Yatra, an Indian online travel firm, has set sights on bolstering its corporate travel segment. CEO and Whole Time Director, Dhruv Shringi, shared that the company’s strategy is oriented towards attracting repeat corporate customers given their higher value compared to price-focused leisure clients. This implementation was evident in the company’s quarterly report ending June 30, which indicated a larger segment of gross reservations coming from its B2B business model.
Shringi elaborated that approximately 67% of gross bookings were corporate driven and he anticipates this could edge closer to 70% by the end of the financial year. A significant part of Yatra’s approach lies in integrating their platform into the daily operations of corporate clients. Doing so instigates what Shringi refers to as ‘switching costs’, essentially making it tiresome for a business to change service once entrenched.
Shringi also stated that a majority of their competitors utilize offline methods to cater to corporate clients, providing Yatra with a competitive advantage. The company prides itself on a deeper technical convergence with customers and a wider online penetration. Yatra asserts that these attributes give it an upper hand as firms increasingly digitize their travel arrangements.
Shringi highlighted the vast opportunity awaiting them as many competitors still resort to offline servicing, offering minimal integration. As large-scale digital adoption is underway across the industry, Yatra is strategically positioned to penetrate this growing trend. The CEO stated, ‘Most of our competitors still service customers in the offline manner with a minimal amount of integration. That is why there is a large opportunity for us right now to go and penetrate the digital adoption that’s happening across the industry.’
The previous year marked an important milestone for Yatra as it acquired corporate travel service provider Globe All India Services, or Globe Travels, for a cash consideration of INR 1.28 billion ($15.25 million). Increased focus on long-standing corporate customers is a key pillar of Yatra’s business approach. Shringi mentioned the length of relationship with large clients as proof of Yatra’s customer retention ability.
Shringi said, ‘If I study our top 100 customers, 73 of them have been with us for more than five years.’ The company believes these enduring relationships deliver a predictable stream of revenue and improved operating efficiencies once technical integrations become operational. Contrary to the trend of online travel platforms luring consumers with discounts and marketing gimmicks, Yatra has taken a distinct approach.
The CEO proudly mentioned that Yatra’s annual retention rate for corporate clients exceeds 97%, providing the firm with a high level of operating leverage. Shringi highlighted two principal factors that have led to an improvement in the company’s margin. One, the company has cut-back direct discounting to patrons; instead, the focus shifted on offers through banking and marketing partners, reducing Yatra’s customer acquisition costs.
The second contributor to margin improvement was a transition in the business blend towards high-margin products encompassing corporate fares for air travel, hotels and packages. Shringi stated, ‘Hotels and packages have net margins closer to about 11%, compared to about 3%-4% net margin for air. Our mix of hotels and packages, year over year, has changed from about 15% to about 20% of gross bookings.’
These organisational amendments were instrumental in enhancing the firm’s net margin and revenue-after-cost, which surpassed the mere increase in gross bookings. According to the quarterly report, gross bookings saw a year-to-year increment of approximately 9%, recovering from past declines in overall volume.
The comeback however, was not evenly distributed: air ticketing displayed modest improvement, while hotel bookings and package services witnessed a faster growth rate. Thanks to this dynamic, Yatra views cross-selling accommodations to corporate patrons as a primary driver for imminent expansion.
The company has achieved several remarkable ‘hotel-led’ corporate wins, where customers initially engaged with Yatra for hotel bookings, subsequently paving the way for offering a broader range of travel services. Currently, hotels and packages offer higher margins and are relatively easier to cross-sell for Yatra.
Noteworthy figures from the recent quarterly results reveal a 108% year-on-year rise in operational revenue to INR 2.1 billion ($24 million). Additionally, the adjusted EBITDA rocketed 138% compared to the same quarter of the previous year to INR 249 million ($2.8 million).
Yatra’s net profit amplified by 296% from the comparative period last year, amounting to INR 160 million ($1.8 million). Amid these promising figures, the company has concurrently expanded its corporate client base and added 34 new corporate accounts during the last quarter.
These new partnerships have a prospective annual billing totaling INR 2 billion ($23 million). Yatra’s strategic focus on corporate travel business, underpinned by its technological edge in the increasingly digital landscape, paints a positive picture for its future growth.
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