MakeMyTrip Ltd

NASDAQ:MMYT

Earnings Call Transcript 2024-Q4

[Vipul Garg, executive]

[Audio Gap] or from the company's Investor Relation Department. I would like to now turn the call over to Rajesh.

[Rajesh Magow, executive]

Thank you, Vipul. Welcome, everyone, to our fourth quarter and full year call for fiscal 2024. Fiscal year '24 started on a positive note and only got better over the -- we are very pleased to end the year delivering a strong performance despite it being a low seasonality quarter for leisure travel. Fiscal year '24 has been a year of many record milestones for the full year we stand all-time high gross booking value of $8 billion, and we posted a record adjusted operating profit of $124 million compared to an adjusted operating profit of $70 million in fiscal year '23. . Our strategy of targeting various demand segments serve millions of our customers and first-time travelers with a comprehensive portfolio of travel and ancillary products with personalized experiences yielding results. Gross booking value for Q4 was more than $2 billion, growing at 23% year-on-year in constant currency terms. -- and the adjusted operating profit was $32.4 million, registering a growth of over 70% year-on-year. There are several macro factors that are contributing to the growth of travel and tourism in India. Robust GDP per capita growth is leading to growth in disposable income, fueling more frequent leisure breaks by people, ongoing investments in transport infrastructure, including airports, roads, railways and public transportation have improved accessibility and travel experience of various tourist destinations within the country.

Spiritual tourism is also emerging as a crowd pooler recently in the domestic travel and tourism market. In the last 2 years, we have witnessed over 97% growth in searches for spiritual destinations on our platform. With further improvement in connectivity and infrastructure, we expect this category to be a long-term growth driver. According to the Ministry of Tourism, religious tourism in India has been on an upward trajectory and can potentially grow at a CAGR of over 16% between '23 and 2030. According to the overall travel and tourism sector will grow its contribution to the GDP to INR 36.8 trillion by 2033, approximately 7% of the Indian economy and will employ over 58.2 million people across the country with 1 in 10 working in this sector.

As a leading travel services company in India, we continue to see collaborative opportunities to work closely with various government agencies as we strive to nurture the growth of the tourism ecosystem in the country. We recently signed MOUs with state government of Goa and Madhya Pradesh aiming to foster sustainable tourism development in both states. The collaborative effort with Goa aims to propel tourism in the region into a vibrant year-round destination moving beyond its iconic sun, sand and beaches. The MOU with Madhya Pradesh focused on various dimensions of tourism, including promoting home stays and intensifying the focus on pilgrimage and wild life led travel experiences that the state has to offer through its platform. While the domestic travel and tourism sector is showing a promising outlook, outbound travel is likely to continue in the growth phase this year as well. According to UN-World tourism organization, India is 1 of the top 3 fastest-growing outbound tourism markets and is expected to become the fourth largest global spender on travel by 2030.

With India's emergence as a key source market in major tourism destinations, foreign tourism boards are targeting the Indian population with incentives, campaigns, simplified visa requirements and new initiatives to attract more Indian outbound travelers.

Let me now turn to the business segments, starting with our air ticketing business. Our international air ticketing business registered a strong growth of 33% year-on-year in this quarter. While we continue to maintain our market share of 30% plus in the domestic air business. During Q4, the total number of departures were similar to Q3, as we mentioned last quarter, we expect the domestic supply situation to gradually start improving from the second half of the upcoming financial year. Keeping aside the short-term headwinds, the long-term outlook for the Indian aviation sector is robust, driven by the expansion of aviation infrastructure as well as record plans ordered by the Indian carriers.

On the customer experience side, we continue to innovate and enhance our product proposition. We have expanded our flexibility offerings on domestic flights by offering consumers a new add-on called Flexifly, which enables the customers to have a choice of exercising either 0 cancellation or free date change, option at a nominal incremental cost. We also revamped our value-added bundles to support more inclusions such as seats, meals, caps, priority check-in, et cetera, along with our existing products like 0 cancellation and free date change. This has helped make these bundles more accessible to our customers. To further strengthen our international outbound proposition, we launched a new initiative called Visa Garage, which ensures a full refund of the flight flight fair to the customer in case the Visa gets ejected by the embassy by some reason. Our recommendation business that includes hotels, home stays and packages, witnessed strong 41% year-on-year growth in adjusted margin in constant currency terms.

The outlook for hospitality in India continues to be strong with most global and local chains and have shared ambitious targets of signing more properties, especially in Tier 2, Tier 3 cities. In the last couple of quarters, large domestic and international chains have announced plans to add over 650 properties in India on a current base of over 1,000 properties. We expect strong additions in the hotel inventory across categories in the future. We continue to increase our supply. We now have 84,000-plus sellable properties on our platform with an unmatched penetration covering over 2,000 plus cities in India.

