India’s Yatra Leans More on Freight Delivery Than Corporate Travel for Recovery

Transporting cargo rather than people sustained many airlines through the pandemic. Now Yatra wants to do the same ahead of taking the company public in India later this year.

The India-based online travel agency, which has 700 corporate customers and 38,000 small and mid-sized clients for its business travel services, is building up a 200-employee team for its new “multi-modal” freight forwarding division, where it will ship goods by plane, sea, road and rail.

It predicts sales will eventually outpace its corporate travel revenue, but this means making its platform work in a different way, with little cross-selling potential.

Like all travel agencies, Yatra’s been struggling. Its failed merger with Ebix in June 2020 didn’t help, while India was particularly hit hard as the Delta variant began to spread. More recently activist investor Maguire has called for its management to exert shrewder oversight of strategy, product development and capital allocation.

Counting the Cost   

Yatra has just posted a $1.9 million loss for its 2022 second quarter, which covers the three months ended Sept. 30, 2021. It was a deterioration on the $1.2 million loss posted in the previous quarter.

The second quarter hit comes off the back of $6.1 million revenue, which is an increase of 48.6 percent on the previous quarter, and 71.1 percent up on the 2021 second quarter. It has seen some recovery in travel due to India’s gradual easing of travel restrictions and an increase in vaccinations, but said rising staff costs impacted its results because it was heavily recruiting for its freight division.

Up until recently, Yatra wanted to bolster its position as the go-to digital travel management platform in the country. Gross bookings grew 61 percent in November 2021 compared to September, with revenue reaching 50 percent of pre-pandemic levels. 

Things are looking up too as domestic travel in India is rebounding, according to consulting firm HVS. “Corporate travel is already accounting for 20-25 percent of hotel revenue in certain cases, which is a positive sign for the sector,” said Mandeep Lamba, president, South Asia, in a column on Sunday. “While the increasing travel restrictions due to Omicron may prompt companies to focus on critical and crucial travel in the short term, we expect the situation to stabilize and domestic corporate travel to pick up significantly in the coming year.”

Like rival MakeMyTrip, which also sells leisure as well as business trips, Yatra sees huge potential in a country that mostly prefers to do things offline. 

“Fundamentally, India is a legacy business travel market,” said Gaurav Sundaram, president of India-based ProKonsul Consulting. “Self-booking is largely limited to domestic travel, where it is probably a little more dominant than it used to be maybe five years back, but for international travel the technology is very nascent because of the visa issues Indians have got.”

Online penetration in the corporate travel market in India is 10 to 15 percent only, according to Yatra, while 60 percent large part of the market is still filled by smaller offline players.

Cargo Headstart   

Despite the good omens, and potential to convert businesses from offline to online bookings, Yatra wants to leverage its booking technology, as well as existing vendor and corporate relationships, to help customers shift goods. “As we look towards digitizing the logistics space, our corporate travel relationships with both airlines and enterprise executive management together with our technology capabilities has given us a significant headstart,” said Dhruv Shringi co-founder and CEO, during an investor call at the end of last month.

“Despite the pandemic, we have rapidly scaled up this (freight) business over the past few months and we believe this business longer term has the potential to be even larger than our corporate travel business,” he added.

In the three months to Sept. 2021, a quarter of its new customer wins were for freight, and the rest corporate travel. Of those 20 new corporate customers, some were cross-selling for freight, the company said.

It is aiming to generate $4 million to $5 million in freight-forwarding revenue this year, and expand further next year. “In terms of seeing a doubling year-over-year from there on as well, I think that’s something that we are definitely leaning towards,” Shringi said during the investor call.

The CEO is also emboldened by the “success of tech-enabled corporate travel platforms like TripActions … and we don’t think India would be any different. We have multiple levers of growing our corporate travel business and we believe that the digital platform approach that we have adopted is the right one. Our early success in the freight business also lends more support to the validity of this approach,” he said.

Meanwhile, the agency will continue to curb its marketing budget, relying on the strength of its brand and working with influencers on platforms like Instagram to boost leisure sales. It then plans to take the company public in India in the first half of this year. And similar to RateGain Travel Technologies, which made its stock market debut in India in December, it will use the proceeds to acquire other local companies and strengthen its balance sheet.

During the call there was no mention of Maguire’s open letter calling for change at the top. “I want to thank our shareholders who have stood by Yatra through these trying times. I am hopeful and honestly believe it’s only a matter of time before your patience and understanding are rewarded,” Shringi said.