Yatra bets big on corporate travel as high customer acquisition costs weigh-OxBig News Network

Against this backdrop, online travel giant Yatra is doubling down on corporate travel, pulling away from direct-to-consumer bookings to focus on a high-growth, tech-driven segment that now makes up 60% of its business.

“Airlines will start flying into these airports soon, which will increase capacity and ease pressure off the top two cities. But on the hotel side, travellers will continue to face high costs in the next 2–3-year period, until enough new supply comes in to catch up to the growing demand,” said Dhruv Shringi, co-founder and chief executive of Yatra Online Inc., speaking exclusively to Mint. 

While some micro-markets within cities have seen pricing stabilize, broader trends indicate that significant reductions are unlikely in the near term. “Instead of double-digit price hikes, we may see rates grow at low-to-mid single-digit levels in some areas,” said Shringi.

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According to a recent report by hospitality consultancy Horwath HTL, India’s hotel market has only about 200,000 branded rooms, projected to grow to 300,000 by 2029. In 2024 alone, just 14,400 new rooms were added—11,700 from new hotels, 2,000 from brand conversions, and the rest from earlier expansions. This slow pace of growth means hotel prices are likely to remain high in the short term.

Rating agency Icra Ltd has estimated domestic air passenger traffic to climb to 164-170 million in FY25, marking a year-on-year increase of 7-10% from 154 million ferried in the previous year. For FY26, this number is likely to rise to 175-180 million.

While hotel prices are unlikely to come down soon, domestic airfares—which remain elevated—are expected to stabilize by late 2025 as new capacity comes online.

Jewar International Airport is set to begin operations around April-May, while Navi Mumbai International Airport is expected to open toward the end of the year. As airlines start flying into these hubs, additional capacity should ease congestion at metro airports, helping stabilize ticket prices.

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Travel: A mixed bag

Even as the travel sector rebounds, business travel remains uneven.

Shringi noted that corporate travel has recovered since the pandemic, but the composition of travelers has shifted. Consulting firms, FMCG businesses, and e-commerce companies are booking more trips than before 2020, while the IT and IT services sector has yet to return to pre-pandemic levels. Travel in manufacturing is currently at 80-90% of 2019 levels, while IT companies are still operating at 60-70% of their previous travel capacity.

“The IT sector should see some growth as overall there is a lot of investment in artificial intelligence etc., happening across the globe. Over the next two or three quarters, their spending will begin to rise as well,” he said.

Despite concerns about slowing economic growth in sectors such as FMCG and manufacturing, Yatra has yet to see a decline in corporate travel demand. Shringi believes the company’s diversified client base may help insulate it from downturns. “We’ve acquired new business customers, which has helped offset any slowdown in spending from existing clients,” he said.

Meanwhile, religious tourism is emerging as a high-yield segment, driven by rising disposable incomes and better infrastructure at key pilgrimage sites. Events like Mahakumbh—expected to attract 500 million visitors—highlight this shift.

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The lines between India and ‘Bharat’ are beginning to blur, Singhi said, adding that it’s no longer just big-city travellers heading for religious tourism.

“We don’t see any slowdown of demand for travel in the near term because there is a big cultural shift that’s happening in India and how people spend their disposable income,” he said.

In calendar year 2024, pan-India hotel occupancy stood at 63.9%, nearing 2008 levels, which marked the highest-ever performance for the sector. Average daily room rates across all hotel categories approached ₹8,000, and revenue per available room (RevPAR) exceeded ₹5,000, underscoring strong demand despite ongoing capacity constraints.

Hotel occupancy rates in December 2024 also showed steady year-on-year growth, approaching pre-pandemic levels, according to hospitality consultancy HVS. Key markets like Mumbai, Kolkata, Ahmedabad, and Kochi reported occupancy above 80%, with Mumbai leading at 81-83%. 

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Kochi saw the highest year-on-year growth, increasing by 5-7 percentage points. However, markets like Chandigarh and Hyderabad recorded declines of 2-5 percentage points. Average room rates (ARR) rose across most markets, except Goa, which saw modest growth but maintained the highest ARR in the country at over ₹14,000. Kochi also led in ARR growth, driven by strong demand.

Yatra’s growth engines

Yatra is doubling down on corporate travel, shifting away from its consumer-facing segment, where high customer acquisition costs and intense competition persist.

“Corporate enterprise business is much more secure in nature,” Shringi said, explaining that B2B margins contribute directly to operating profits, unlike the heavily discount-driven consumer vertical. “(W)e don’t have to continuously induce companies with discounts to buy our packages. We’ve seen the long lifetime value of our business customers.”

The corporate travel market in India is valued at over ₹1. 25 trillion and remains underpenetrated in terms of digital adoption, making it a lucrative opportunity for online travel firms. 

Shringi said corporate demand for air travel, large events, and company offsites—including meetings and incentive programmes—continues to be a strong growth driver for Yatra. “The kind of growth that we’re driving in this business is coming largely on the back of the corporate travel growth,” he said.

“Over the next medium term, right over the next two years or so, we will continue to scale up our corporate business at a much faster pace at 25-30%. This type of growth rate will drive about 40-50% growth in terms of profits.” Shringi said.

That momentum is already visible in Yatra’s financials. In Q3 FY25, revenue surged 111% year-over-year to ₹235 crore, while the company swung from a ₹39 crore loss last year to a ₹39 crore profit this quarter. However, adjusted air ticketing margins declined by 23%, largely due to lower consumer segment volumes, as Yatra scaled back discounts in response to aggressive price competition.

Meanwhile, the company’s marketing and sales promotion expenses rose 9.4% year-over-year to ₹11.4 crore in the quarter ended 31 December, up from ₹10.4 crore in the same period last year.

While Yatra’s corporate travel business remains focused on large enterprises, the company is also expanding into small and medium-sized businesses.

Shringi said that online travel firms have traditionally targeted India’s top 5,000-10,000 companies, but there is now significant demand from smaller businesses that lack direct negotiating power with airlines and hotels. To address this gap, Yatra is developing specialized products tailored to SME clients.

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The company is also eyeing a new opportunity: personal travel for employees of the corporate clients it serves. With over 500,000 employees working at companies that use Yatra’s services, the company sees significant potential in offering personal travel packages through its platform. 

There’s a big opportunity there, Shringi added.