Hello, everyone. I'm Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited. Welcome to our fiscal year 2023 second quarter earnings webinar. Today's event will be hosted by Deep Kalra, our company's founder and chairman. Joining him is Rajesh Magow, our Co-Founder and Group Chief Executive Officer, and Mohit Kabra, our Group Chief Financial Officer. As a reminder, this live event is being recorded by the company and will be made available for replay on our IR website shortly after conclusion of today's event. At the end of these prepared remarks, we will also be hosting a Q&A session. Furthermore, certain statements made during today's event may be considered forward-looking statements within the meaning of safe harbor provision of the U.S. Private Securities Litigation Reform Act of 1995.
These statements are not guarantees of future performance, are subject to inherent uncertainties, and actual results may differ materially. Any forward-looking information relayed during this event speaks only as of this date, and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements are contained in the Risk Factors and Forward-Looking Statement section of the company's annual report on Form 20-F, filed with the SEC on July 12, 2023. Copies of these filings are available from the SEC or from the company's investor relations department. I would like to now turn over the call to Rajesh for his comments. Over to you, Rajesh.
Thank you, Vipul. Welcome, everyone, to our second quarter earnings call of fiscal 2023. To start with, just a couple of key performance highlights of the quarter. While the reported quarter was a seasonally weak period for leisure travel, we delivered strong results with gross bookings growing by 126.3% year-on-year on constant currency basis. EBITDA for the quarter was at $10.7 million as compared to an EBITDA loss of $0.6 million in Q2 fiscal year 2022. Adjusted EBITDA or adjusted cash operating profits stood at $18.7 million as compared to $10.5 million in the same quarter last year. COVID-19 infections in India have steadily come down and continue to be mild. Hence, the impact of pandemic on travel decisions was negligible during the quarter.
However, the inflationary pressure and visa issues are holding recovery momentum, especially in outbound international travel. As shared earlier, high fuel costs and inflationary pressures led to high air fares during Q1. While we witnessed some moderation in crude oil and ATF prices towards the end of Q2, for large part of the quarter, fares remained high. Domestic leisure traffic has recovered more than 100% of pre-pandemic levels and continues to be strong. As per DGCA data, overall domestic daily flown passenger market has recovered to 85%. We are recovering faster than the market at 98% as compared to same quarter pre-pandemic. As a result, despite headwinds on outbound travel, we delivered more than 126% recovery on air gross bookings and 117% recovery in overall gross bookings on constant currency basis compared to the pre-pandemic Q2 fiscal year 2020 quarter.
As stated earlier, consumer sentiment continues to stay positive in terms of willingness to travel and therefore fares getting rationalized with full restoration of passenger carrying capacity can aid to full recovery in outbound international travel in the next few quarters. While travel industry continues to navigate short-term macro headwinds with resilience, the medium to long-term outlook for travel and tourism in India remains robust. Government of India estimates that by 2030, tourism sector will contribute $250 billion to India's GDP, up from $150 billion in 2024. The aspiration is to take this contribution to $1,000 billion , $1,000 billion by 2047. Ministry of Civil Aviation has projected a phenomenal growth for India's civil aviation, 220 airports by 2030 from current 153.
Overall fleet size of 1,200 planes from current 700 planes in next five years and 400 million air travelers from current 200 million in next seven to 10 years. Government is looking to make all the necessary interventions, including investments in infrastructure to promote India as a leading tourism destination, which is great news for the industry and us. From demand perspective, India is the second most populous country in the world and an under-penetrated market for travel. Propensity and willingness to travel is steadily increasing, fueled by growing Indian middle class. Middle-class households are expected to reach 330 million in 2030 from 166 million in 2018. Also, digital revolution in the country continuing, leading to ever-growing internet and e-commerce penetration.
Over the last decade, internet penetration has increased from 11% in 2012 to 47% in 2022, and e-commerce users have increased over 19x from 10 million users in 2012 to 190 million in 2022. Recently, 5G services were also launched in the country. That should further accelerate this trend with high-speed internet enabling richer content and higher e-commerce adoption. We have been at the forefront of this digital revolution as well, and through the year, we have invested and facilitated online penetration across different travel segments. We continue to digitize various travel use cases with our robust multi-product platform with an aim to deliver best user experience and value. Coming to business segments now, starting with air business. We continue to maintain our leadership position in market share on the back of innovative products and industry-first features.