Our international outbound business continues to scale during the quarter. We sold room night spread at crossover about 25,000 hotels in over 156 countries outside India. We will continue to develop direct contracting in international geographies frequented by Indians in the new financial year as well. During the year, we successfully launched our hotel products on the ICTC website with an encouraging initial response. Through platforms such as ICTC, Amazon Pay, HDFC Smart Buy and my partner platform, -- we continue to attract new users from smaller cities. On the customer experience side, we made significant strides in the integration of AI within our accommodation business. Now we offer condensed reviews empowering our customers with crisp summaries. This enhancement enables swift property selection and furnishes intending sites into each property's offerings.

On our international hotel platform, we continue to improve the experience for Indian travelers by making the discovery and selection easier for them by scoring properties that are high on parameters like proximity to public transport, Indian food and tourist attractions. Our home sales business continues to grow with increasing coverage of destinations and increasing customer awareness via our category-building marketing efforts. During the quarter, we sold over 16,500 plus unique properties across 800-plus unique destinations with strong growth across our business and leisure destinations. While MakeMyTrip brand has been leading the way in the home stay and Villas category, we have now kickstarted the journey on Goibibo as well and have rolled out multiple features for Homestays enabling richer information on food and dining, host discovery, et cetera.

Our holiday packages business continues to scale, driven by our innovative offerings such as launching charter services to Bhutan from Mumbai, which is a key source market. Customer service is an important aspect of the holiday business, and we've been making continuous efforts to improve the post sales experience. Our NPS on holidays is steadily increased, which will improve our repeat rate in the business. Our business continues to grow well, driven by strong demand and expansion of supply with the total number of average daily bus services on the platform, reaching 35,100 from 27,800 a year earlier, an increase of over 26%. With demand keeping up and cutting diesel prices, aiding the profitability of the sector, the momentum to add new buses and supply has improved, and we hope it will continue in the new financial year as well.

By providing database intelligence to bus operators for deployment of this additional supply to routes that have a high demand, but fuel services, we are playing our part in their network planning. International bus markets witnessed healthy growth in Q4 '24 on the back of Ramadan bookings in Southeast Asian markets and good Friday Easter holiday bookings in Latin America. We launched Red Bus in 2 new international markets this quarter. We went live in Vietnam on all channels with both English and Vietnamese booking finance. We also launched our services in Cambodia with inventory from 30-plus bus operators flying on routes within Cambodia as well as 2 cities in Thailand and Vietnam.

Our rail business continues to grow. We continue to innovate, add product features and strengthen our value proposition. As a result, we continue to gain market share in train bookings, leveraging all our brands, including MMT, GI and [indiscernible]. On inter-city cabs, we continued strengthening the supply side coverage during the quarter. We have progressed well on our integration with Savari post the investment announced last quarter. Working together, we are confident of unlocking the growth potential in this segment. Our corporate travel business via both our platforms, Midas and Quest Travel is witnessing strong growth. Our active corporate customer count on my base is now over 56,300 plus -- and for Quest to travel, the active customer count has reached 351 large corporates compared to 249 customers in March 23. We have further bolstered our service offerings by incorporating train bookings into our my base platform as well.

To tailor the booking experience even more closely to individual preferences, we have introduced personalized voter recommendations, streamlines process for our corporate bookers. My partner, B2B2C platform for small travel agents now has 44,000 plus travel agents compared to 36,000 agents during the same period last year. And is helping us reach out to customers who are largely buying their travel offline. This is particularly meaningful in the case of segments with low online penetration, such as international outbound travel.

And lastly, from my side, at MakeMyTrip, we believe that focus on sustainability is essential for the long-term success and resilience of travel companies as it not only protects the environment and sports local communities, but also enhances brand reputation, meets customer expectations and ensure regulatory compliance. Our social development arm, MakeMyTrip Foundation is dedicated to climate action and community environment and has helped us make a substantial impact across 13 Indian states, positively affecting the lives of over 1 million individuals. The details of our initiatives are available on MakeMyTrip Foundation's website. With this, let me now hand over the call to Mohit for the financial highlights of the quarter.

