Yatra, a leading online travel firm in India, is eyeing growth in its business travel segment. The company’s CEO and Whole Time Director, Dhruv Shringi, revealed that Yatra’s strategic direction will center on nurturing high-value, recurrent business clientele, rather than pursuing leisure customers driven by price. The reasoning behind this strategic change is evident in the quarterly report ending June 30, where Yatra’s business-to-business (B2B) sector demonstrated a significant surge in gross bookings.
Shringi revealed that approximately 67% of the overall gross bookings were accounted for by the B2B segment. He indicated that this percentage might increase, possibly nearing a 70% share by the conclusion of the financial year. Yatra is eager to engrain its platform into the daily operations of its corporate clientele. This adoption creates what Shringi termed ‘switching costs’. In essence, once integrated into the organization’s day-to-day functions, it becomes burdensome for a company to switch away.
Shringi pointed out that many competitors in the industry are still using traditional offline methods to serve corporate clientele. In contrast, Yatra leverages advanced technical integration with its clients and fosters substantial online penetration. This, according to the company, gives it a distinct edge in the marketplace as businesses transition towards digitizing their travel operations.
Shringi stated, ‘The majority of our rivals continue to serve customers in an offline mode with minimal integration. This presents a unique opportunity for us to capitalize on the widespread shift towards digital adaptation within the industry.’ Yatra believes its profound integration capability will be key to its success.
Yatra’s commitment to its corporate growth strategy was highlighted last year when the company announced the acquisition of Globe All India Services (Globe Travels). Globe Travels is a provider of corporate travel services, and the purchase was valued at INR 1.28 billion ($15.25 million) in cash. Cultivating sustained relationships with corporate clients and prioritizing these relationships forms a cornerstone of Yatra’s strategy.
Providing an insight into the loyalty of their clientele, Shringi said, ‘Of our top 100 clients, 73 have been with us for over five years.’ Such long-term relationships, according to Yatra, offer a source of steady revenue and potential operational leverage once the technical integrations are fully implemented.
While other online travel platforms have focused on winning over consumers through discounts and marketing, Yatra chose a different approach. Shringi proudly stated, ‘Our annual retention rate (for corporate travel) is above 97%. The high retention rate is a primary factor contributing to the high operating leverage within the business.’
Margin improvement, according to Shringi, can be traced back to two main factors. Firstly, Yatra scaled back on direct customer discounts. Instead of aggressive price reductions, the company focused on presenting offers through banking partnerships and marketing alliances. Shringi states this strategy significantly lowered the cost of customer acquisition. Secondly, Yatra shifted its business mixture towards higher-margin products, such as corporate airfares, hotel bookings, and travel packages.
‘Hotels and travel packages have net margins close to about 11% compared to about 3%-4% net margin for air travel. There has been a shift in our mix of hotels and packages, year over year, from about 15% to about 20% of gross bookings,’ Shringi explained. These strategic modifications contributed to an increase in the company’s net margin and a boost in revenue after cost, outpacing the growth in total gross bookings.
Yatra witnessed a 9% year-to-year increase in gross bookings for the quarter, reversing previous downward trends in total volume. The recovery did not occur evenly across all segments: moderate improvement was observed in air ticketing, while the hotels and packages segment experienced more rapid growth.
As a growth strategy, Yatra plans to focus heavily on cross-selling hotel services to its corporate clients. Shringi revealed that many of their recent corporate wins were ‘hotel-led.’ This means that clients initially used Yatra for hotel bookings, which consequently led to further utilization of Yatra’s comprehensive travel services. Hotels and packages, for Yatra, are a higher-margin product and easier to cross-sell.
Key financial figures for the quarter further underscored Yatra’s success: Operational revenue rose by 108% year-on-year to INR 2.1 billion ($24 million) in the first quarter. Adjusted EBITDA saw a 138% surge year-on-year to INR 249 million ($2.8 million), while net profit was up by a staggering 296% compared to the same period last year, amounting to INR 160 million ($1.8 million).
In pursuit of continued growth, Yatra has been successful in expanding its corporate client base, adding 34 new corporate accounts during the quarter alone. These new accounts hold the potential for an annual billing of INR 2 billion ($23 million).
The post Yatra Shifts Focus to Business Travel for Profound Growth appeared first on Real News Now.
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