Q1 FY19 has been a bit tough on online travel major Yatra. With a tight control on costs resulting in fall of 17.4% in losses over the previous quarter, the company is now looking to increase its sources of income, while observing a fall of 16% in revenues on a quarter-on-quarter basis. ‘Flexi Stay’ – a new feature launched by Yatra which is based on a pay-per-use pricing model seems to be a step towards the same.
Launched in September 2018, the Flexi Stay option offers consumers an option to book hotels in India with an anytime check-in/ check-out facility, thereby paying only for the time-based usage of the room. Being in the initial phase, it is currently being offered in two of India’s largest metros – New Delhi and Bengaluru, and two key religious towns – Shirdi and Tirupati.
Currently priced in a range from INR 49/hour to INR 199/hour depending on the hotel, the FlexYatra Launches ‘Flexi Stay’ At Hotels To Curb Its Falling Revenues In FY19i Stay algorithm also takes into account more than 20 parameters such as full night room rate, time of booking, star category of hotel, day of booking, demand patterns for that hotel, location, city, etc. and suggests the final price to pay.
How Feasible Pay-Per-use Pricing Model Is In Travel Sector?
According to Dhruv Shringi, cofounder and CEO of Yatra, while there is a minimum stay requirement of just 4 hours, Flexi Stay booking data shows that 35% users book it for a 4-8 hour time period, while 65% guests book it for more than 16 hours.
“We are also seeing long tail users booking for 36 hours, 40, 60 hours and so on. So this is clearly much larger than just a day use market and these are users who otherwise would not have booked the hotel, but now have chosen to do so given the flexibility to customise their time and pay per use,” he added.
The table below illustrates how Yatra Flexi Stay compares with regular room night based booking, where the user pays for 15 hours vs. the traditional room night rate and saves 30%.
Existing Market Opportunity And Plans Ahead
Bengaluru-based Mistay is another startup offering similar pricing options to the consumers. However, being launched in 2016, the company is presently in the growth phase, and thus Yatra certainly has a wide untapped opportunity ahead.
Earlier in 2016, OYO also came up with an option of sunrise check in which allowed users to do check-in in the hotels at six in the morning. At present, OYO is continuing with its international expansion spree.
Also, last week MakeMyTrip introduced ‘Experiences’ aimed at providing consumers with curated and unique hyperlocal travel services. Community-driven hospitality company Airbnb and Cleartrip have already launched the ‘Experiences’ feature on their platform long ago.
Currently, in India, Hotel occupancy levels are hovering around the 60% range. Yatra’s Flexi Stay is further looking to offer this pricing advantage to its large corporate customer base.
“We will soon launch Yatra Flexi Stay in 100 cities with select hotel partners and will revolutionise the hotel booking process and industry in India. We are also looking to launch this product in select test markets outside India especially for our corporate customers who tend to be a frequent outbound traveller,” added Dhruv.