[Mohit Kabra, executive]

Thanks, Rajesh, and hello, everyone. During the last few years, we have invested increased areas such as building wider and deeper offerings of travel and travel-related services for our customers with improved personalization while scaling up multiple B2C and non-B2C platforms so that we can target differentiated demand segments. We have also been investing in technology to build efficiencies and increase our value proposition to our customers. As a result, our business has bounced back strongly post the pandemic and has also delivered better on profitability metrics. Financial year '24 has been a true testament to this long-term strategy as we have delivered our best of our financial performance during the year across key metrics. . With respect to the full year financial year FY '24, our gross bookings grew 24.9% year-on-year in constant currency terms to about $8 billion. Revenue as per IFRS grew by 25.7% year-on-year in constant currency to $782 million from about $593 million in the previous fiscal year. Profit for the year was $216.7 million compared to a loss of $11.2 million in the previous financial year. This includes certain one-off items, which I'll talk about subsequently. Keeping the one-off aside, the existed operating profit registered a very strong growth of 76.7% year-on-year and reached $124.2 million compared to $70.3 million in the previous financial year.

As to the quarterly results for the reported fourth quarter of this fiscal year, gross bookings grew by 23% year-on-year in constant currency to about $2 billion compared to $1.7 billion in the same quarter last year. Revenue as per IFRS grew by 38.1% year-on-year in constant currency terms to $202.9 million from $148.5 million in the same quarter last year. Adjusted operating profit has restored a growth of 70.4% year-on-year and reached to a number of $32.4 million during the quarter compared to about $19 million in the same quarter last year.

Moving on to our segment results. Our air ticketing gross bookings for the quarter came in at $1.3 billion, witnessing a year-on-year growth of about 20.9% in constant currency terms. Adjusted margin stood at $83.7 million registering a growth of 13.7% year-on-year in constant currency. The take rates for the ticketing business continued to be in line at about 6.5%. For domestic air ticketing, we delivered performance in line with the market and have continued to hold on to our market share of about 30%.

The highlight of the quarter and the year has been the growth in the international air ticketing businesses, which has posted segment growth of over 50% compared to the last full fiscal year. The mix of international air ticketing business has also grown by about 50% during this year to about 1/3 of the air ticketing segment. We believe that the international air ticketing business will continue to lead the growth in this segment.

Gross bookings. For the quarter, in the Hotels and Packages segment were at $495.6 million, witnessing a strong growth of 28.8% year-on-year in constant currency. Adjusted margin growth was much stronger at 41.3% year-on-year in constant currency, resulting in an adjusted margin of $88.9 million during the quarter. The take rates in this business continue to be in line at about 7.9% during the quarter. We continue to drive supply expansion by going deeper and wider in the Indian market and growing directly contracted hotels in key international markets, which are of interest to Indian overseas travelers.

Our coverage and penetration in India has expanded meaningfully, and we now sell a combination room nights in over 1,800 cities across the country. Our directly contracted international hotel count has been increasing in line with the launch of direct flights to new international destinations. This year, apart from offering wider options across existing cities, we have also initiated direct contracting in about 8 cities globally.

In our bus ticketing business, gross bookings for the quarter were $260.6 million growing at 23.3% year-on-year in constant currency. Adjusted margin stood at $26.1 million, registering a strong year-on-year growth of over 36.6% in constant currency terms. The take rates for the bus business continue to come in line at about 10% for the quarter. A large part of the growth has been driven by supply expansion, whereby our private bus operators count has increased by over 20% year-on-year.

Given the short-term headwinds on the domestic air supply side, we witnessed travelers preferring other modes of transport, which was reflected in the strong growth in our ground transport segments. We continue to remain focused on operating cost efficiencies. Our marketing and sales promotion expenses are our customer exchange costs for the year came in at about 4.7 percentage points of gross bookings compared to 5.1 percentage points in the previous year.

Apart from this, continued operating leverage coming in from the significant fixed cost optimizations through the COVID impacted years has helped us expand our operating margins over the last few years. As the business is scaling, our cash generation continues to be robust. During full year of financial year '24, our adjusted operating profit was about $124.2 million, and we added net cash of about $121 million. As a result, year-end cash position stands at over $600 million.

Besides maintaining a healthy [indiscernible], we will continue to leverage the strong cash portion to invest in potential organic and inorganic niche growth opportunities as demonstrated in the recent past. Apart from domestic air ticketing, online penetration across travel services in India is still very low. As a result, we believe there can be meaningful growth opportunities for us to pursue in the coming years.

In view of the improving cash generation in the [indiscernible], we may also pursue opportunistic sale repurchases or buybacks -- as reported in the past, we have been able to continue to leverage our employee stock option plans to be an important part of our people strategy. We could start with opportunistic buybacks to mitigate the dilution from our share-based compensation programs.

Before we get into Q&A, I would like to call out 2 exceptional items or one-off items impacting the current quarter as well as the full fiscal year being reported. Firstly, in view of the established trend of profitability over the last couple of years, the company has recognized net deferred tax assets to the tune of $126.1 million based on an estimated utilization of carried forward losses and other deductible temporary differences against future taxable income.

