Online travel enterprise Yatra, based in India, is on a trajectory to expand its operations within the business travel sector. The company’s CEO and Whole Time Director, Dhruv Shringi, indicated that the goal is to cater to repeat corporate clients who value quality over cost, in contrast to leisure-focused customers who are likely to be driven by price. This strategy has found its evidence in the significant proportion of gross bookings, a strong footing in the B2B sphere, Yatra has reported for the quarter concluded on June 30. Shringi revealed that an impressive 67% of gross bookings were the outcome of their B2B operations.
This figure is likely to approach the 70% mark by the fiscal year’s end according to Shringi’s predictions. Yatra’s ultimate objective is to position its platform as an integral part of their corporate clientele’s routines. This strategic tethering creates what Shringi terms as ‘switching costs’, whereby a company would find it considerably taxing to untangle their operations from Yatra’s platform once integrated. It is observable that numerous competitors lack this strategy as they still cater to companies in more traditional, offline ways.
However, Yatra boasts of its comprehensive technical integration with its corporate clients along with a significant online penetration. The company believes that these factors provide them an advantage as businesses gradually transition towards digitising their travel operations. Shringi pointed out that the currently large opportunity for Yatra lies in the mass digitisation trend in travel processes taking place across the industry. Many competitors still adhere to older, offline practices with minimal integration leading to this opening.
Highlighting a major achievement for Yatra, Shringi mentioned their acquisition of Globe All India Services or ‘Globe Travels’ last year. This acquisition of the corporate travel services provider amounted to INR 1.28 billion or $15.25 million in cash terms. The company’s preference towards long-term relationships with corporate customers is the core of their strategy. Yatra is indeed ‘sticky’ in the corporate world, with their high client-retention figures supporting this fact, Shringi observed.
In an illustrative comment, he stated ’73 of our top 100 customers have been with us for more than five years’. The value of such long-term partnerships lies in the predictable revenue flow and the operational leverage that successful technical integrations offer. As per Yatra’s strategic direction, they emphasize the retention of corporate clients, achieving a lofty annual retention rate above 97%. This retention helps the company achieve a significant operational leverage, unlike prominent competitor strategies that heavily rely on consumer discounts and marketing.
Shringi identified two major factors contributing to the improvement of their margins. Initially, the company consciously reduced direct discounting, decreasing Yatra’s customer acquisition costs. Instead of reducing prices substantially, they depended more heavily on rewards or offers given through banking and marketing partners. Secondly, the company reoriented its business mix towards higher-margin products such as corporate airfares, overnights and packaged tours.
As Shringi explained, ‘Hotels and packages have net margins closer to about 11% compared to about 3%-4% net margin for air. Our mix of hotels and packages, year over year, has changed from about 15% to about 20% of gross bookings’. These revisions in Yatra’s strategy boosted its net margin and post-cost revenue measures, which exceeded the mere growth in gross bookings. Statistics reporting a 9% year-on-year increase in gross bookings for the quarter also signal a turnaround from previous slumps in the overall volume.
The company’s recovery has yet to find a uniform course, with air ticketing showing only moderate improvement in contrast to a more noticeable growth in hotel stays and packages. Yatra aims to leverage cross-selling opportunities with hotel reservations for their corporate clients, recognizing it as an effective growth vehicle. Noteworthy are the ‘hotel-led’ corporate wins that have recently materialized for Yatra. These cases, where clients initially use Yatra for hotel bookings, have led to wider travel service arrangements.
In effect, hotels and packages have emerged as high-margin offerings that are easier to cross-sell for Yatra. Turning our focus to the company’s financial performance in the recent quarter, their revenue from operations recorded a substantial 108% year-on-year growth, reaching INR 2.1 billion or $24 million. Additionally, the adjusted EBITDA surged by 138% year-on-year to INR 249 million or $2.8 million. The net profit metric also witnessed a momentous 296% increase compared to last year, culminating in INR 160 million or $1.8 million.
Yatra strived to continuously penetrate the corporate sector and achieved 34 new corporate account closures in the last quarter. The potential annual billing from these accounts is speculated to be INR 2 billion or $23 million. While Yatra’s journey in the corporate travel sector seems promising, it is important to note that success also hinges on evolving market dynamics and staying in tune with the needs of corporate clients. The company’s client-focused strategy paired with their many bold fintech initiatives, however, render them an intriguing player in the corporate travel scene.
The post Yatra Targets Business Travel Sector for Expansion appeared first on Real News Now.
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