We recently launched QuickBook feature for our frequent flight bookers. This feature leverages the user's previous booking history and provides their most preferred flight options, thereby helping them complete the flight transaction lightning quick. We continue to build on our new stack of products and features based on data science models, and our zero cancellation product is seeing very good traction among travelers. We have recently extended the zero cancellation product for international flights as well, where international travelers can now avail a full cancellation penalty waiver by purchasing this add-on product at the time of booking. International travelers who are unsure of their travel plans now also have the option of locking flight prices through our in-house price lock feature by paying a nominal amount.
During the quarter, we also went live with HDFC SmartBuy platform, where HDFC premium credit card holders can not only book to get maximum reward points, but also utilize their reward points on their travel bookings. Coming to our accommodation business, which includes hotels, packages and homestay segment, we continue to see strong growth on year-on-year basis. We have seen strong recovery in premium and mid-premium segment. While budget segment recovery has been slower, our share of premium and mid-premium in the overall hotel volumes has increased significantly as compared to pre-pandemic levels. That helped overall recovery to be almost 100% in hotels and packages. Gross booking as compared to pre-pandemic levels on constant currency basis. Pandemic has also changed travel habits to a certain extent.
In addition to annual holidays, more and more people are now taking multiple short holidays on long weekends and traveling to nearby getaways, giving a boost to domestic tourism. For instance, in August, we touched our all-time high of single-day check-ins on the Independence Day long weekend. We continue to innovate and launch industry-first capabilities to serve our customers with best quality experience. We launched our new flexible payment option for users, which allows customers to book hotels without any upfront payment. We offer it to all customers across a broad base of properties. Customers who plan their trips early have found this as a perfect feature, thereby increasing our share of user bookings. Additionally, in our endeavor to tap the group booking customer segment, we also launched a dedicated funnel for group booking five or more rooms.
Besides the price benefit, the product also innovates around payment policies, meal selection, et cetera, to make it easier for the customers to do group booking online. During the quarter, we relaunched our go Stays program, which offers top-rated affordable properties to customers. It comes with a money-back guarantee across over 2,000+ properties pan-India, which covers our main promise of hassle-free check-ins with clean rooms, TV, AC, and free Wi-Fi. We continue to add more properties as we build on customer experience in the budget segment. We also launched our new use case of hourly stays with about 3,000 properties in 109 cities to cater to the short stay use case. Customer will now have flexibility to choose stay options as per their need for three hours, six hours or nine hours with a price advantage.
As mentioned earlier, homestays have been gaining popularity among consumers in India, and we are investing behind creating more awareness of this category. We recently hosted India's Favourite Homestay Awards, a first of its kind annual celebration to recognize and reward the growing community of homestay hosts in the Indian market. We received about 2,400+ nominations and 15 properties were selected as winners by a neutral jury across various categories. Our domestic packages product has done phenomenally well, with 166% growth in domestic volumes compared to pre-pandemic. Encouraged by the growth rate, we have ramped up our holiday experts team from 700 at the start of the year to about 1,000 women holiday experts now. This team operates on a variable cost structure.
We also grew our franchise channel from 110 partners to about 140 active partners now. Coming to our bus ticketing business. We maintained our recovery momentum in the seasonally weak quarter. Our overall bus business gross bookings in quarter two recovered to 111% of quarter two fiscal 2020 levels in constant currency terms. Product-related initiatives continue to focus on driving new customer acquisition and better user experience. We launched a Hindi booking funnel in redBus as a first step towards full localization. Also, more than 80% of Primo bus operators were onboarded for the instant refund program, which resulted in issue closure turnaround time improvement from over three days earlier to less than six hours now. Our other ground transport services such as intercity cabs, rail tickets, et cetera, continues to scale well and have already surpassed pre-pandemic volumes.
This business contributes significant new users each quarter to both MMT and GI platform. Major part of this new traffic comes from the non-English speaking tier two, tier three cities, thereby expanding the reach of our offering to newer geographies and user segments. In March 2022, we launched the standalone lightweight redRail Android app for rail ticketing and infra services. As of September, the app crossed 1.7 million installs and 300,000 monthly active users with an app rating of 4.25. For airport transfer use case, we had entered into an exclusive partnership with BluSmart, offering customers 100% electric, hassle-free, guaranteed and on-time pickup and drop experience at Delhi Airport. Post the launch we are witnessing a pickup in transactions. Our attach rate has increased by over 20% with an NPS of 62.
myPartner, our other B2B2C demand channel, added 3,940 travel agents during the quarter, thereby increasing the penetration into under-penetrated areas of the country and taking the total count to about 32,000 by the end of the quarter. Domestic corporate travel is now coming back to near normal and both our myBiz and Q2P platforms catering to this demand segment continue to grow very well. Our corporate business is now more than 2 x of the pre-pandemic levels in terms of gross booking and continues to scale. We have been adding new customers on both myBiz and Q2P platform, and the active corporate count has now reached to over 39,000 small and medium corporates on myBiz and 209 large corporates on Q2P, which is almost double as compared to pre-pandemic customer base.
