India’s domestic leisure travel recovered “more than 100 per cent of pre-pandemic levels” and “continues to be strong”, while inflationary pressures and visa issues are holding recovery momentum, especially in outbound international travel, said Rajesh Magow, Co-founder and Group CEO of MakeMyTrip.

Speaking at the earnings call, Magow said while there was some moderation in crude oil and ATF prices towards the end of Q2, air fares remained high for a large part of July-September period.

According to DGCA data, overall domestic air traffic has recovered to 85 per cent of pre-Covid levels. The Nasdaq-listed MakeMyTrip, however, was recovering faster than the market at 98 per cent, compared to the same quarter in the pre-pandemic period.

“As a result, despite headwinds on outbound travel, we delivered more than 126 per cent recovery on air gross bookings and 117 per cent recovery in overall gross bookings,” he said, adding that customer sentiment remains positive.

“...therefore [air] fares getting rationalised with full restoration of passenger-carrying capacity can aid full recovery in outbound international travel in the next few quarters,” Magow added.

Gross bookings stood at $1,541.7 million in Q2. Air ticketing revenue stood at $39.6 million, hotels and packages revenue improved to $68.2 million, while bus ticketing revenues improved to $ 16.1 million.

Budget hotels lagging

According to him, in the accommodation business, there was a “strong recovery” in the premium and mid-premium segments, while in the budget segment, recoveries were slower.

A lag in recovery of budget segment bookings — witnessed across both MakeMyTrip and Goibibo — is primarily because of demand considerations, rather than supply-side constrains.

Some of these hotels were aggressive on customer acqusition and were running several promotions, however, prices have now firmed up, which has impacted demand, Magow explained.

“Our share of premium and mid-premium in overall hotel volumes increased significantly as compared to pre-pandemic levels. That helped overall recovery [gross bookings] to be almost 100 per cent in hotels and packages as compared to pre pandemic levels,” he said adding, post the pandemic people are opting for “multiple short holidays” in addition to the annual holidays. The rising popularity of weekend destinations and getaways have given 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,” said the Group CEO.

MakeMyTrip will also be investing towards “creating more awareness” on the homestays category i view of it gaining popularity among consumers in India.

Customer acquisition cost

Customer acquisition cost is currently 5.4 per cent of gross bookings and the management expects a “slight scale up” to 6 per cent.

“Pre-pandemic the mix of hotels in the revenue mix used to be close to about 50 per cent plus. We are currently a little short of that because the recovery in the accommodation segment is slightly lagging the recovery in the air ticketing segment,” said Mohit Kabra, CFO, adding that no significant increase in customer increase cost is expected in the near term, which will help “improve operating profitability year-on-year”.

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