MakeMyTrip Ltd (MMYT) 2017 Q2 法說會逐字稿

Welcome to MyTrip's Fiscal 2017 Second Quarter Earnings Call. The Company wishes to remind you that certain statements made on this call are considered forward-looking statements within the meaning of Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performances and by their nature are subject to inherent uncertainties. Actual results may differ materially.

Any forward-looking information relayed on this call 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 is contained in the Risk Factors and Forward-Looking Statement sections of the Company's Annual Report, Form 20-F filed with the SEC on June 14, 2016. Copies of these filings are available from the SEC or from the Company's Investor Relations department.

And with that, I would like to introduce your host for today's conference, Deep Kalra. Sir, you may begin.

Thank you and welcome everyone to our fiscal 2017 second quarter earnings call. I would like to start the call today by commenting on our historic announcement to consolidate the ibibo Group with MakeMyTrip. The team and I cannot be more excited for the value creation that this consolidation can bring to our customers, industry partners and shareholders. For our customers, we believe the newly combined MMYT will truly become a one-stop shop for all Indian travellers. Whether they are travelling by air, bus or rail and staying at a 5-star luxury hotel in a Metro city or a home-stay property at a hill station for the holidays, we'll be able to offer the right travel products at the right price point and across all the familiar brands, like MakeMyTrip, goibibo and redBus.

As for our supply partners, we believe the increased scale and customer reach possible with access to easily scalable platforms for distribution will be beneficial in the form of increased business volumes and customer service. We also believe that by combining the best practices and human talents of both companies we will be able to innovate and solve travellers' pain points much faster and accelerate the natural shift from offline to online in various travel segments, all while driving operational efficiencies with high growth.

Now, let me share some key highlights from our fiscal second quarter, as our operational and financial achievements reflect the success of our strategy of balancing market share gains in the online hotels business, while we continue to find ways to improve our customer satisfaction and retention and drive strong business growth.

In Q2, we achieved very strong year-on-year growth in transactions for the Hotel and Packages segment, driven primarily by MakeMyTrip India's standalone online hotel bookings, which now represent over 93% of all H&P transactions in the quarter. This growth rate in our view is especially commendable, given Q2 is a typically slow holiday quarter for the Indian travel market and we are now facing tougher year-on-year growth rate comparable, since we embarked on our high growth strategy just about a year ago.

The good news is we believe we continue to make strong headway in bringing more of the offline market online, via our various marketing and customer delight initiatives and mobile-first approach. As a result, we lead the market with a 27% share of the online hotels market in India according to the latest Millward Brown survey. As we've shared before, we believe the online hotels market is less than 15% penetrated online today and even lower if you include alternative accommodations within the calculation and we continue to accelerate the offline to online shift by providing users greater selection and choice, coupled with a superior booking channel on desktop or mobile.

In the air ticketing business, the year-on-year growth in our domestic air transactions remained strong at over 35%, outpacing DGCA's reported year-on-year growth -- market growth during Q2 of 24%. Our continued outperformance relative to market illustrates the strength of discretionary consumption by the large Indian middle class, driven by affordable domestic airfares, and more importantly, it is a reflection of customers' brand preference while making a travel booking. As a result of the high growth in our [air ticket] transactions, we've been able to attain a 16.4% domestic air market share in the reported quarter, versus 15% in the same quarter a year ago.

In a country with over 250 million smartphones in use and growing rapidly, we believe our adoption of a mobile-first approach is the right strategy for our business. As a company, we continue to see strong growth of net users coming from smaller cities and towns, which is highly encouraging for our business, as deeper parts of India continue to move online and present a large opportunity for long-term growth. Furthermore, we are also seeing handset makers introduce more 4G devices into the market, as telecom companies are launching pan-India 4G services with rates that are designed to drive data usage. We believe we got this growth tailwind within our business. And accordingly, we continue to invest behind our mobile initiatives to drive adoption by new and existing customers.