On the product side, we have recently added capability to enable easy integration with the expense management and client ERP platform. We have also further strengthened supply of both flights and hotels to bring more value to our corporate customers. Our GCC business continues to scale organically. Gross booking value this quarter has grown over 9 x, albeit at a lower base as compared to same quarter last year. During the quarter, we launched our first digital-only brand campaign with the unmatched delight theme. This campaign resulted in a shopper uplift for both flights and hotels. Before I wind up, I would like to reiterate that travel continues to rebound on the back of waning COVID infection and positive consumer sentiment. We have inflation-led macro pressure right now, but medium to long term outlook of the industry look very robust.
At MakeMyTrip, we are pleased to deliver consistent strong performance both in terms of revenue and profitability. We continue to believe that as a leading travel company, we continue to garner a major share of future growth in demand on the back of our robust multi-product platform and customer-first approach. With this, let me now hand over the call to Mohit for financial highlights of the quarter.
Thanks, Rajesh. Hello, everyone, and I hope you're all staying safe and healthy. To start with, I'd like to call out that while our operating business is largely in Indian currency, our financial reporting is in U.S. dollars. Significant weakening of the INR versus the U.S. dollar by about 3.4% during the quarter has had a translation and restatement impact. This mostly affects our growth numbers and our cash balance as restated in U.S. dollars, and as a result, the finance cost from Forex impact is higher during the quarter. Hence, I will focus on growth in constant currency to reflect the stronger underlying growth in the operating currency. As highlighted in the last couple years during the pandemic, we have focused on tight cost control and operational profitability in view of the business uncertainties from disruption in travel services.
As we are returning to business normalcy, our focus during this fiscal year is on business recovery and growth, with operating leverage in the business continuing to drive profitability. During the first half of the fiscal, we have seen gross bookings grow 227.7% year-on-year in constant currency terms, and the adjusted profit has come in at about $21.6 million versus a loss of $2 million in the first half during last fiscal year. We are glad to report that for the first half, our adjusted operating profit came in at about 1 percentage point of gross bookings, in line with our targets and estimates.
The other broad highlight for the quarter is that despite Q2 being a seasonally weak quarter and the macro headwinds, we continue to see rebound in travel demand, and that has helped us achieve gross bookings of $1.54 billion, which is about 1%, just about 1% lower compared to the seasonally strong previous quarter in constant currency terms. Our air-ticketing adjusted margin stood at about $75 million, registering 109.2% year-on-year growth and 27.8% quarter-on-quarter growth in constant currency terms. While the air traffic was impacted in July and August, it picked up during September due to leading of air fares and advanced bookings due to the festival season in October. We ramped up our marketing and promotional activities to capture some of this traffic.
Airlines have also helped push the demand through additional consumer promotions on our platform. As a result of which, you also see that the margins during the quarter have been slightly higher at about 7.4%. Adjusted margin for our hotels and packages business is still at about $57.4 million during the quarter, witnessing a growth of 74.7% year-on-year in constant currency terms, and the margins at 17.2% were in line with our expectations. In our bus ticketing business during the quarter, the adjusted margin stood at $16.9 million, registering a strong year-on-year growth of 129.8% in constant currency terms.
The margins at 9% are again in line with our expectations. Adjusted margin from the other businesses during the quarter stood at about $7.5 million, which is an 89.1% year-on-year growth in constant currency terms. Our operating costs were largely in line, and we continue to be prudent with our variable expense, especially with respect to customer acquisition costs. As a result, our marketing and sales margin expenses came in at about 5.4% of gross booking value, at almost the same level as Q2 of last fiscal year. We thereby post an adjusted operating profit or adjusted EBIT of about $15.1 million during the quarter.
Adding the non-cash expenses, the adjusted cash operating profit or adjusted EBITDA stood at about $18.7 million as compared to $10.1 million during the same quarter last year. During the quarter, we acquired additional equity interest and controlling stake in Simplotel Technologies Private Limited, a company engaged in managing hotel websites with booking engine capabilities in India. This was largely done via primary investment in the company, which will not only help them scale up in India, but also test their offerings in new regulated markets like United States, which can bode well for the long-term prospects of Simplotel. We will continue to leverage our strong brand and cash position to drive investment in areas of future growth. Before I end, let me share a quick update on the recent CCI order.
