Yatra, a renowned Indian digital travel organization, has set its sights on scaling up its corporate travel operations substantially. A primary approach for the company is to direct its efforts towards high-value, recurring corporate consumer engagement rather than visitor traffic stimulated by affordability concerns. Dhruv Shringi, the firm’s CEO and Whole Time Director, has announced this shift in company strategy. Reflecting this strategic change, the firm’s B2B segment contributed a significant chunk of gross bookings in the quarter ending June 30.
The corporate travel industry saw Yatra capturing about 67% of total gross bookings, a share Shringi expects to edge closer to 70% at the fiscal year’s conclusion. A primary goal for Yatra is to embed itself consistently in the business processes of corporate clients. Shringi emphasized the reality of ‘switching costs’, which imply a significant investment in time and resources for enterprises that decide to switch platforms once they’ve successfully integrated.
This creates a sort of barrier that favors Yatra, discouraging businesses from moving to other providers due to the effort required. Shringi pointed out that, unlike Yatra, a majority of their competition still serve corporate needs through offline mechanisms. Yatra takes pride in having a stronger technical integration with corporates resulting in a higher online interaction rate.
Yatra differentiates itself with the claim that it is uniquely positioned to take advantage of corporate digital transformation within the travel industry. Shringi stressed the untapped opportunity for Yatra to capitalize on widespread digital adoption trends within the industry, given their competitors’ continued reliance on outdated, minimally-integrated offline processes.
In its endeavor to dive deeper into the corporate sector, Yatra previously announced the acquisition of Globe All India Services (Globe Travels), a business focused on providing corporate travel services, in a cash deal worth INR 1.28 billion ($15.25 million). In Yatra’s strategic lexicon, retaining a roster of corporate clients for the long-run is of crucial importance. An indication of this success lays in the tenure of its largest clients, Shringi noted, pointing out their retention as a testimony to Yatra’s compelling value proposition.
Shringi went on to highlight a noteworthy aspect — among their top 100 corporate clients, 73 have stayed with the company for more than half a decade. Yatra as a company believes that such long-standing relationships with corporate consumers contributes to predictable revenue rhythm and gives operating leverage once the technical integrations have been executed. Contrasting with platforms targeting online audiences with discounts and marketing tactics, Yatra opted for a fresh perspective.
Incorporating this novel approach, Yatra boasts an impressive annual retention rate exceeding 97% within its corporate travel clientele. Such high retention suggests a degree of significant operational leverage in the business, according to Shringi. A question on major contributors to the firm’s margin improvement led to two crucial insights.
Primarily, Yatra pivoted away from extending direct discounts for customer acquisition and instead relied on promotional offerings through banking and marketing collaborators. This strategic change notably decreased Yatra’s customer acquisition overhead. Moreover, the company’s mix of offerings began to reflect a preference towards products with higher margins, such as corporate air travel tickets, hotel bookings, and packages.
Speaking to this shift, Shringi detailed how accommodation and travel bundles yield a net margin roughly around the 11% mark, compared to a margin of 3-4% for air travel. Over the course of year-on-year comparisons, the proportion of these higher-margin services in gross bookings moved up from 15% to around 20%.
The result of these strategic adaptations led Yatra to witness incremental improvements in its net margin and post-cost revenue figures that exceeded raw growth in their gross bookings. Yatra saw a year-on-year increase in gross bookings by nearly 9% for the quarter, an uplift from prior overall volume downtrends. However, this recovery graph was not uniform across all divisions.
Air ticket sales registered a modest uplift, while the segment for hotel bookings and packages displayed quicker growth. Current plans for the company include capitalizing on its corporate clientele to cross-sell hotel services as a short-term growth strategy. The company has seen fresh corporate engagements that commenced by availing hotel services, subsequently branching out to wider travel facilities.
These early steps with hotel services often serve as an entry point to a broader range of travel facilities for corporate clients.Yatra sees hotel bookings and travel package provisions as high-margin products that can be cross-sold effectively.
With respect to the key financial figures for the quarter, Yatra reported a revenue from operations totaling INR 2.1 billion ($24 million), registering a year-on-year growth of 108%. The company’s adjusted EBITDA also saw a 138% rise, year-on-year, marking INR 249 million ($2.8 million). Furthermore, Yatra’s net profit escalated by a staggering 296%, year-on-year, closing at INR 160 million ($1.8 million).
Yatra carried forward its expansionist momentum in its corporate clientele segment, securing 34 fresh corporate accounts in the quarter. This potential rise in client base is estimated to bring in approximately INR 2 billion ($23 million) worth of annual billing.
While the strategy of focusing on corporate clients over price-driven leisure traffic has shown promising results for Yatra, it’s too early to determine the full impact. The blend of strategies including their acquisition of Globe Travels, reduction in direct discounting to customers, and a shift towards higher-margin offerings seems to have given the company a competitive edge.
The high retention rate, focus on digital adoption and service integration appear to be creating an exciting growth story for the firm. As companies continue to digitize their processes, particularly in the travel industry, Yatra’s strategy of focusing more on similar high-value opportunities may well set the stage for its global success.
The post Yatra Aims for Rapid Expansion in Corporate Travel Sector appeared first on Real News Now.
About Author