Since we've launched our first app, we've logged on nearly 27.5 million apps downloaded to date and currently have over 5.4 million monthly active users accessing our Android, iOS, and progressive Web apps on mobile browsers. We believe we are only at the beginning of a multi-year mobile revolution in India and believe we are now best placed to lead this growth in online travel in India.

Now, I'd like to ask Rajesh to share more details of some of the financial and operational highlights I just shared.

Thanks, Deep, and hi everyone. As you just heard from Deep, we are very excited to welcome the ibibo team to the MMYT family, post closure of the transaction after shareholders and regulatory approvals. We consider this a very strategic move to help us achieve new business heights in our future.

Now, let me elaborate on our Q2's achievement and performance. During the quarter, we continued to drive growth in our domestic hotel segment, and command an industry-leading market share in the domestic air segment. We also achieved a record number of standalone hotel transactions booked on lower overall hotels marketing spend in the typically slower Q2 travel season. Our growth rate was over 292% year-on-year in standalone online hotel transactions and over 453% in mobile standalone hotel transactions for the quarter.

We were also able to achieve robust growth of 51% year-on-year in revenue, less service costs, in constant currency terms. In addition, our domestic air business continued to outpace overall market growth and achieve market share of over 16% in Q2. As highlighted in the previous quarters, we've been pushing for mobile adoption in a big way with our mobile-first approach across all our business lines. Our continuous effort on this front is helping grow the transactions booked on the mobile platform.

During Q2, over 76% of our domestic standalone online hotel and 49% of domestic flights online transactions were booked via mobile. This achievement represents a material improvement in mobile penetration as compared to the same quarter a year ago. Our total cumulative apps download to-date has increased by 4.5 million, sequentially, since Q1, to 27.5 million cumulative downloads and we continue to see increased growth in monthly active mobile app users to 5.4 million in Q2. In addition, we have also launched progressive Web apps for our international flights business, which is now seeing good traction coming from the new mobile website experience in the form of meaningful incremental bookings.

Furthermore, in Q2, our Rightstay team continued to sign up alternative accommodations across the country, as we want to open up this large potential market and bring the shopping and booking experience online. As we've mentioned before, this segment presents a potentially large growth driver for years to come within our H&P segment. Our team has done a great job of identifying and signing up more than 9,000 properties, which are bookable today. While Rightstay was initially launched as an app-only experience, we have also introduced a desktop experience, which should help us capture an even wider audience.

Now, moving on to share some of the key product, tech and supply initiatives that helped improve the customer experience and delivering better results. In the quarter, we launched a new feature called Pay At Checkout for our hotels business, with 6,400 hotel partners participating in the program, which allows customers to make a booking without providing a credit card and offers the option of free cancellation. We believe this will resonate well with many customers who prefer the flexibility of booking hotels without any upfront commitment, which is similar to how hotels can be booked offline today. We launched this new feature with a new TV commercial campaign to introduce this feature to a nationwide audience during the last week of September.

On the flight product side, since we still have around 50% of transactions being booked on desktop, we worked on enhancing desktop booking experience for our customers as well. For example, we have introduced smart filters, indexed and (inaudible) recommended international flights to make customers' online shopping experience even better when using makemytrip.com.

One of the other tech initiatives was to lower latency on mobile app, to the point where the top 20 hotel things from a mobile app search gets displayed instantaneously, which would be very helpful for the customers where wireless connectivity speeds can be constrained at times. In addition, we have also experimented and tweaked with key messaging in our app experience to persuade customers to book immediately, which is intended to drive higher hotel conversions.

Moving on the air business, it continues to grow faster than market growth. One of the key marketing initiatives delivering results is leveraging CRM with personalized offers, as well as new-user acquisition initiatives from secondary and tertiary underpenetrated cities and towns.

Lastly, let me share some details of our holidays business during the seasonally slow travel quarter. In our holiday packages business, we continue to focus on productivity and efficiency gains in the largely offline holidays business. As standalone hotel transactions within our H&P segment become the dominant part of the segment, we would continue to tap into the packages market opportunities, especially in the outbound market, with optimized costs of offline distribution channel.