While we had communicated receipt of the public order on 19th October, we have received the confidential order on 29th October. The order is appealable before the National Company Law Appellate Tribunal of India within 60 days of receipt. We are currently reviewing the order, and we believe we have strong merits in the case. We are also working with our external legal counsel in determining our future course of action. With that, I turn the call to Vipul for Q&A.
Thank you, Mohit. Thank you, Rajesh. Any participant who has any questions can please click on the Raise Hand option, and we will unmute them so that they can ask a question. We'll just wait for a moment for queue to assemble. Thank you. First question is from the line of Brian Wang. Brian, you may unmute yourself and ask your question.
Evening, and happy Diwali to the management team. Congrats on your third straight quarter of IFRS profitability. On this front, could you let us know your views behind how you intend to manage S&M and operating expenses in the long term, and how this might translate to higher levels of profitability? A second one, if I may. How do you manage customer inducement costs on the air ticketing side, and how should we think about this in the long term? Thank you very much.
Brian, maybe I can take that. You know, like I called out, we're continuing to be very prudent on the customer acquisition costs overall. Therefore, we do believe we'll continue to see, you know, marketing and promotional expenses remain much lower than what they used to be, you know, like, during the pre-pandemic times. If you would recollect, you know, pre-pandemic, you know, the marketing and sales promotional expenses used to be about 9 percentage points-10 percentage points of gross booking. Although we've seen much higher number at about close to about 14% way back in 2017.
These were largely coming out of, you know, the significant investments that we are doing in terms of, you know, building, you know, online penetration in the, in the hotel business or the accommodation business, and also driving significant amount of customer acquisition on the mobile platform. You know, particularly the mobile apps which were launched between 2015 and 2017. You know, this was largely in keeping with our investment in customer acquisition on mobile platforms as well as in the hotel category. We have continued to see, you know, good growth in both these areas. As a result of which you see the efficiencies coming through. Now the customer acquisition cost is close to about 5.4 percentage points of gross booking.
We do expect a little bit of an increase coming in the customer acquisition cost, you know, and this could scale up to about 6% or so. This would largely be in line, you know, with our revenue mix kind of, you know, once again, you know, improving in favor of hotels. Pre-pandemic, I would like to kind of, you know, bring to attention that the mix of hotels in the revenue mix used to be close to about, you know, 50%+ . We are currently a little short of that because the recovery in the accommodation segment is slightly lagging the recovery in the air ticket segment.
As that kind of, you know, catches up, we do believe the overall blended margins will also improve a little bit, and there might be a slight increase in the overall, you know, customer acquisition cost as well. Coming to slightly longer-term, you know, operating margins, we should continue to see, you know, operating leverage coming in from scaling up, because we don't really see any significant increases in the customer acquisition cost in the near-term future. That should really help us, you know, improve, you know, operating profitability year upon year. This is what we are kind of seeing, you know, in the current first half also compared to what we had seen, say, maybe in the first half or second half of last fiscal year.
Thank you very much. That was excellent.
Brian, next question is from the line of Lester Poon. Lester, you have been unmuted. You may unmute yourself and ask your question, please.
Hi. I noticed that it's also about the customer acquisition cost. In the last earnings call, you expected the cost to increase in this quarter, but actually it was about the same or actually slightly lower. Is that due to any factors like branding, you spend less on branding or other variable factors? Thank you.
Hi, Lester. Yeah. You know, I think we've been able to kind of, you know, keep this at much lower levels than we had expected. Yes, to some extent it has also been because, you know, one of the brand campaigns that we had planned kind of, you know, got postponed because we weren't really seeing as significant, you know, kind of, strength in the recovery on the accommodation side as we had expected. This kind of campaign is kind of, you know, now planned in the next quarter. Therefore you could kind of possibly see a slight kind of increase coming through in these expenses in the next quarter.
It should also be kind of, you know, getting pretty much offset by the improvement in the volumes in the seasonally better quarter of Q3.
Okay. Thank you. Yes.
Thank you, Lester. Anyone, any participant who wants to ask a question can please click on the Raise Hand option. At this point of time, we have no questions, so we'll wait for a couple of minutes. Next question is from the line of [Tarbei Shafuli] . [Tarbei], you can unmute yourself and ask the question now. Thank you.
