Yatra, a distinguished online travel firm based in India, is steering its focus towards the amplification of its corporate travel division. Dhruv Shringi, the company’s Whole Time Director and CEO, stated that their growth strategy would concentrate on securing more repeat business from corporate clients who have higher value propositions, rather than pursuing a bargain-oriented, leisure traveler market. With the close of the quarter ending June 30, Yatra recorded an increased concentration of its gross bookings originating from its B2B operations. As per Shringi, about 67% of the company’s total bookings were contributed by their B2B sector with projections of this percentage inching closer to 70% before the financial year concludes.
Yatra is working diligently to become an integral part of the regular corporate operations for its clients. Having a routine and interdependent relationship with its corporate clients introduces Shringi’s concept of ‘switching costs,’ denoting the additional effort a company would have to exert to transition away from their platform after integrating it into their operations. Shringi emphasized that a large-scale transition to digital operations from traditional offline modes is yet to be taken up by most of their competitors. Yatra signifies its position with a deeper level of technical integration with clients and higher online penetration.
Yatra believes that its deep technical integration and digital reach provide it a competitive advantage as businesses move towards digitization of their travel processes. Shringi highlighted the fact that many competitors still rely on providing services in an offline mode with barely any integration. This, he believes, presents a substantial opportunity for Yatra to penetrate the industry which is rapidly adopting digital methods. ‘There is a monumental opportunity presently for us to delve deep and permeate into the digital transformation sweeping across the industry,’ affirmed Shringi.
In a strategic move towards the corporate travel market, Yatra announced the acquisition of Globe All India Services (Globe Travels), a specialist provider of corporate travel services, last year. The purchase, made for INR 1.28 billion ($15.25 million) in cash, was a testament to Yatra’s commitment to its corporate growth strategy. Shringi underscored the importance of long-term corporate clients in Yatra’s strategic framework. The longstanding relationships cultivated with a multitude of their clients were indicative of Yatra’s deep-rooted presence within these corporations.
Shringi divulged that out of their top 100 clients, 73 have maintained a professional relationship with Yatra for a period extending beyond five years. Such enduring partnerships, Yatra believes, are conducive to generating consistent revenue and operational leverage once technical integrations have been securely instituted. While other online travel platforms have poured resources into consumer acquisition through discounts and aggressive marketing, Yatra has chosen a different path. ‘Our yearly corporate travel client retention rate stands above 97%. This contributes significantly to realizing high operational leverage in our business’, adds Shringi.
Shringi outlined two critical factors that have assisted in improving the company’s margins. For one, Yatra has decreased its reliance on direct customer discounts. Instead of providing steep price reductions, Yatra now leans on promotional offers mediated through banking and marketing partnerships. This pivot has consequently reduced Yatra’s customer acquisition expenses. Secondly, the company has shifted its business composition towards higher-margin offerings – corporate airfares, hotel bookings and travel packages.
Shringi highlighted the inherent profitability of hotel bookings and travel packages, ‘The net margins for hotels and packages are approximately 11%, dramatically higher than the 3-4% net margin from air tickets. Our mix of hotel and package bookings, year-on-year, has shifted from 15% to approximately 20% of gross bookings.’ These critical modifications have boosted the company’s net margin and revenue after cost indicators, even surpassing the raw growth in gross bookings.
Yatra disclosed its annual gross bookings growth at about 9% for the recently concluded quarter. This announcement marked a notable rebound from earlier downturns in the total volume. Although the revival has been slightly uneven with modest improvements in air ticketing and more rapid growth in hotels and packages, it signifies a positive shift. Hotel bookings and vacation packages evidently became the faster-growing segments for Yatra.
Yatra’s strategy heavily relies on cross-selling hotel services to its corporate clients as an immediate route to growth. Multiple recent corporate acquisitions were primarily driven by hotel reservations, which later flourished into wider travel service agreements. This suggests hotel bookings and packages, being both higher-margin and easier to cross-sell, occupy a critical role in Yatra’s current product portfolio.
For the concluded quarter, key financial figures were promising. Yatra’s operational revenue saw a tremendous boost of 108% year-on-year, reaching INR 2.1 billion ($24 million). The adjusted EBITDA also saw a substantial uptick, rising 138% year-on-year to stand at INR 249 million ($2.8 million). The net profit of the company soared by 296% compared to the same period in the previous year, reaching INR 160 million ($1.8 million).
Moreover, Yatra managed to continue expanding its corporate client base during this period. It inked deals with 34 new corporate accounts during the quarter in question. These fresh corporate accounts herald a potential annual billing increase of INR 2 billion ($23 million).
Under Shringi’s steering, Yatra has made compelling strides towards becoming a leading player in the online corporate travel niche. Its strategy of focusing on the digital realm, offering competitively high-value services to its corporate clients, and scaling back on price-based competition appears to be yielding promising results. These results mirror in its financial indicators and expanding client roster.
With this distinct shift in strategy, the company has demonstrated the sustainability of its approach in a highly competitive environment. By pivoting towards the corporate travel sector, Yatra was able to distinguish its brand from other online travel companies chasing leisure customers with discounts. In the same stride, Shringi’s tactics of using ‘switching costs’ and deepening technical integration with clients reinforced their position in the corporate client’s routine operations.
The acquisition of Globe Travels, a decision aiming to bolster their corporate arm, proved further their commitment to this shift. This growth direction allowed Yatra to capitalize on the increased need for digital integration in the travel processes of corporations. Leveraging this digital shift, Yatra demonstrated a deeper understanding of the market dynamics and the potential they hold.
On a broader scale, Yatra’s growth and success underline the broader trend of digital adoption across industries. Their ability to seize this digital wave and make it work in their favor illustrates the potential of a well-honed digital strategy in the corporate travel landscape. As corporations continue their relentless march towards digitization, Yatra is positioning itself as an essential ally in that journey.
In conclusion, the emphasis has been clearly laid by Yatra to focus on high-value, repeat corporate customers rather than the more volatile sector of leisure traffic. This strategy, coupled with the benefits of the higher margin products and services, seems to have set course for the company towards a promising horizon. The steady growth reported across important operational and financial parameters, the consistently increasing customer base and the overall traction in the digitization pathway further endorse the legitimacy and success of its distinctive approach in the highly competitive online travel industry.
The post Yatra: Steering Growth with Focus on Corporate Travel Sector appeared first on Real News Now.
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