Now, let me hand it over to Mohit, who will provide a financial overview from the quarter.

Thanks, Rajesh, and hello everyone. I'm pleased to share that we have achieved strong year-on-year revenue less service cost, or net revenue growth of 51% and report $53.2 million of net revenue in the second quarter of the fiscal, and this was above consensus estimates.

Our air-ticketing business achieved year-on-year transaction growth of 31% and net revenue growth of over 33% in constant currency. As the market leader, our air-ticketing business has consistently outpaced domestic industry growth rates, which recorded a year-on-year growth of about 24%. At the same time, the average transaction value of our total air business dropped by about 17% year-on-year and by about 9.5% on a quarter-on-quarter basis. As a result, our air take rate expanded to about 6.9%, as not all of our air net revenue sources are directly a proportion of the gross value of the transaction.

I am also very happy to report that our year-on-year constant currency net revenue growth in our hotels and packages business was about 73% in the seasonally weak travel quarter being reported. This growth was driven by strong transaction growth of nearly 173% as we continue to pursue our market share gain strategy in the online hotels business. This transaction growth was powered by over 292% growth in India standalone hotels booked online and by over 453% growth in mobile transactions in the same segment.

I'd like to call out that we had embarked on an high share gain strategy about four quarters back and it's heartening to know that we have been able to grow our India standalone online hotels volumes to almost 4 times since Q2 2016. More encouraging is the fact that despite this being a low travel season and hence revenues dropping by about $5.7 million over last reported high travel season of Q1, we were still able to drive the significant growth with similar operating losses of about $25 million as were reported in Q1.

As we have called out in the last few quarters, the current operating losses have primarily been the result of our two-pronged strategy of: firstly, driving significant market share gains through customer acquisition and inducement programs for standalone online hotel bookings; and secondly, investing behind brand and category building media campaigns to drive online booking behavior, by addressing perceived blockers, based on customer insights, particularly in the deeper parts of India that can fast move online with increasing smartphone penetration.

In line with the reported quarters of this fiscal, we will continue to focus on building operating efficiencies, alongside the high growth strategy. Disciplined approach of optimizing our marketing and sales promotional spends, while actively driving transactions for better unit economics across our entire product portfolio is likely to continue even post the closure of the transaction announced with the ibibo Group.

Now, before we open the call to the audience for Q&A, I'd like to comment on the suspension of our annual outlook. At this time, we will not be sharing a consolidated view of our net revenue growth outlook, since the proposed transaction with ibibo Group has not been completed as yet. Please note that our prior guidance is no longer relevant and we expect to resume providing guidance after the proposed transaction with the ibibo Group is completed.

With that, I'd like to pass the call back to the operator for Q&A.

(Operator Instructions) Lloyd Wamsley, Deutsche Bank.

Hi guys, this is (inaudible) on behalf of Lloyd. Couple of questions from our side. So I guess, the first question would be in terms of your market share on the hotel side, how do you think about your market share on the hotel side between travel within India and outbound? And then, how do you compare that versus the other international OTAs that are operating in India at this point in time?

So the reported market share as per the latest MB, Millward Brown survey is like I shared, is 27% market share; this is domestic. So this is Indians travelling within India and this also takes out the impact of the inbound travel. So this is what we have tasked the research agency to do and it's kind of a syndicated survey. So, this is domestic. International is really hard right now to get a fix on, because we've got -- it is very hard to poll it. We can look at some key destinations, we could look at some key hotels, but it becomes really difficult, because these guys are getting travellers again from all over. So we've not been able to actually get a fair share of it, but suffice it to say that's still small and we are definitely putting more emphasis now on ex-India hotels. As you would imagine, they have large inventory, that's air. Most of it is not direct. Direct inventory strategy is being followed in key markets. We have basically shortlisted about 20 markets -- 20 cities which are frequented by Indians and which are more prone to a la carte hotel booking, versus packaged kind of products. And these are the places where we are doing direct inventory. Now we have a bunch of market managers out there doing that. And I think over the next few quarters, we should be able to show traction and also try to find a way of showing market share -- getting market share for those markets.