Hi, Rajesh. This is specifically towards competitive intensity. Do you mind spending a few minutes on that and what's your sense today and maybe, you know, a year out, you're seeing on the ground? Thanks.
Sure, [Tarbei]. Let me just give you a sort of short overview of the competitive dynamics in the market. You know, for us, given that we are an on-segment player, so, you know, the way we sort of see the competition is specific to a particular product that we're offering. Let's say for our domestic flights or an overall air market first, you know, the overall competitive dynamics remain the same. There is no real change from what we've been seeing for the last couple of quarters or more. It continues to be the same. There is some bit of sort of you know, the consumer promotions push from in the market.
Part of that, by the way, is also from the airlines because, you know, the endeavor really is for everyone to sort of build the volumes. You know, given that, you know, the recovery is still sort of short of on in volume terms, short of full 100% recovery, in the domestic air market. No real change from what we have been seeing in the past. It continues to be the same. Coming to hotels market, you know, our competition there is the global players, whether it is Booking.com or Expedia or Airbnb and, you know, for homestays market.
Again, there also we haven't really seen, you know, any significant change in terms of any, you know, sort of aggressive competitive activity picking up or, you know, going ahead and making some investments in the marketplace, from the competition. Again, here the competition is largely focused on, you know, on the back of the product strengths or the supply strengths, in general, and not necessarily driven by, you know, aggressive sort of, promotions, if you will. Coming to bus segment, you know, given that we are the market leader by far there as well, there's been some competition for bus focused or ground transport focused OTAs at the local level, whether it is, you know, ixigo or, you know, Paytm to some extent on the, on the horizontal side.
Again, from there also, if I may say so, we have actually seen the intensity coming down a bit, you know, relatively relative to a couple of quarters ago. Overall, you know, as a result of that, we would have actually gained share, you know, on our bus segment in this quarter that we are reporting out.
Thank you so much. That's really helpful. You know, if I could just get one short one more in. It's something we're all actually internally discussing and maybe I want to ask it publicly. Is there a plan for a cross-listing at all?
Hi, [Gaurav Rane]. You mentioned cross-listing?
Listing in India, yeah.
Listing in India. Yeah. I mean, you know, I kind of called this out earlier also that, you know, two or three key considerations, basis which we'll consider, you know, a listing in India. As far as, you know, the need for funds is concerned, we don't really have a need for, you know, a fundraise right now because we're kind of well capitalized. We have got, you know, over $450 million on the balance sheet in terms of cash and cash equivalent. So that's not really a driver. The only driver being, you know, overall shareholder value creation and unlocking. And also kind of, you know, leveraging the significant kind of, you know, brand strength that we have, you know, in the operating market. So something which we're kind of considering.
Couple of considerations, you know, which will drive the path to it will be, you know, one.
Seeing the impact of the pandemic over the last couple of years, I think that we are very keen that we should see the business getting back to kind of, you know, growth over pre-pandemic levels. That remains a key agenda and that kind of, you know, strategic aim there. The other is kind of, you know, ensuring that the kind of, you know, the operating model kind of continues to be profitable and sees operating leverage coming through. This is what demonstrated over the last few quarters and, you know, if we continue to remain on that path, that will possibly kind of, you know, open the kind of, you know, the prospects for a listing in India as well.
Great. Thank you so much. That's all from my end. Good luck for the future.
Thank you.
Thank you, Gaurav. The next question is from the line of Aditya Chandrasekar. Aditya, you can unmute yourself and ask your question now.
Yeah. Hi. Just a couple of quick questions from my side. Firstly, can you give us a sense of the market share in each of the segments? Just broadly, what would be the share and how it has moved, maybe in the last couple of quarters, if at all it has moved. Secondly, on the adjusted margin percentage, we see some fluctuation on the air ticketing side over the last couple of quarters. It came down in Q1, back up again in Q2. Is that purely a function of airfares going up and down? Or is there any kind of structural change in the way we make the adjusted margin there in terms of commission or maybe airline promotional activity, et cetera? Yeah, those are the two questions.
Yeah. Like I called out, you know, the fluctuation in the adjusted margin percentage for the air ticketing business is largely in line, you know, with the kind of promotional push that we see coming in from the airlines. That's one of the key reasons, you know, for the fluctuation over there. We've seen it kind of fluctuating very significantly through the pandemic. It's kind of, you know, linked to the overall kind of, you know, load factor that the airlines are seeing and the amount of promotional activities that they would want to kind of, you know, do on the platform. Largely coming in from that. Could you just kind of, you know, take me back to your first question?
Maybe I can take that, Mohit. It was about the market share.
