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One Way To Play The Recovery In The Indian Travel Industry

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Silvia Munoz Campo
·2 min read
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Yatra Online, Inc. was one of the sponsors for the Benzinga Global Small Cap Conference that took place on December 8-9, 2020.

Given the restrictions and quarantine recommendations brought by the COVID-19 pandemic, the travel industry was forced to take a back seat in 2020, affecting many countries that rely on tourism as a source of income.

In India, the travel sector contributes 6.23% of the country's GDP and generates employment for roughly 9% of its population via hotels, travel agencies, airlines, and tour operators, among others.

But India’s travel industry looks like it could be beginning its recovery. 

As the country continues to adhere to the recommended safety guidelines, the number of reported cases of COVID-19 has substantially decreased. According to data from Indian officials, daily new cases are down approximately 80% from the peak of 97,859 on September 16. 

Domestic travel operations are back to 80% of pre-COVID capacity, with much of that coming via domestic travel, which increased 18% month-over-month in November to 6.2 million passengers. At the same time, air passenger traffic reached 48% of its pre-pandemic levels in November, showing a faster recovery than the United States and Europe. 

This faster-than-anticipated pace of recovery in the Indian travel industry is benefiting online travel agencies (OTAs) like Yatra Online, Inc. (NASDAQ: YTRA), which has a broad reach within the Indian travel sector. 

India’s Recovery And Yatra’s Opportunity

Yatra provides information, pricing, availability, and booking facilities for domestic and international air travel, hotel bookings, holiday packages, buses, trains, city activities, intercity, and point-to-point cabs homestays. As a platform for accommodation options, Yatra provides real-time bookings for more than 102,000 hotels in India and over 1,500,000 hotels worldwide.

Established in 2006, Yatra is one of India’s largest travel services providers targeting the country’s $32 billion online travel market. The company’s operations are split between consumer travel and corporate travel, the latter of which represents the company’s more significant growth opportunity according to the company. 

In a post-COVID world, OTA’s like Yatra also stand to benefit from an accelerated shift to online. Over 80% of the company’s traffic comes from mobile devices. 

In the September quarter, Yatra reported $5.1 million in revenue. Though that number is down from pre-COVID levels, it represents a 60% quarter-over-quarter increase, reflecting the continued recovery in India’s travel segment. The company also reported $36.2 million in cash on hand compared to just $2.38 million in debt as of Sept 30, 2020, with a declining burn rate of $600-700k a month. 

Photo by Eva Darron on Unsplash

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