And then my second question was regarding your long-term positioning about outbound travel, how do you compare that, how do you compare your position on that versus some of the international OTAs that are operating in India?

Long-term positioning versus sorry --

The international OTAs.

How do you compare your position versus international OTAs in terms of outbound travel from India?

Right. As you know, both Booking.com and Expedia have been in the market now for a while, several years. Some of the other international OTAs are still -- I think they have very thin presence out here like Agoda et cetera. But both these companies have been operating now in the market. Clearly, they have an edge over -- I mean they are more known for international travel over domestic travel. But that being said, when we look at the numbers, be it for air or whatever we get for hotel the kind of information we get, it doesn't seem like anyone is actually that well entrenched. I think for international air, it's pretty safe to assume that we would still be the single largest player for international air, but for -- and Expedia obviously does have some market there, but it's still essentially -- we're in a comfortable position when we get our feedback from the airlines or the GDS companies. When it comes to hotel bookings, I think definitely Booking.com is doing quite well. But again, don't have a good sense on numbers as of now, so hard to say.

And just one or two questions on your recent ibibo announcement. So, it's been a few days since you made that announcement. Just wondering if you could share any feedback that you've received from your hotels players or other players in the industry, since you made that announcement last week?

I think we have, as of now, at least (inaudible) only our senior folks, they've only got very strong positive congratulatory messages and we have had some one-on-one conversations at a hotel meeting just today. I think when you talk about our market managers and the feedback we're getting out there, people have got questions definitely that how is this going to play out. And I think the message is clear that we are reassuring our partners that this doesn't result in us going out and trying to get higher margin, because very clearly, our strategy anyway had changed for the last few quarters, where we were looking much more at penetration and availability, rather than getting a couple of percentage points more. So that assurances have gone out and I think people are quite positive, and continue to work closely. And again, as you know, until we get our CCI approval, we really cannot be -- we are functioning as two separate companies and will continue to do so. I think we'll continue to give that same positive message to all.

And then just one last thing before I hop off. Just wondering if you could share anything in terms of take rates on the bus segment for ibibo?

Very hard right now. We are actually not in a position right now to share that information. So it will be hard to say. What we know of the business, we can definitely share. We've had a bus offering for a while, albeit smaller. So take rates tend to hover close to the 10% mark in this business. It is a lower ASP business, but about 10%. I'm sure redBus with a larger traction and much larger market share would probably be enjoying something better, but we really will not be able to comment on that.

(Operator Instructions) Arya Sen, Jefferies.

Just a few bookkeeping questions. First, if you could give the number of transactions in ETB in the quarter? And standalone India hotel, what was the net revenue contribution?

Hi, Arya. Mohit here. As you would recollect, we were giving ETB transactions separately as a part of the call-out that we are taking that business segment down last year. We are no longer reporting ETB as a separate segment, since the beginning of this year.

And it will not be possible to share the transaction number for that?

Not material.

But I think last quarter you did mention a number of 29 million or so, no?

Possibly Arya. But as I said, the transaction number is kind of coming down and considering the total standalone hotel transactions that we report, the number is pretty immaterial.

And if you could give the standalone hotel net revenue contribution out of the total net revenue of $28 million in this quarter in H&P?

Again, Arya, we kind of report the segment as a whole. And as we have been calling out, depending upon seasonality, the mix between packages and hotels tends to kind of move, albeit the only color that I could perhaps share is that the mix has significantly moved in favor of hotels, compared to packages over the last year or so.

I mean, because where I'm coming from is the average booking value in H&P seems to have fallen further, even from, say, in the last two quarters when it was around $120, $125. It is fallen further to almost $100 -- $104. Now the understanding was that standalone hotel average transaction size was somewhere close to that, but this appears to suggest that that has also fallen. I mean any comments on the transaction size of standalone hotels also, I mean has that fallen further, how was the mix changed?

