Leading digital travel brand in India, Yatra, is set to amplify its operations in the corporate sector. CEO and Whole Time Director, Dhruv Shringi, expresses the company’s forward-looking strategy to primarily serve repeated corporate clientele. The company’s focus is shifting away from seasonably erratic leisure customers who tend to prioritize cost-efficiency. This decision is in pursuit of higher-value and more predictable business connections.
During the quarter that ended on the 30th of June, there was a remarkable surge in Yatra’s gross bookings, primarily driven by their B2B operations. According to Shringi, almost two-thirds, precisely 67%, of gross bookings originated from this sector. The company anticipates that this percentage may border 70% by the fiscal year-end, marking an increasing trend.
Yatra is currently striving to become an integral part of the habitual operations of corporate clientele. According to Shringi, this integration results in ‘switching costs’, essentially requiring a company to expend additional effort to detach once integrated. The stickiness of Yatra’s services stands out, especially when evaluated alongside competitors’ lagging online presence.
The company prides itself on deep-seated technical integration and a strong online foothold, both helping it drive a significant competitive advantage. As businesses continue to digitize important aspects like travel processes, Yatra’s technical competency is a strong offering. Shringi argues that the majority of their competition still relies on antiquated, offline services with minimal technological integration.
In the light of the mass digital adoption transpiring across industries, she restates the huge opportunity lying in store for Yatra. She emphasizes that due to many organisations maintaining their services offline, digitization offers an untapped growth avenue. Hence, the company stands to substantially benefit from this ongoing shift.
In the previous year, Yatra made a significant move to expand their corporate reach by purchasing Globe All India Services, a renowned provider of corporate travel services. The deal, valued at INR 1.28 billion ($15.25 million), was completely cash-based. The acquisition underscores Yatra’s commitment to strengthen its corporate services.
The sustainable alliances Yatra created with esteemed corporate entities strongly indicate the company’s tailored approach to traveling solutions. Shringi considers the longevity of these relationships as proof of Yatra’s valued position among its most significant clients. Furthermore, she pointed out that from their top 100 corporate relationships, 73 have been enduring for more than half a decade.
The company recognizes these maintained relationships as a consistent, predictable source of revenue. Once all technical elements have been aligned and integrated, these relations provide both revenue stability and operational flexibility. By adopting an unconventional method, Yatra diverts from the industry trend of mainly targeting the general consumer population.
Additionally, Yatra boasts an impressive retention rate for corporate travel—approximately 97% annually. The company attributes its tremendous operating leverage to this high retention rate. Another contributing factor is the company’s shift in marketing tactic, moving away from costly consumer discounts and instead focusing more on incentive offers delivered through marketing partners and banks.
This strategic redirection helped reduce the overall costs expended to secure new customers. It also reflected in how Yatra diversified its product offerings, with a notable shift to higher-margin services like corporate airfares, hotels, and packages. Hotels and packages contribute around 11% of net margins compared to air ticketing, yielding between 3% to 4%.
The company’s rapid adaptation in its product mix has been evident year over year with an increase from 15% to 20% of gross bookings generated from hotels and packages. This shift has positively impacted both the company’s net margin and revenue-after-cost metrics, outpacing the raw growth observed in gross bookings.
Despite a stark contrast in recovery between the air ticketing and hotel services sectors during the last quarter, a rise in gross bookings of about 9% was observed. Air ticketing recovery was modest, while the hotel sector displayed a faster recovery. This progress is enabling Yatra to focus more on cross-selling hotel services to their corporate clientele.
Yatra revealed that most recent corporate successes have been led by hotel services. They believe that hotel-bookings are generally a good entry-point for introducing clients to a broader range of their travel services. The company sees hotels and packages as lucrative products with potential for more effective cross-selling.
Quarterly figures indicate a promising trend; operational revenue swelled by 108% year-on-year, amounting to INR 2.1 billion ($24 million). Adjusted EBITDA leaped 138% to INR 249 million ($2.8 million) year-on-year. Net profit grew by an incredible 296% to INR 160 million ($1.8 million) in comparison to the same period in the previous year. Yatra successfully closed 34 new corporate accounts during the quarter, with a potential annual billing of INR 2 billion ($23 million), emphasizing their continued efforts to expand into corporate travel.
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