The other one-off gain is due to change in the carrying value of our 2028 zero coupon convertible notes. We had issued these notes in February 21 with a life of 7 years and the put options -- in the note, we're at end of year 3 and year 5, initial accounting treatment at the time of issuance was to true up the potential redemption value by the end of the third year, which was the first put option time. However, none of the notes were put in for redemption during the first put option, which came up in February 24, with the next production being due 2 years later at the end of year 5 of the notes, the redemption value on the notes has been discounted to arrive at the current carrying value, resulting in a gain to the tune of about $30.6 million, which will be expensed over the next 2 years or before the next put date. With that, I'd like to turn the call to Vipul for Q&A.

[Vipul Garg, executive]

Thanks, Mohit. any participants wishing to ask a question can raise their hand now and we will take questions 1 by one. The first question is from the line of Sachin Salgaonkar of Bank of America. Such in your line has been unmuted. You may please ask your question now. .

[Sachin Salgaonkar, analyst]

I have 3 questions. First question, I wanted to understand a bit on domestic air supply. I just hear your comment that in the second half, you should see an improvement in supply -- but the question out here is with now Air India pilots as well after the Vistara pilots going on for strike, and we saw obviously the impact of that. How bad could we see the impact in the near term.

And an extension of that question is, should we see some impact of that as we go into the summer holidays? That's question number one. Let me pause here.

[Rajesh Magow, executive]

Sorry. thanks for the question, Sachin. And observation is right. And as we've sort of called it out as well. If you look at like full year data, fiscal year '24 over '23 and you look at the the departures data. And you would notice that all things considered, it has still improved 5% year-on-year. So despite all the issues and the noise that we here, it has still managed to overall improve.

And you know that go-first has been sort of grounded and there's no sort of hope of that coming back, et cetera. So it seems like that despite all those issues that we see and hear both Indigo and Air India and also Spigit have been able to sort of also get alternative alternatives in place in terms of just replacing some of the planes where there were engine issues earlier or the new planes coming in as part of their expansion plans, et cetera.

So my view is, obviously, the potential of the growth is higher. We all know that, and that's the reason why from the long-term outlook standpoint, they placed record orders, et cetera. And therefore, so I'm not necessarily overly worried about midterm to long-term outlook on domestic air supply expansion. I think that will fall in place. This recent issue of strikes, thankfully on Air India Express got controlled very, very quickly.

We didn't really see -- obviously, there will be an impact on day or 2, but we didn't really see a significant sort of impact beyond the couple of days that we saw. And the other thing I think in Mohit's script that he was also trying to highlight, we noticed a very interesting sort of trend as well that if there is temporary disruption that happens on the air side, we see all the other modes of transport sort of gaining share as well. So I don't know if you noticed that we highlighted that the bus volumes growth at about 17% on our platform, rail is growing at about 30% and intercity cab also growing at a very healthy percentage.

So my sense is the demand momentum is -- because there is momentum in demand. And if there is -- and the fact that the overall experience on the other modes of transports have also improved significantly, and for any reason, whether it is supply disruption or let's say, fares going up because -- and the year-on-year fares have been up if you look at quarter -- this quarter compared to the last year's same quarter, about 15% to 17%. And then the demand moves on to the other channels. And we do have alternatives today.

So overall, I would say that there will be a balancing act and should not even have even from a short-term standpoint or sort of big impact on the general demand momentum that is there in the market.

[Sachin Salgaonkar, analyst]

Very clear and articulate Second and third question, sir to Mohit. Mohit just wanted to understand personnel expense and ESOPs increase into this quarter. Are there any one-offs or any specific reason which led to that? And third question is, any thoughts on potential share buyback?

[Mohit Kabra, executive]

Sure, sure. Thanks, Sachin. When it comes to the share-based compensation program, like we have been mentioning our overall full year number on discount is likely to remain in the same range. So if you look at it over the last 3 years, this has remained around the range of about $36 million to $37 million and the current year has also come in at about $36.9 million.

Generally, what happens is the truing up at the end of the year for a variety of variables such as attrition rates, et cetera. leads to a scenario where historically, we have seen that the initial 3 quarters, the charge out is higher. And in the fourth quarter, the charger tends to be lower. [indiscernible], this has been a reversal of trend, whereby because of improving attrition rates and much better retention rates, the actual charge out in the fourth quarter has been higher compared to the first 3 quarters. But if you look at it overall for the full fiscal year, the trend remains intact, and the absolute dollar amounts remain the same.

[Sachin Salgaonkar, analyst]

Got it. So that's on share-based compensation. I presume same logic for personnel expense or anything more to look into that?

[Mohit Kabra, executive]

Not really, largely in line because no significant kind of additions on the other personnel expenses as well. .

[Sachin Salgaonkar, analyst]

Got it. And thoughts on buyback. .

