Revolutionizing Travel: Yatra’s Bold Bet on a 9-11% Boom

The Yatra’s Bold Bet on a 9-11% Boom a travel-tech startup on the cusp of going public, is placing a substantial bet on the expected upswing in the travel industry. Projections indicate a Compound Annual Growth Rate (CAGR) of 9-11 percent over the next five years. Additionally, the company is actively targeting the burgeoning freight sector to diversify its revenue streams.

According to a Crisil report, the Indian travel industry witnessed a CAGR of 6-8 percent from FY17 to FY23, resulting in a market size ranging from Rs 2,82,500 crore to Rs 2,84,500 crore. This growth trajectory is anticipated to persist, with estimates suggesting that the industry will reach Rs 4,54,000 crore to Rs 4,56,000 crore by FY28. This expansion will be fueled by factors such as robust development in tourism infrastructure, rising income levels translating into increased discretionary spending on travel and tourism, a surge in both business and leisure travel, reforms in visa regulations, and improved connectivity across various modes of transportation.

Dhruv Shringi, the CEO of Yatra Online, emphasized the pivotal role of domestic aviation within the travel sector. He noted that airlines are progressively adding more aircraft to their fleets, with orders exceeding the current count of less than 700 aircraft in India. This substantial fleet expansion is expected to unfold over the next decade. Furthermore, Shringi highlighted significant growth in airport infrastructure, with new airports emerging in tier II and III cities, and extensive expansions occurring in major metropolitan areas. These developments underscore the escalating investments in travel and associated infrastructure.

Notably, the demand for travel is no longer confined to the top 5-10 cities; it has extended to at least 25-30 cities across India. Yatra plans to leverage its network of 30,000 agents to deepen its presence in tier II and III markets, in tandem with the expansion of airports in these regions.

The air ticketing segment, which demonstrated a CAGR of 8.5-9.5 percent from FY17 to FY23, currently commands a 50-52 percent share of the Indian travel market as of FY23. This momentum is expected to persist, with projections indicating a 12-13 percent CAGR until FY28. Consequently, air ticketing is projected to maintain its dominance in the Indian travel market through fiscal year 2028.

Shringi attributed this industry growth to the evolving consumer behavior, predominantly the shift toward online platforms. Online penetration, defined as the share of bookings conducted online, has increased from 59-61 percent in FY20 to 66-68 percent in FY23. It is forecasted to rise further to 73-75 percent by FY28, as reported.

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Yatra, the travel-tech startup gearing up for its initial public offering (IPO), is placing a substantial bet on the anticipated resurgence of the travel industry. Forecasts indicate a Compound Annual Growth Rate (CAGR) of 9-11 percent over the next five years. Moreover, the company is strategically diversifying its revenue streams by venturing into the burgeoning freight sector.

According to a comprehensive Crisil report, the Indian travel industry demonstrated a robust CAGR of 6-8 percent from FY17 to FY23, propelling the market size to a range of Rs 2,82,500 crore to Rs 2,84,500 crore. This growth trajectory is poised to persist, with projections suggesting that the industry will expand to a range of Rs 4,54,000 crore to Rs 4,56,000 crore by FY28. This upward trajectory is underpinned by several factors, including substantial investments in tourism infrastructure, an uptick in income levels leading to increased discretionary spending on travel and tourism, a surge in both corporate and leisure travel, progressive reforms in visa policies, and enhanced connectivity across diverse modes of transportation.

Dhruv Shringi, the CEO of Yatra Online, underscored the pivotal role played by domestic aviation within the travel sector. He pointed out that airlines are in the midst of an unprecedented expansion, with orders surpassing the existing fleet of approximately 700 aircraft. This forthcoming fleet expansion is expected to unfold over the course of the next decade. Furthermore, Shringi highlighted the significant advancements in airport infrastructure. New airports are sprouting up in tier II and III cities, while major metropolitan areas are witnessing substantial expansions. These infrastructural developments unequivocally signify the substantial investments being channeled into fortifying the travel industry and its accompanying ecosystem.

It’s noteworthy that the burgeoning demand for travel is no longer confined to the top 5-10 cities; it is now emanating from at least 25-30 cities across India. In light of this trend, Yatra is strategically deploying its extensive network of 30,000 agents to penetrate deeper into tier II and III markets. This expansion mirrors the concurrent growth of airport facilities in these regions, positioning Yatra for optimal market coverage.

The air ticketing segment, which has historically been a prime driver of the Indian travel market, currently commands a substantial 50-52 percent share of the industry as of FY23. The impressive growth witnessed from FY17 to FY23, with a commendable CAGR of 8.5-9.5 percent, is poised to persist through FY28, with a robust 12-13 percent CAGR. This steadfast momentum underscores the enduring significance of air ticketing in the Indian travel landscape.

Shringi attributes this industry growth not only to the burgeoning travel aspirations of the populace but also to the transformative shift in consumer behavior. A pivotal aspect of this shift is the significant migration of booking transactions to online platforms. Online penetration, quantified as the share of bookings conducted through digital channels, has surged from 59-61 percent in FY20 to 66-68 percent in FY23. This paradigm shift is set to further intensify, with online penetration projected to scale up to 73-75 percent by FY28, as stipulated in the report.

In conclusion, Yatra’s ambitious strategy is perfectly poised to harness the promising growth prospects embedded within the Indian travel industry. As the company readies itself for its IPO, it is strategically positioned to ride the wave of mounting travel demand, infrastructure expansion, and the digital transformation sweeping the industry. These factors, in concert with Yatra’s forward-thinking approach, paint a vibrant future for the travel-tech startup as it endeavors to redefine the travel experience for millions of travelers across India.