Yatra, an Indian online travel firm, is emphasizing a strategic shift towards the expansion of its corporate travel sector, according to Whole Time Director and CEO Dhruv Shringi. Instead of catering primarily to leisure customers seeking low prices, the company’s future direction will prioritize valuable corporate clients who can assure frequent business engagements.
In the reporting quarter concluding on June 30, Yatra experienced a substantial portion of its gross bookings originating from B2B interactions. As stated by Shringi, around two-thirds (67%) of gross bookings stemmed from B2B, a figure he predicts might incline to 70% by the end of this current fiscal year.
The overarching goal is for Yatra’s platform to become an essential part of the everyday operations for corporate customers. Shringi highlighted an important factor termed ‘switching costs’, represents the significant effort required by a company to shift its operations elsewhere once it becomes accustomed to Yatra’s integrated services.
Contrasting the current standard in corporate booking services, Yatra boasts in-depth technical integrations and superior digital penetration. Shringi applauded their unique edge inflow from the company’s foresight to digitize travel processes ahead of competitor firms, most of which still rely primarily on offline customer service with limited integrations.
Shringi emphasized the immense opportunity for Yatra to capitalize on the increased digital adoption sweeping across the industry at present. The past year saw Yatra propel itself further into the corporate travel segment with the acquisition of Globe All India Services (Globe Travels), an established corporate travel service provider. The deal, which amounted to INR 1.28 billion ($15.25 million) in cash, further solidified Yatra’s presence in the sector.
For Yatra, long-standing corporate relationships present significant strategic advantages. Shringi highlighted the duration of their partnerships with large clients, indicating it as evidence of Yatra’s effectiveness in retaining customers. ‘Observing our top 100 customers, it turns out, 73 of them have been our partners for exceed five years’, he noted.
Yatra assesses these enduring relations as a source of steady revenue flow and operational leverage following the successful implementation of technical integrations. While the majority of online travel platforms sought to catch consumers’ attention through promotional discounts and marketing gimmicks, Yatra decided to take a different route.
Shringi noted that the company’s annual retention rate for corporate travel stands at a strong 97%, which in turn, contributes to their impressive operational leverage. According to Shringi, Yatra’s margin improvement has been driven by two primary factors.
Firstly, Yatra minimized direct discounting for customers. Instead of employing massive price slashes, the company started to rely more heavily on offer arrangements with banking institutions and marketing partners. This shift enabled Yatra to reduce the cost of customer acquisition significantly.
Secondly, the company promoted a transition in their business model in favor of more remunerative items like corporate airfares, hotel stays, and travel packages. ‘The net margins for hotels and packages come close to 11% as against the 3%-4% net margin for air travel. The proportion of hotels and packages in our gross bookings has seen a yearly rise from 15% to nearly 20%’, said Shringi.
These strategic adaptations have succeeded in increasing the company’s net margin and revenue-after-cost measures, surpassing the base growth in gross bookings. Yatra experienced a year-over-year growth of about 9% in gross bookings for the quarter, underscores a reversion of previous volume declines.
The progress, however, has not been uniform across all sectors. The air-ticketing segment saw only modest improvements, while the hotel stay and package deals sector demonstrated faster growth. Yatra has identified cross-selling of hotel packages to corporate customers as an immediate course of action to boost growth.
Some of their recent corporate gains were ‘hotel-led’, which means customers initially chose Yatra for their hotel booking needs, subsequently expanding their engagement to wider travel service offerings. For Yatra, hotels and package deals are currently higher-margin goods, and are easier to cross-sell.
On crucial quarterly figures: Yatra posted a 108% year-on-year growth in operational revenue, which reached INR 2.1 billion ($24 million) in the first quarter. Adjusted EBITDA saw a surge of 138% year-on-year to INR 249 million ($2.8 million), and the net profit increased by 296% compared to the same period last year to reach INR 160 million ($1.8 million). Further, Yatra has successfully expanded its corporate client base, closing the quarter with 34 new corporate accounts that potentially offer an annual billing of INR 2 billion ($23 million).
The post Yatra Steers Towards Corporate Travel, Focusing on B2B Interactions appeared first on Real News Now.
About Author
