.
In a strategic move to strengthen its business operations, Yatra announced its acquisition of Globe All India Services (Globe Travels), a major player in the corporate travel services sector last year. This acquisition, worth INR 1.28 billion (approximately $15.25 million), was executed in cash, boosting Yatra’s capability to cater to a larger corporate clientele.
Central to Yatra’s strategy are its longstanding corporate partnerships. Shringi shed light on the company’s client loyalty by stating, ‘Among our top 100 clientele, 73 have chosen us as their preferred service for over five years.’
Such relationships, the company believes, assure a steady source of revenue and operational advantage once technical integrations are properly established. Unlike its competitors, who often lure consumers with hefty discounts and marketing tactics, Yatra has chosen a different route.
Shringi proudly shared, ‘Our annual retention rate for corporate travel stands above 97%, providing us with robust operating leverage.’ Through two principal strategies, the organization has managed to improve their margins.
Firstly, Yatra curtailed direct discounting to its customers. Rather than frequent heavy price deductions, the company shifted focus to promotions delivered via banking partners and marketing collaborators, effectively reducing their customer acquisition costs.
Additionally, Yatra placed more emphasis on higher-margin products in their operation mix such as corporate flight tickets, hotels, and package deals. Shringi mentioned, ‘Compared to 3%-4% net margin for air travel, our hotels and package options yield nearly 11% net margin.’
Changes in the company’s strategic orientation have resulted in an elevation of the organization’s net margin and post-cost revenue measures, outperforming raw growth in gross bookings. Yatra reported an around 9% boost in gross bookings compared to the same period last year, a development that reversed earlier volume decline trends.
Having observed the disparity in recovery rates across services, with air ticketing showing mild improvement and hotels and packages growing markedly faster, Yatra has chosen to prioritize cross-selling hotel services to its corporate clientele as a growth strategy.
A number of their recent successful corporate alliances were primarily ‘hotel-led’; clients initial engagement with Yatra was through their hotel services. This subsequently paved the way for a broader range of travel services from Yatra.
The company’s key numbers during the quarter included a 108% year-on-year growth in operational revenue, reaching INR 2.1 billion ($24 million). The adjusted EBITDA rocketed up by 138% from the previous year, reaching INR 249 million ($2.8 million). Net profits saw a colossal surge of 296%, totalling INR 160 million ($1.8 million).
In alignment with its corporate expansion strategy, Yatra added 34 new corporate accounts during the quarter. These new accounts have the potential to generate an estimated annual billing of INR 2 billion ($23 million), reflecting the steady growth and expansion of the firm.
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