[Mohit Kabra, executive]

On the buyback side, like I've just called out, we do have good cash [indiscernible] now. And, the initial intent is, we would be open to kind of pursuing opportunistic buyback. And the initial intent is that we do have the share-based compensation plans. -- the 1 we just discussed close to about $35 million, $37 million of kind of expense that comes in or the issuance that comes in every year. So if nothing else, we should be able to start with trying to mitigate the dilution coming in from the share-based compensation programs going forward. So that would be the initial start in terms of foray share repurchases.

[Sachin Salgaonkar, analyst]

Any time line in mind next 6 months or more? .

[Mohit Kabra, executive]

Not really. I mean we'll keep an open mind. There is no kind of urgency around it. And therefore, we'll keep an open mind. And like I said, this will be more opportunistic in nature rather than kind of steady-state buyback programs.

[Vipul Garg, executive]

Thanks, Sachin. Next question is from the line of Manish Adukia of Goldman Sachs.

[Manish Adukia, analyst]

So first question on demand. Now it's been quite strong in this quarter like you called out, Rajesh, despite it being a seasonally weak quarter. And like you said, maybe second half of this year, supply situation should further improve, international's quite strong hotel momentum has been great. So I mean trying to understand what kind of, let's say, visibility do you have on medium-term demand outlook for MakeMyTrip. I mean in the past, you said you can grow at 1.5 to 2x of the underlying market, given our penetration is low. But I'm just trying to understand, can this 25% kind of a growth sustain for the next 2, 3 years, what are maybe the upside or downside risks? Just maybe your thoughts on that? That's my first question.

[Rajesh Magow, executive]

Yes. Thanks for asking this question, Manish. Our thoughts actually haven't really changed from what we had shared it earlier and you called that out as well. We do believe that if the market is able to hold on to the our projected numbers of double-digit growth overall. This I'm talking about travel and tourism market and some of the reports I've spoken about anywhere between 10% to 13% growth. And we -- like in the past, we should be able to grow higher than the overall travel and tourism market growth rate. by 1.5x or thereabout.

So I don't think there is -- at this point in time, there is anything pointing towards of changing the view on that from a midterm standpoint because like I was just saying it earlier also, even in this quarter, it's supposed to be a lower season, leisure quarter. And but we were able to -- if you look at the overall adjusted margin on an absolute terms, very close to the season quarter, absolute number. And that's partly also because that we've been -- our investments into various other segments have also sort of yielding results.

But it also points to the fact that there is momentum in travel in every particular use case. Now whether it is VFR or leisure or business travel or spiritual travel and so on. So at this point in time, I would say, Manish, our view remains the same. And there's nothing that I can see at least at this point in time, that points towards just forming a different point of view.

[Manish Adukia, analyst]

That's very helpful. Maybe a follow-up on that. like your marketing and promotion spend obviously has remained below 5% for some time. Competitive environment seems really good. So that 1.5 to 2x, which is the growth of the underlying market is grade from the shift to online. But do you think there is opportunity over the next 2, 3, 4 years to actually grow even faster because you may win more market share, given how benign competition is? Or do you think your current market share is steady state or stable market share, you don't foresee.

And I'm talking about specifically the online cohort within the online, do you think the market share now has stabilized? Or do you think there's more room for that to move higher?

[Rajesh Magow, executive]

I would Manish, put it slightly differently. I mean, rather than just going with any kind of a preconceived thing or notions. I would say, and this is how we operate, by the way, we have been operating in the past as well that we would not necessarily miss any opportunity that we see. Wherever and whichever segment we see an opportunity, and we are not holding on our investments. The overall brands have become more and more reliable and popular and our repeat rates have been very, very robust. . But wherever we see -- and you've seen some of the recent investments where we have been powering different different platforms to be able to get to the -- expand our reach for the new user acquisition, et cetera. So I don't think we are -- we are saying that we will hold on to any potential investment that will be required. Obviously, trying need -- to do that and diligently need to do that data back and more sort of looking at what kind of return on investment that you could potentially get, et cetera. So doing it more intelligently, but definitely not going to leave any opportunity that might be out there, staring on our face and saying, in this particular segment that we could grow more. For example, like international segments, you've seen there is more headroom and we are growing at a faster rate.

Our home stay segment has been growing at a faster growth rate Potentially, we've called out that there is a potential unlock that we can do for the intercity cab as well. Now all of these areas are where there is more headroom, more potential, and we will continue to keep investing behind those.

[Manish Adukia, analyst]

That makes sense. My last question maybe to Mohit. So on the cash initial, maybe a follow-up to the question that Sachin asked earlier. When you think about -- you've called out some of the number that maximum buyback of its $60 million, but you also talked about in your opening remarks that you would also -- you could look at organic and inorganic opportunities.