Hi Arya, where have you picked the $100 number?

Sir, in the past, I think -- no, overall was -- you know it used to be much higher. I think you've been talking about somewhere in the range of [$8,000, $9,000] kind of a number for standalone hotel transaction size, right, including two room nights per transaction, one and a half to two room nights per transaction. This time it has fallen even further, right, it's almost $100 for the overall segment. So is there -- is the underlying for --

Hotel standalone ATVs haven't changed, but comparably between last quarter to this quarter, as we have been calling out, this was a seasonally low quarter for holidays and since when the holidays mix goes down significantly, then it impacts the ATV for the segment as a whole in a significant manner and that's the larger part of the change that you're seeing at the H&P level. Within the respective segments of packages, as well as hotels, there is no significant change over the previous quarter.

And I mean in terms of your mix of hotels, is it still -- I think you had guided for some -- close to 80% being 3-star or above. Is that still the case or --

Arya, on the prior point, another contributing factor is the fact that it's a low holiday season quarter. So the trips and the vacations also are even shorter, so even vacation to vacation we are looking at shorter length.

In terms of the mix of hotels how has that moved? Is it still 80% is Tier 3 and above, or is that changing? I mean any comments on that.

So Arya, we've been calling out about 70% plus coming in from mid to premium, not really 80%, for the last few quarters and the mix continues to remain on similar lines.

There is no change from the previous quarter, Arya, on that one. On this overall transaction value, the only difference is packages transaction value coming down and that's only because of the lower season quarter, nothing else.

Lastly, on the finance cost, in the release you have mentioned that the interest payment for the [sea trip] convertible was $4 million in this quarter and I think last quarter you had mentioned a number of $3.6 million. I'm just trying to reconcile that with the 4.25% interest coupon that you've mentioned this, in the first half itself you seem to have --

Sorry Arya, carry on.

Yes. I'm just trying to reconcile, because I mean if I add these two, then in the first half itself you've paid almost $7.5 million in terms of that, which would be much higher than the 4.25% annual sort of coupon on $180 million, right? I mean, how does that -- is there something else in that?

The quarterly coupon works out to about $3.9 million, Arya.

Okay. I mean if I do 4.25% of $180 million that should be -- the full year should be about (multiple speakers) right?

Where are you picking this number from Arya? Sorry.

The coupon rate on the convertible is 4.25% per annum, right?

Yes.

So, 4.25% --

The quarterly number is 3.99%. So, Arya, let us reconcile that number, maybe we will take this offline in a one-on-one call, we'll probably give you more details.

Shaleen Kumar, UBS.

Just one or two couple of questions. Just wanted to ask you one thing, let's assume this deal gets closed, let's say, assume by December end. So how much time do we -- are going to take to kind of have a synergistic number, or what kind of -- basically when we could see MMYT as a one company to start operating, instead of two, post the closure?

So you're talking about reporting from financials point of view or operational point of view?

Both, no, operational point of view, rather.

Operational point of view, as soon as we get the approval, I think we should be able to start. Obviously there are ideas and thoughts et cetera, which are there. So we should be able to start seeing synergies et cetera pretty quickly. I think I've shared earlier last week there are no intentions to discontinue any of the brands. We think all three brands are very strong. We're going to continue with the brands. And then we will seek out the synergies in various areas. So for that I think we'd have to wait for the approval, doesn't start straight away. Consolidation of financials, I think we can only be able to do this in -- hopefully by in the --.

Post the closure of the transaction --

In the (multiple speakers) quarter I think is when we should be able to share.

And that will be consolidated at the MMYT level only. So, from a consolidation standpoint, there will be one parent company which is listed, which is MMYT, will have all the -- will have the consolidated numbers.

My next question is on your marketing spend. I understand that we have kind of a strategy where we intend of increasing our market share and also we are trying -- trying to build or rather shift offline consumer to online consumer and that's basically to have a kind of mass. But when do you think that you know you believe that, at least from the offline to online, is sufficient and you need not to pump more capital on that side and it can continue as with the smartphone penetration and there is a sufficient awareness on that side? And even with the market share, now you guys will be like a substantial market share. So you may not need to go that aggressive. So what's your thought on that for near term and long term?

