In an interview, Sharat Dhall, COO, B2C, Yatra.com, told FE’s Anushree Bhattacharyya that he blames the losses on the increased cost of marketing and promotions.
Travel agency Yatra Online, which went public on Nasdaq December last year, opted for a reverse merger with Terrapin 3 Acquisition. The deal valued Yatra at $218 million. Again, in July this year, in an effort to build its business-to-business (B2B) division, Yatra bought corporate travel services provider Air Travel Bureau (ATB) in an estimated cash-and-debt deal of $22.5-27.5 million, almost four-five months after its biggest rival MakeMyTrip bought Goibibo. Besides, it roped in actor Ranbir Kapoor as its brand ambassador adding teeth to its campaign. Yatra.com posted an adjusted Ebidta loss of Rs 61 crore for the quarter ended June 2017, compared with a profit of Rs 1.3 crore a year earlier. Revenue, excluding service costs in the April-June quarter, increased to Rs 163.44 crore from Rs 122.16 crore a year earlier. In an interview, Sharat Dhall, COO, (B2C), Yatra.com, told FE’s Anushree Bhattacharyya that he blames the losses on the increased cost of marketing and promotions. Edited excerpts:
Going by the first quarter, marketing and sales promotion expenses increased by 248.7% to Rs 115.3 crore from just Rs 33 crore a year ago. Does the big jump in customer acquisition signal widening losses?
It is our constant endeavor to bring down the cost of new customer acquisition. Currently, 80% of our transactions are repeat orders from existing customers, with only 20% coming from new customers. However, with so many new customers coming into the market, one can’t afford to stop promotions. Also, the growth of any business depends on two factors. Firstly, old customers increasing the size of their spend by buying more. Two, more new customers transacting. We are losing money because we are investing in growth besides building the brand, but this quarter’s loss includes a lot of other costs like IPO, etc.
Also, revenue from air ticketing increased by 25.6% to Rs 106.3 crore from Rs 84.63 crore. While this growth in air ticketing was largely driven by an increase in gross bookings, net revenue margin remained flat at 6.1%. Why?
It is true that net revenue margin has remained flat for some time because it depends on several factors, such as demand, capacity, etc. At the end of day, there is a certain set of suppliers. So it is largely a function of demand and supply. As aggregators, we are just intermediaries in the whole process. Moreover, this is a worldwide trend and not restricted to just Indian online travel firms. The margin is not expected to go up dramatically.
Again, revenue from hotels and packages rose by 6.6% to Rs 1,833.3 crore from Rs 172 crore. Gross bookings also increased by 16.4% along with a 13% increase in net revenue margin. How well is Yatra placed against MakeMyTrip and OYO rooms?
The increase in revenue is due to a change in the business mix skewed more towards standalone hotels and higher margins as negotiated from the suppliers. Presently, in the hotel booking space, a lot of very cheap hotels are being sold at ridiculous prices. While this is driving a lot of bookings, it’s not really building value. Our focus is to provide good quality budget accommodation where a customer has a good experience. The aim is to increase sale by offering a selected and curated set of hotels — mix of premium and budget properties.