So specifically on the inorganic opportunity, is there like a threshold cap number that you have in mind that you will not, let's say, buy assets that are larger than a certain number, given, of course, the cash balance is really large and you could potentially invest a lot. So just trying to get some sense as to could inorganic be like a large investment area or would it not?

And maybe another follow-up was on ESOP also. So just to clarify, this $35 million to $40 million will also be the run rate for the next year? Or is the $13 million for the quarter annualized the new run rate for I wanted to just confirm that?

[Mohit Kabra, executive]

Sure. Maybe I'll take the Second 1 for us. So into the $35 million to $40 million full year number is the run rate that I was talking of. So it's best to look at it in the full year terms and not necessarily by the quarter because you could have a slight varies across quarters based on vesting schedules, et cetera. So it's more the full year run rate.

And coming to the to the inorganic growth opportunities. Unfortunately, I don't think there's any cap in mind, and we don't necessarily need to kind of put in a cap in mind right now with the kind of cash reserves that we have on the balance sheet and even otherwise, the appetite to be able to raise cash if need be for any inorganic growth. I think the the realistic thought over there is that we don't necessarily see any large consolidation opportunities per se.

And like we've been saying, the large consolidation opportunity has already played out in our case wherein we have kind of already seen brands like ibibo and Redbus coming into the platforms coming into the group. And therefore, going forward, the inorganic investments are likely to be more in niche spaces, which can help us drive faster growth or kind of accelerate our plans in some of these segments now whether it would be like, say, for instance, the last few examples have been in the intercity cab market, or say, for instance, in the corporate kind of a demand segment or say, for instance, on the hotel SaaS side or on the ForEx side.

So we would be open to kind of looking at investment opportunities pretty much across the board, except for the fact that we have historically in our made any inorganic investments on the ticketing side or on the ticketing side. So most of the other segments is where we kind of keep looking for opportunities to augment our growth or accelerate our plan. So -- that is where I would leave it.

[Vipul Garg, executive]

The next question is from the line of Aditya Suresh of Macquarie.

[Aditya Suresh, analyst]

In terms of your cash position and the impactional ambitions, maybe if you can just clarify on what the impactional ambitions are for Nakata, please? .

[Rajesh Magow, executive]

What's the ambition on sorry? .

[Aditya Suresh, analyst]

On the international side, there was some news flow in the quarter. So just clarity on international aspirations. .

[Rajesh Magow, executive]

Yes. No, of course. Now I was just trying to -- I think the audio was not that clear. See international additive, what I was trying to highlight was there are 2 types of international use cases here in our business, right? So 1 is outbound travel. And the 1 that you see the numbers that we particularly highlighted actually both for flights and hotels, it's the international outbound travel for flights and the hotels and even the packages, which is part of the hotel and packages reporting segment, there we see a lot of headroom, both from an online penetration standpoint, but also rising income and people are looking to sort of get back to their foreign travel as well as the supply situation improves and again that has been improving over the last year significantly.

Also the fact that the Visa operations for many, many countries and they are trying to 5 -- hour ,6 -- hour flying distance Southeast Asia, Middle East and many countries, new countries, even some parts of Europe, they have opened up the Visa operation, trying to sort of Indian tourists and travelers into their countries. And we have seen tremendous amount of inbound sort of interest coming in from all the tourism ministries of various countries as well.

So that is something that we were trying to say that there is good potential opportunity of growth there. And our ambition there is clearly see our overall vision is for the Indian travelers, whether traveling within India or traveling outside of India, we would like to provide all kind of travel services and the travel-related services, and that's really our focus has been. And we'll continue to sort of keep driving that. And then the other part of international business that we have is for the different markets. So the GCC launch, for example, for MakeMyTrip Mantra brand starting with the UAE market is for that source market. Now that has been steadily growing as well, starting with there.

And then you want to also grow hotel business sort of organically growing that as well. Now that travel might be coming to India and back and forth between India from that region, but that travel could also be the expats from that market going to various sort of other leisure destinations for their break for their holidays. So that is the other sort of aspect of our international business growth, if you will.

And last but not the least, I would also mention, I think it's there in the script, which we called out as well. is our Red Bus trying to go to various international destinations. In this quarter, we launched in Vietnam and Cambodia as well. So wherever we see there is a large bus market, we already have a playbook that has worked very well in India. We are taking it to those markets as well, which is again our midterm to long-term play, but that is another sort of aspect of our international business growth, if you will.

[Aditya Suresh, analyst]

And the second piece was on margins, right, or commissions in the air business, which has kind of steadily improved and has remained healthy. So any trends here for us to think about in terms of how commission rates in the air business could kind of shake up for this year?