Okay.
Maybe I can just quickly take that, Aditya. You know, the only line of business where we have the third-party authentic data of market share is actually domestic air because we do get that data from DGCA, pretty much on daily basis, which is Directorate General of Civil Aviation in the country. There, we clearly have gained share. Pre-pandemic, we used to be at about 27%. We today are about 30% of the total market. This is like offline, online all put together. We also believe in on other segments, whether it is hotels or, you know, hotels and packages together, or for that matter, bus segment, we would have incrementally gained there as well, given that we've been growing.
You know, when you pick up survey data, we've been growing faster than the market recovery pretty much on every segment. I guess directionally, just from a trend perspective, we believe that we've been gaining share.
Got it. Just a quick follow-up on the adjusted margin again. Going forward on a sustainable basis, where do you think this number will lie between, say, 6%-7% or how should we look at that number? Yeah.
I think it should largely remain around the 6 percentage points-7 percentage points. It all kind of, you know, like I said, is linked to, you know, what are the kind of prevailing airfares during that particular quarter and the kind of, you know, load factors and overall promotional activity in that particular space. We've seen this going up, you know, even to 9% +, you know, in some of the quarters during the pandemic. I think that little bit of volatility will remain until the overall, you know, domestic civil aviation kind of, you know, market stabilizes and the pricing stabilizes.
Got it. Thanks a lot.
Thank you, Aditya. The next question is from the line of Raghav Bihani. Raghav, you may please ask your question now.
Yeah. My question was around the market share, but I think you've already taken that up. No question. Thank you.
Thanks, Raghav. We'll take the next question from the line of Prashant Kothari. Prashant, you may please unmute yourself and ask the question now.
Hi. Thank you for the opportunity. Just wanted to understand on the personnel cost, the increase that you've seen that's in dollar terms. I guess if I have to convert it into rupee terms, we're seeing more like 20% growth in personnel expenses year-over-year. Can you just explain how much of it is headcount addition and how much of it is salary increase?
Prashant, I'll take that. This is Mohit Kabra again. I think, you know, overall we did kind of, you know, expect certain amount of, you know, the, you know, inflationary impact to come through. You know, it's largely coming in from that, but not necessarily in terms of, you know, significant headcount increase. A larger part of it is coming from the
Can you?
From the inflationary increase which I think the partner didn't bill, and not necessarily any significant headcount increase.
Okay. It's roughly 18%-20% type of wage increase across the board this year.
We need to see, you know, because it could also possibly have a combination of, you know, people on roles and those on the call center. That would be, you know, overall as part of the HCA part. Maybe I can kind of, you know, share more details, you know, separately.
All right. Okay. The second question, I'm not sure if you already answered it because I joined the call a bit late. On the hotels and the hotels segment, you said that the recovery is a bit slower. Is it just for us or is it kind of reflection of what's happening to the overall industry?
Yeah, Prashant, maybe I can take that.
Yeah, yeah.
No, Prashant, what we were trying to say as part of our commentary was actually the overall industry trend for the budget segment of hotels. Just the budget use case, say, you know, the price points per room night from INR 500- INR 1,500 per room night kind of a segment. That too if you go deeper, it'll be more on business cities versus leisure cities. While the, you know, the recovery has been fairly robust as we shared both for premium and mid-premium segment in terms of just, you know, surpassing the pre-pandemic levels on gross booking basis very close to, you know, 100% sort of recovery even on volume basis.
Specifically on the budget segment, and this is across-industry phenomenon, not on us, specifically, as we see it from, you know, all the industry sources. That's the only segment and I guess it's just a function of, you know, all the sort of use cases just coming back, in an absolute full-blown manner. The reality also is that, just the consumer price, I mean, there is a bit of an inflation there also in terms of, you know, the average selling price going up, relatively speaking, to the, you know, pre-pandemic regime, where there used to be a lot of the aggressive sort of acquisition of the customers in this particular segment was happening across the industry.
you know, maybe some part of the impact is because of that. You know, our belief is that it's just a matter of time. It's just taking a little long to come back.
Yeah. You do plan to increase your investment in that segment. You think that would help kind of revive the demand? What's your kind of thinking there in-
Yeah.
Increasing the marketing spend?
No, sure. Not necessarily marketing spend. In fact, we have been actually pushing and making investments in terms of just you know having the right kind of supply, the right kind of experience on our platform. As you might have noticed in the commentary we covered as well, that we relaunched our goStays proposition, which is specifically in the budget segment. We are obviously trying to work with the partners to also ensure and give them all the intelligence that we get on our platform in terms of what kind of conversion rate will happen on what kind of price points, et cetera. Get them to sort of you know do the price adjustments on their fares differently for different periods.
