It's important to build our businesses to a certain scale: Dhruv Shringi

Interview with Founder and Chief Executive Officer, Yatra.com

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Online travel company Yatra.com says it aspires to become this country's Amazon-equivalent one day. For now, it is trying to bring down its losses, build market share and give a significant boost to its hotel bookings business. Founder and chief executive officer Dhruv Shringi spoke to Ruchika Chitravanshi on the Initial Public Offer (IPO) plans and the direction of its efforts. Edited excerpts:

The e-commerce space has never been more buzzing. Do you think the online travel segment is taking a backseat in the total pie and tapering in terms of growth?

Travel in India still constitutes 70 per cent of all the e-commerce. The e-commerce penetration in the world and in India is driven by services - travel, jobs, classifieds -because there is no real offline interface. Travel went through a real phase of growth from 2006-07 till 2011. In 2012-13, things started to get slower when the Kingfisher (Airlines) capacity got pulled out. Over the past two years, capacity has come back. Growth is back in the past two quarters. Also, we are not as dependent on air. Today, you have more secular growth - domestic, international air and hotels and packages growing strongly.

What is the break-up of your air and non-air revenue?

Seventy per cent is air and 30 per cent is non-air. By 2016, it will be close to 50:50. Hotels and packages are growing much faster because of the sheer size of that market. Third, you have mobile penetration. A lot of people who could not connect to the net have access to mobile and smart phones, bringing more bookings for us. In the past 12 months, we have seen tremendous growth on the mobile front. Pre-April 2013, it was two per cent of our overall business; today, it is touching 15 per cent for domestic air bookings.

There has been talk around a Yatra IPO for long. Have you shelved the plans?

There was a time when we were contemplating it. Our sense right now is that given the quantity of investment required in the business, we can do it much better in a private domain. We need to sort our fundamental structural issues; a 50:50 mix (air booking and hotels) is a crucial milestone, as it will bring a lot more stability in terms of the earnings. We will get to those milestones and then look at an IPO. 2016 seems like a reasonable sort of timeframe.

When your competitor, MakeMyTrip, goes on an acquisition spree, how do you react? After Travel Guru's acquisition in 2012, there hasn't been much activity in Yatra. Any reason?

There is a difference in the thought process. Our sense is to go deeper into India, as opposed to growing horizontally across different markets. We are not looking for acquisitions outside India. Our take is to focus on the domestic market. It doesn't mean every step has to be an acquisition. You don't need the inorganic kind of play to get into this market. It is more about growing organically. There is a lot of work happening on ground in terms of sourcing new hotels and getting them online and getting real-time connectivity with them. We are sourcing 15,000 hotels domestically.

How are you dealing with your losses?

When you see the number of hotels penetrating the online market, our businesses are still literally babies. Even today, we would do a total transaction value of $700 million. We do not think the market is going to contract or that we have reached saturation; hence, we feel it is important to build the business.

Once we have a certain scale, we can start looking at optimising everything. Today, it is more about getting the growth.

Have you managed to bring down the losses?

They have come down significantly. We are still investing but the quantum is much lower. We also did a lot of marketing activity. We hired Salman Khan as brand ambassador. We ran a large television campaign with him and that was a heavy investment. We are coming up with a campaign again. Half our revenue goes into marketing.

For long, you have been the second largest player. What are you doing to get to the top slot?

To quote Avis, "Being the number two guy, we try harder." Of the online travel market we would be about 30 per cent of the market. We also have to see the segmentation and see which is the real space that matters. I think we want to get into a world-domination, Amazon sort of a mode. More realistically, there are certain areas where we want to be number one. Domestic hotels is right up there for us and we want to be the largest player on that segment.

Like Amazon, do you want to diversify into other segments?

We have given it some thought but there is still so much upside on the travel side that focus needs to be on growing that. Maybe once we get to a stage where we have 15-17 per cent of the overall market share, we can start looking at other opportunities. Currently, we have three to four per cent. The entire organised sector is less than a fourth of the market.

What are your hiring plans?

Currently, we are 1,800 people. We don't outsource our call centres. Guys who work in the call centre need to feel as the brand ambassador. Two years earlier, we brought back all our call centre operations from an outsourced organisation and it has been a huge improvement in terms of customer service. Annually, we are hiring about 150 people in call centres and as technology developers.