[Mohit Kabra, executive]

It kind of medium-term kind of estimate is this could kind of see, the overall ticketing rates could go southwards, but not in a very large manner, so they should largely remain around the 6% mark. It would be small plus or minus over that number. But we do believe that most of the margins across segments are likely to remain stable. So whether it is air ticketing in and around the 6% level, where it is hotels and packages around 16%, 17% levels or whether it is bus ticketing around the 9.5% to kind of 10% levels, we do believe that margin should largely remain stable in the coming years. .

[Aditya Suresh, analyst]

Excellent. And the final piece was on other expenses, right? Obviously, that's increased strongly and there's a reclassification of your distribution costs and other expenses. This has been an ongoing theme Mohit, but if you can just shed more color here on this and should we expect, for example, sales marketing to remain within that 5%, but perhaps other expenses are going to grow stronger. Any thoughts on this?

[Mohit Kabra, executive]

Yes. I think this is a bit of view better presentation, which has kind of been started from this year onwards and therefore, we started going around from the last few quarters, and this is a continuation. So no no real change over there, but it is more an appropriate representation. And these aren't really kind of marketing or promotional expenses. These are actually in the nature of distribution costs and therefore being kind of reported accordingly. You may not have very a good comparable in this year compared to the previous year. But going forward, we'll have a clear cut comparable because already the first full year of kind of [indiscernible] classification has gone through.

So I think we'll have good comparables over there. I think we'll continue to keep looking at these expenses very differently because they're kind of not necessarily interchangeable per se.

[Aditya Suresh, analyst]

If I can, may I squeeze 1 more question. .

[Mohit Kabra, executive]

Sure. .

[Aditya Suresh, analyst]

Just thinking about the operating leverage of the platform and thinking about kind of sales -- sorry, staff expenses should our expectation be that the staff expenses and employee expenses, that line grows in tandem with revenue? Or do you see that as a potential area for operating leverage as your gross bookings grow

[Mohit Kabra, executive]

Some spool amount of operating leverage should keep coming in on the personnel cost side because we don't really kind of expect to add any significant number of head count. So it will predominantly be more inflationary increases, which will come through on an ongoing basis in the next few years. And hopefully, the growth kind of in the business should be higher than that.

[Vipul Garg, executive]

Thanks, date. The next question is from the line of Vijit Jain of Citi. Vijit. .

[Vijit Jain, analyst]

My first question is -- just looking at the other component, right, this quarter, if I look at just comparing it to the last quarter, generally, this is a seasonally weaker quarter. So all GPVs are lower versus last quarter, but there's a pretty decent jump here, and it's been a story for a while. So just trying to understand what is the most sensitive travel segment, which seems to affect the other businesses. Is that related to the air side, where the pricing has been slightly higher, so some of the products you have, like lock in, et cetera, is doing very well. Just trying to get a sense of what are the key drivers for that piece? .

[Mohit Kabra, executive]

The do has been increasing in terms of the number of offerings that we kind of report in there, right? And historically, if you would regulate, it used to be predominantly the insurance-related income, which used to be kind of coming in over there. We have added a variety of in travel-related services, including some travel series, I was talking about other ground transport kind of improving very meaningfully through the year, so things like income from rail ticketing income from intercity cabs, et cetera, right now is all kind of reported in the other segment.

You would recall like we had launched a full Triponey platform, which is more a fintech platform, wherein we've also kind of built in a variety of options for offering periods other ancillary services such as ForEx, et cetera. All of that is also kind of a part of the other services. I think One, it is kind of a natural growth coming in, in the existing kind of offerings in that particular segment. And also the increase in the breadth of services that are now being kind of captured under that segment. So that's what's driving it. .

[Vijit Jain, analyst]

All right. And my second question is just sticking to the air side of the business and the international outbound part, did that do much better this quarter versus last quarter? And how much of the air business that you see this quarter is our advanced booking for the upcoming holiday season? If you can relate it to that, just share what your market share in the domestic aviation is left? .

[Mohit Kabra, executive]

Sure. I think the market share in domestic aviation like [indiscernible] continues to be around the 30% level. And if I talk about the mix of international versus the domestic, I think the pretty much faster growth in international has been the kind of the highlight that I had called out not only for this quarter, but across the year. so for the full year as well.

And just to give you some color, our mix coming in on the adjusted margin side, in the ticketing business from international used to be hovering about 24%, 25%. It's already kind of gone up to about 33% plus. So we've seen a significant improvement through the fiscal year. And therefore, -- that's been a story for the year across quarters, not just for Q4.