You know, weekdays versus weekends or long weekends versus, you know, the regular days. Seasonality wherever there is seasonal, you know, high seasonality, versus, you know, low season pricing. For that matter, destination days where there could be a different sort of, you know, sort of pricing intelligence that goes back to them, let's say, for if there is any kind of a pilgrimage, you know, festival that seems to be happening on some of the pilgrimage destinations. You know, all kinds of, variety of sort of intelligence gets passed on to the partners and then they end up sort of making the price adjustments or doing promotions on our platform.
All kind of interventions are happening, both on the product side, supply side, you know, product side coupled with supply side on the front end on our platform and also through our partners, even on the pricing side.
Okay. Just one last question. The service cost for the rotation package segment has increased a lot this year. Can you just explain what is it?
Yeah, I think it's been a much sharper growth kind of coming in the packages business which gets reported on a gross basis. Therefore you see the cost of service kind of, you know, increasing on a year-on-year basis.
Yeah. If I may just add, Prashant, I had called this out, the domestic packages for us grew 166% year-on-year. Then like Mohit pointed out that only the packages business gets reported on a gross basis, and the cost of servicing is nothing but the cost of sales for the packages. You know, that would have grown in line with the growth in revenue.
If you're looking at the adjusted margins of the segment, roughly what part would be contributed by packages and what part is the standalone nights?
You know what? While we do share kind of operating metrics on standalone hotels as well, but if you kind of, you know, look at, you know, broadly the mix, you know, between, say, hotels and packages at a margin level, it's predominantly hotels. It's kind of, you know, in the high 90s% coming in from the hotel side. Yeah, as a gross booking kind of, you know, breakdown, there is, you know, the mix of hotels or packages mindset.
All right. Okay. Thank you.
Thank you, Prashant. The next question is from te line of Santosh Sinha. Santosh, you may unmute yourself and ask your question now.
Hi. My question is regarding the Forex product that was launched recently. How has been the traction in this segment, Forex segment? And what kind of actually revenue or margins you are expecting from this segment?
Yeah. Santosh, if I may just take that. Good question. I would say at the outset, early days, I mean, you know, we just launched. In fact, this last quarter we just finished the integration with the BookMyForex, the company that we had, that's focusing on Forex sales on B2C platform. We were supposed to be integrating with them. We just finished the integration in this quarter, in fact, just more recently spilling over to current running quarter as well. We've started to see some traction, more traffic sort of going from our platform to, you know, also opting for Forex products. Really early days, but BookMyForex, you know, again, that also we've just sort of consolidated only part of the quarter.
I think in the coming quarters, we should be able to give you a better sense of how much you know is the contribution coming from this essential product called Forex and how it's sort of growing and what kind of margin, et cetera. But right now for the reported quarter, it's insignificant.
Okay. That was helpful. Our next question is regarding the hotels business again. As the share of home stays increase in the revenue, will it impact margin for the company? Also, as the lower segment of the hotels actually rises, budget segment actually rises. Whether it's share increase, will it impact margins for the company?
There could be slight, you know, overall, you know, improvement in the margins, you know, with the budget segment kind of, you know, mix improving. Like we had called out, we do kind of expect overall hotel margins to remain within the 17%-19% kind of a range overall. I would kind of, you know, leave that as a larger kind of, you know, range to kind of keep in mind, even as the mix changes.
Thank you. Good. Thanks for taking my question. Thank you. Thanks a lot.
Most welcome.
Thank you, Santosh. The next question is from the line of Vijit Jain. Vijit, you may unmute yourself and ask the question now.
Yeah. Thanks, Vipul . Hi. Sorry, I joined a little bit late. Apologies if this question was already answered. Two questions from my side. One, can you comment on the supply recovery currently as it stands from the pandemic, overall across the segments? My second question is, the BookMyForex that you mentioned that you've consolidated only in part of this quarter in terms of revenues, can you talk about what was the impact of it in terms of costs, employee costs and other costs, in this quarter? How should we look at that cost increase quarter-over-quarter next quarter when it is fully in the numbers?
Vijit, what was the first one that you asked? Sorry.
Supply recovery from the pandemic.
At the moment.
