The leading online travel firm in India, Yatra, has declared its intent to expand its services within the corporate travel sector. As outlined by Dhruv Shringi, the company’s CEO and Whole Time Director, their strategic approach will revolve around high-value, repeat corporate clients instead of leisure travelers who prioritize price. In the fiscal quarter concluding on June 30, the corporate-focused B2B segment of Yatra reported robust gross bookings growth. With an impressive 67% of gross bookings stemming from B2B, Shringi predicts this figure may rise to 70% by the fiscal year’s end.
Yatra’s chief objective is to firmly integrate its platform into standard routines of corporate customers. According to Shringi, this results in ‘switching costs’ which make it more logistically demanding for a company to opt for a different provider once Yatra’s services have been ingrained. Observing that many competitors continue to operate offline, Yatra takes pride in its advanced technical integration and higher online engagement with clients. The firm posits that these factors provide a competitive edge given companies’ current inclination towards digital travel procedures.
Shringi provides insights into the ongoing battle between offline and online business models: ‘Many of our rivals still cater to clients in offline mode with minimal integration. This means there is a significant platform for us to further penetrate the increasing digital adoption wave sweeping across the industry.’ Yatra has been proactive in its endeavors, having acquired Globe All India Services (Globe Travels), a corporate travel services provider, last year for a deal worth INR 1.28 billion ($15.25 million) in cash.
Yatra considers its long-established corporate customers as key players in its strategic plan. Shringi cites the company’s longevity among prominent customers as a testament to its sticking power. He gives an example: ‘Among our top 100 clients, 73 have relied on our services for more than five years.’ Yatra sees these enduring relationships as secure sources of revenue and heightened operational leverage, particularly once technical integrations have been implemented.
While other online travel platforms were enticing consumers with discounts and vibrant marketing campaigns, Yatra opted for a different route. Shringi reveals, ‘We have a remarkable annual retention rate for corporate travel: more than 97%. This form of loyalty generates significant operational leverage for our business.’ Shringi also sheds light on two core factors instrumental in improving Yatra’s profit margin.
Primarily, Yatra minimized its direct discounts to clients. Instead of administering hefty price reductions, the company decided to leverage partner banks and marketing collaborators to deliver rewards. This tactic had a positive impact on Yatra’s customer acquisition expenses. Secondly, Yatra shifted its business model towards products with higher profit margins, such as corporate airline tickets, hotels, and travel packages.
Shringi says, ‘Compared to the net margin of about 3%-4% for airline tickets, hotel and package deals have net margins near 11%. From year to year, the mix of hotel and package deals has moved from roughly 15% to around 20% of gross bookings.’ Due to shifts such as these, Yatra’s net margin and revenue-after-cost metrics have outpaced the total growth in gross bookings. The firm reported a turn in gross bookings from a previously decreasing trend to a 9% year-over-year rise.
However, the uptick was not uniformly experienced across all sectors: while airline bookings had modest improvements, the hotel and package segments experienced higher growth rates. Recognizing this, Yatra is focusing on offering more hotel bookings to its corporate clients as an immediate way to boost growth. A number of fresh corporate partnerships have been made with a ‘hotel-led’ approach in which Yatra first provides hotel services, paving the way to a wider spectrum of travel offerings.
Currently, hotel and package services have emerged as high-margin products that are relatively straightforward for Yatra to upsell. Regarding the company’s financial performance during the quarter, the numbers show promising growth. Operational revenue has soared by 108% year-on-year, reaching INR 2.1 billion ($24 million), while adjusted EBITDA saw a 138% surge, touching INR 249 million ($2.8 million).
During the same period, Yatra’s net profit experienced a remarkable 296% increase compared to the previous year, reporting at INR 160 million ($1.8 million). Yatra continued to broaden its corporate client portfolio during this quarter, securing 34 new corporate accounts promising potential annual billing of up to INR 2 billion ($23 million).
In conclusion, Yatra has been displaying a keen focus on the corporate travel sector, seeking to solidify its foothold in this high-value business segment. By leveraging a digital-focused strategy and further integrating high-end corporate clients into its business framework, Yatra is shrewdly preparing for increasing digital adoption among companies.
By focusing on operational efficiency and maximizing customer retention rates, Yatra has successfully created competitive ‘switching costs’ which make it hard for clients to turn elsewhere. Shringi’s leadership has guided Yatra in embracing high-margin products like hotels and packages and reducing customer acquisition costs — a route considerably different from the practices of many competitors.
Incorporating these strategic shifts, Yatra has made strides in further solidifying and expanding its corporate client base. Their latest acquisition of Globe All India Services is a testament to their committed approach towards their strategic objectives. With a strong focus on additional value over mere price reductions, Yatra has strengthened its position as a trusted partner for big corporate clients.
A strong focus on long-lasting relationships with corporate clients has contributed significantly to Yatra’s success. The fact that an impressive 73 out of their top 100 clients have stayed with them for over five years underscores Yatra’s ability to provide a high-quality, customer-focused service. Not only has this strategy resulted in predictable and reliable revenue streams for the organization, it has also created powerful operational leverage.
What stands out about Yatra’s journey so far is their ability to swim against the current — choosing a unique path over the more typically-tread marketing tactics seen in the industry. While most online travel platforms focus on consumer-centric strategies and aggressive sales, Yatra prioritizes consistency in delivering value in its services and experience to corporate clients, boasting a noteworthy loyalty rate.
By focusing on these strategic intentions — from retaining their high-value corporate customers to upselling their high-margin products, they have managed to increase their net margin and outpace the total growth in gross bookings. With such a strategic approach and successful execution, Yatra looks well-positioned to explore and conquer more opportunities in the corporate travel sector.
The post Yatra Elevates Their Corporate Travel Services appeared first on Real News Now.
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