And secondly, it is also to some extent coming in from the fact, like Rajesh had called out that the growth in the domestic [indiscernible] industry has been muted from the last year in view of a variety of kind of one-off that the industry is facing. And as a result of that, also, the mix has been moving more in favor of international air ticketing. So those are the 2 large reasons.

[Vijit Jain, analyst]

And my last question, on the bus side, I heard when you mentioned the launches in Cambodia and Vietnam. In general, overall, for the bus business specifically, what would be the share of international losses domestic right now? No 1 is growing better? .

[Mohit Kabra, executive]

In ballpark about 10%, and the expansion or kind of the forint Cambodia and Vietnam is pretty much in line with our overall strategy where we've been calling out that we do see an opportunity of getting into multiple markets in Southeast Asia on the bus ticketing side.

And you would recollect we had started in the month lease, then we kind of added more countries to launch it in Indonesia, and now we're kind of launching it in Vietnam and Cambodia. So we do believe overall Southeast Asia offers good opportunity for expanding the...

[Rajesh Magow, executive]

Sorry, I was just going to add 1 additional comment on that, that our sort of aim is to double that contribution from 10% to 20% in the midterm as well.

[Vijit Jain, analyst]

Just the last question then from my side. In the budget hotel segment, right, any any change, any new momentum that you see there? I know you've said before that the super budget continues to [indiscernible], but the cheaper part of the market has done relatively better. And I'm just wondering with all these price increases in the premium category, have you seen any change in activity in low price to your point as well on the hotel side. Do you think that is going to happen eventually? Or do you think that part will remain a little bit lack decel?

[Rajesh Magow, executive]

At what has happened is as we realize over the quarters, analyzing the data very, very deeply, any hotel with a price point of around 1,000 or beyond. There is no problem. It has come back, the growth has come back, and that segment is also growing. -- and you see the growth in line with, let's say, the other segments as well. Maybe premium is growing relatively higher than maybe mid segment and budget just about the small gap relatively.

But all of the segments are growing now. The trend that we had seen in the past on the ultra budget, which we have been speaking about less than 1,000 was unfortunately artificially less than 1,000. They were operating or they were getting sold at some INR 400 crore, INR 500 or INR 600 a ridiculously lower levels was only because of the investments being made in the marketplace in that segment, right?

And then -- and those investors have stopped and those price points for those hotels have also come back. So if you really see effectively the same set of hotels, which were just artificially being sold at a ridiculously low price are now that correction on the price has already taken place, which means that they are getting or inching towards or moving beyond INR 1,000 a night as well. And that segment is definitely growing, like I mentioned, in line with the other segments as well.

So I don't think that is the thing of the past. Maybe there was a little bit of a fraud because of just a very, very aggressive sort of price points in the market. And that is now behind us and that is that part, which artificially came in, has gone away. But otherwise, all other segments are now smooth

[Vijit Jain, analyst]

My last question, if I can squeeze it in. On the international outbound travel from India, right, apart from maybe you adding supply on the hotel side across new cities and new geographies. Is there anything else that is kind of missing from your product bouquet, you think that you need to still invest in to kind of accelerate share shift to online or to kind of support your international outbound business, just trying to think of whether there are any major investment areas that you still have to look into.

[Rajesh Magow, executive]

The online price product on B2C is a continuous improvement, and we will continue to keep doing that. We obviously will use the latest technologies to enhance the front-end experience, and that's an ongoing innovation that will continue to happen. I wouldn't say -- I would actually say on the platform side, we are ready. We on the channel side, also we are ready. We actually have my partner channel that is sort of helping getting the B2B2C growth, especially for outbound international segments as well, both for flights and hotels because of the ticket price, there is that market that is sort of off-line sitting out there, and we've been able to sort of reach out to that market as well. . I think the area of investment from -- for future sort of fueling the international growth, both for flights and hotels is going to be -- continuously going to be on the supply side. like we called out in some of the international markets and hotels, we are adding new destinations where Indians are going to do the direct contracting more and more, like every quarter, we will add a couple of destinations and so on.

And similarly, on flight side, we continue to keep working with sort of the different or multiple sources of supply and then see what are the kind of sort of permutation and combinations including virtual interlining, for example, that we can offer to our customers, which will help them sort of get value for the money, if you will. So those are the kind of areas, but the large area of investment there is going to be more on the supply side. On the product side, the continuous innovation will continue. But on channel side, I think, overall, we are in good shape there.

[Vipul Garg, executive]

We're almost out of time. We'll take the last question from Dennis Okan of GGC. In that case, we'll end the call now. There are a few questions in the queue. We can take them separately off-line. And Rajesh, over to you for your closing remarks.

[Rajesh Magow, executive]

Thank you, Vipul, and thank you, everyone, for your time, and thank you so much for your patience as well.

[Mohit Kabra, executive]

Thanks, everyone.