Yatra's Dhruv Shringi to evaluate more acquisition options, sees some firepower left yet

Yatra CEO Dhruv Shringi shares how business travel will grow faster than leisure.

Online travel platform Yatra that made its D-street debut last year earmarked Rs 150-180 crore for acquisitions. The company spent spent Rs 128 crore out of this recently on acquiring Globe Travels to expand its corporate travel business. Yatra is now looking at other opportunities, especially on the corporate side, as it looks to double its business travel in the next three years.

"We still have some firepower left to evaluate other opportunities," said Dhruv Shringi, co-founder and chief executive of Yatra Online, adding that through the next acquisition they are looking to expand their customer base like they did with Globe Travels.

"The other way we look at this (acquisition) is how do we add more products and services which could be cross-sold to our existing customer base like MICE (Meetings, Incentives, Conferences, and Exhibitions) where we get operational expertise, or it could be a technology expertise through which we can go deeper into our existing customers," Shringi told Moneycontrol.

New in the MICE segment, Yatra estimates the India MICE market at $3.3 billion in 2023 with a projected growth to $10.5 billion by 2030, reflecting a compound annual growth rate (CAGR) of 18 percent from 2023 to 2030.

The online travel aggregator (OTA) is expecting growth in off-sites, dealer meets with high margin and high demand frequency in the MICE segment.

"The genesis of this (MICE) was last year when we were speaking to our existing customers in terms of where their spending growth was coming from. We noticed that most of their spending growth was coming from more spend on events, team get-togethers and so on. And we were not in that category. Seeing this kind of captive demand in our customer base, we set up a team first organically (for the MICE segment) and now through the combination of Globe Travels, we set this out to be a key focus area for us," the CEO said.

Acquired last month, Globe Travels added 360 customers to Yatra's current base of over 850 corporate clients.

Boost in business travel

Shringi pointed out that business travel in the pre-Covid period was growing anywhere between one-and-a-half times to two times the GDP (gross domestic product) growth. "Given that there is a strong underlying economic traction at the moment, it (growth) might happen at a slightly faster pace. But there will be some industries which are going to be spending more while others will remain more muted," he said, giving the example of the IT sector where the spending for corporate travel has come down.

He doesn't expect the IT sector spending on corporate travel to go up significantly anytime soon. "We see that as a more gradual recovery, whereas sectors like banking, consulting, some of the state-run companies which are expanding, these guys will see much higher offtake in terms of their spends."

The biggest spenders on the corporate travel side are consulting, followed by IT services, banking and financial services, and manufacturing.

"Sectors like consulting have done really well in terms of spend because they've grown quite significantly unlike IT services which is a bit more muted in terms of their spends versus pre-Covid. Some of the startups have become extremely large now. The business (corporate) travel market today is broadly back to pre-Covid levels, if not slightly higher," the co-founder noted.

Yatra is seeing growth in both ticket size as well frequency in the corporate travel segment.

"Ticket size has gone up because fares have gone up versus pre-Covid level. International travel has become a lot more expensive. So, despite the fact that prices are rationalising a bit compared to last year, prices are up 30 percent for international travel versus the pre-Covid level. For business travel, there is a higher skew towards international travel to preferred destinations like the UK and the US.

The emerging destination for corporate travel is the Middle East with Saudi Arabia opening up as a new big market. "We see a lot of frequency in travel to the Middle East, especially Saudi has come up as a big new market, especially for a lot of the consulting and manufacturing customers. But one destination which has suffered is China which continues to remain muted. Both China and Hong Kong are still at relatively lower levels as compared to pre-Covid," Shringi said.

With many companies continuing the hybrid mode of work and work-from-home, there is more focus on team building activities. "We are seeing large group movements happening with a much higher frequency than what we would have seen pre-Covid. Movement of group sizes between 50 and 250 people is seeing immense amounts of traction," he said, noting that business travel will grow faster than leisure.

B2C versus B2B

"From a B2C (business to consumer) point of view, while volumes will grow, margins will remain under pressure. Whereas on the enterprise side, it's a much more managed service. It's like a technology solution that you're providing to your customers. There, the yield also is much higher than B2C. So, airlines are willing to participate more actively on the corporate platform. And now with Indigo launching business class as well, that becomes another key focus area for them," the CEO said.

For Q1-FY25, Yatra reported a revenue of Rs 100.8 crore, down 9 percent on-year, largely due to the impact of reduced volumes in the B2C segment, as the company optimised discounts amid intensifying price competition in the market, the company said in its investor presentation.

"B2C and part of it is being addressed through looking at acquisitions on the corporate side. So, whatever volume we lost on B2C, that has been more than made up now through the acquisition of Globe Travels," Shringi said.

He added that as B2C continues to have fluctuations, it then becomes a function of how much OTAs spend on customer acquisition or discounting to maintain market share. "Whereas on the corporate side, once you deploy a technology solution, then the discussion is not just about pricing. It's about a product and service and the longevity of the customer tends to be extremely high, like a 5-10 year kind of horizon. So, I feel that's a much better quality of revenue that one can accrue by investing the same amount of money," he added, highlighting how artificial intelligence (AI) tools are simplifying bookings especially on the corporate side.

AI boarding

"Old school expense management tools are not that accurate. On the other hand, the accuracy of AI tools to read a receipt from a photograph, figure out what is the context of it, translate it across different languages, and pick up foreign currency translation is immense. Our tool on the expense side has been built on Google's Gemini," he said.

Yatra is also working on self-service tools like bots, which can from a chat pick up the context, pick up what is the reason for the customer to come on to the platform and be able to address it on the spot.

"People want to find out what their cancellation charges are. Someone cannot trace their e-ticket, they want an agent to send it back to them again. Those kinds of simpler things can just be automated. So, that's what we are working on," he added.