Yeah. Hi, Vijit. It's a good question. Let me just give you an overview on the supply recovery first, and then Mohit can take on the second question. You know, as far as domestic flights is concerned, overall, supply recovery is about 85% in terms of number of flights that, if you compare them apples to apples with the pandemic. As far as hotels is concerned, the supply recovery is pretty much there. Like, you know, there may be a churn of the hotels that might have happened, which might be 5%-10% is our sort of best estimate. Otherwise, you know, sort of 100% of the supply is back in business. Similarly for bus.
I don't think there is any constraint on bus supply recovery per se. It's just that on volume terms, you know, some use cases would still be like I was mentioning for the hotel case, some budget segment use cases still to come back. In case of bus, there may be small, you know, sort of, use case that is, you know, first time office goes, or, you know, people operate working in the big IT industry, IT companies, you know, back and forth travel that happens through bus, you know, in especially in the south region. That has to come back 100%, you know, more and more IT companies are sort of mandating people to come back to office and all.
On supply side, the recovery is almost 100% there as well.
Sorry, Rajesh, just a quick follow-up to that question. On the hotel side, right, one of the things we've seen from other parts of the economy is, you know, the premium segment in general, not just for the hotels, but in other segments as well, has done well so far from the pandemic and the budget. The demand side has also.
Yeah.
Been kind of on the weak side. If you—I don't know if you can strip out the supply-related impact on the budget segment from the demand-related impact, but do you see the same? Or if I put it in other words, do you see the Goibibo app kind of relatively lagging behind MakeMyTrip when it comes to hotels?
Given that Goibibo, yes, was leading the budget segment or the sweet spot for Goibibo platform was budget and mid segment. While mid segment, by the way, is doing there also very well, it, you know, which is comparable with MakeMyTrip as well. Specific to budget segment, yes, you know, it's sort of lagging behind, but it's sort of lagging behind both on MakeMyTrip and Goibibo. Like I was just sharing earlier, you might not be on the call at that point in time, that it is more like an industry phenomenon.
I would say less on the supply side, relatively speaking, more on the demand side because of the fact that the prices have also firmed up in the budget segment across the hotel partners or the hoteliers. You know, relative to what it used to be because there used to be aggressive promotions pre-pandemic, you know, focusing more on aggressive acquisition of the customers in this particular segment which definitely drives more demand. And sometimes some part of the demand can be superficial and as the rates have firmed up so that demand might be taking more time to come up because as people get used to the new levels of the pricing. To my mind, it's more the demand side than the supply side.
Correct. Thanks. Super. Thanks, Rajesh. Mohit, if you can take my second question which is on costs in terms of, you know, employee costs, other costs, et cetera, the full impact what it would be like of BookMyForex.
It will be large. It will be kind of, you know, started consolidating, BookMyForex and the change will happen with Simplotel. Between the two put together there won't be any significant kind of an impact coming on the people cost side.
Okay.
All of these are gonna be, you know, marginal increases. Nothing meaningful. Large part of the increase actually continues to be the inflationary increase that we have called out will happen.
Okay.
When you look at it on a comparative basis versus the previous fiscal.
Correct. Got it. Great. Thanks, Mohit. Those were my questions. Thank you so much.
Thank you.
Thank you, Vijit. The next question is from the line of Manik Taneja. Manik, you may please unmute yourself and ask your question.
Thank you for the opportunity and, my apologies that I joined the call late and probably you might have answered the question earlier. If you could help us understand what drove the sequential improvement in the take rates on the airlines business this quarter? Are they really one-off there? How should one be thinking about the take rates on the airlines business going forward? Thank you.
Yeah. Manik had picked that earlier, so we kind of, you know, possibly call it out briefly that it's largely in line, you know, with the increased, you know, promotional spending, you know, which is kind of coming from the airlines because the overall load factors have been under stress during the quarter. It's largely coming in on account of fluctuation on promotional spend, you know, which are kind of, you know, funded by the airlines.
Thanks. If you could want to comment on the relative market share between players over here, that would be really helpful.
Our market share has largely remained around the 20% level in line with the previous quarters. We've not seen significant changes over there.
Any changes in competitive intensity from some of the other players in this space?
Not really through the quarter.
Thank you.
Thank you, Manik. If anyone has any other question, last question in the interest of time, we'll take that. Otherwise, we'll end the call now. I guess that was the last question. Rajesh Magow, closing comments for you, from you and then we can end the call.
All right. Thank you. Thank you, Vipul Garg, and thank you everyone for sparing time. Thanks for all the curious questions as well. We'll keep you all updated as we go along. Thank you. Thanks a lot.
Thank you everyone for joining. You may now disconnect the call. Thank you.
Goodbye.