Let me take this one. So, the approach that we're taking is the segment wise approach. So let's talk about domestic hotels first. Clearly, as we've been talking about in the past and I'm sure you would be aware that the penetration -- online penetration of domestic hotel is 12%, 13%, maybe 15%, depending upon which source that you look at. So we believe, one, that momentum is continuing right now in terms of shift from offline to online. We also believe that there is a huge amount of headroom that is available. So this 15% number could potentially go to about 35%, 40% in the next two to three years. And the key drivers for that is going to be the increasing number of Internet users through the mobile smartphones, right, because both the numbers are penetrating and are they are projected to grow and they are just -- you know the -- one, the device is becoming very cheaper. Two, the data plans are becoming very cheaper, including the launch of Reliance Jio et cetera. So that's going to be the key driver.

So as far as this particular segment is concerned, we believe that we would continue to invest in -- invest and focus on growth as much as we could potentially do. So that's as far as domestic hotel segment is concerned. We also do see growth potential in our international hotel segment, as the consumer behavior is changing more and more from an offline booking to online booking. So we would like to continue to invest in that segment as well. As far as domestic air segment is concerned, relatively more matured segment in terms of online penetration, about 50% online penetration versus about 12%, 13% online penetration for hotels. And that's relatively more matured, and therefore relatively less amount of headroom, if you will. And, therefore, there it could be a balanced approach. But in the air segment, international air outbound would be -- we believe that there is growth potential there. So therefore there could be growth focus out there. So, this is how it is going to -- very detailed segment wise approach, directly linked to the opportunity in each segment is how our strategy is going to go forward play out.

So, on an overall blended basis, if you would see, you would see definitely, over time, as the penetration improves, the marketing and sales promotion expenses would get optimized, but it's not going to change overnight. And the idea is not to actually change it overnight, because of the underneath momentum that is continuing right now. But we would obviously, like we've been doing it in the past couple of quarters, we would continue to see opportunities where we could rationalize, where we don't need to go overboard et cetera. You would see that playing out in the coming quarters, for sure. But just wanted to set the expectations right and that is strategically important from a long-term standpoint that given that there is momentum, we will continue to focus on growth on these segments that I highlighted.

Right. I completely agree with you Rajesh that there is definitely a lot of opportunity available. But from 15% to 35%, I agree with you. But what would be the -- like percentage where we feel that we may not be responsible to bring them online, it's good enough, or rather it has achieved sufficient momentum that maybe like a [25%, 20%] you think that we can considerably reduce our spend, or maybe at 35% also?

Yes. I mean probably 35% to 40% and beyond that when it slows down a bit. But we being the market leader in all fairness, in order to get the disproportionate share, we will have to continue to kind of take this initiative and lead this initiative. And as the momentum picks up, overall presentation improves, it automatically kind of slows down. We've seen this playing out in the air market also a few years ago or a decade ago. And it automatically then kind of keeps coming down as the penetration improves. But very hard to predict at what level this will come down. I guess you will have to just keep watching this space, keep looking at the numbers, quarter-on-quarter, year-on-year. We would see some lapping effect coming in in the subsequent quarter as well, given that third quarter of last year we had pushed the pedal on growth, so there will be a year-on-year impact coming in there. And in terms of spends also, when you see and analyze as a percentage of gross booking or revenue, you would see -- there will be small marginal improvements happening pretty much every quarter. So keep watching the numbers. It is very hard to predict, precisely linking it with the penetration number, whether it will happen at 25% or 20% or 30% or beyond, very hard to predict that. But clearly, as the penetration improves, it should keep coming down.

Ashwin Mehta, Nomura.

Deep, Rajesh, I had one question. Now, it appears that you would be more in control of when you can achieve profitability, especially given that the market share of the combined entity will be large, and secondly, competition is not necessarily as well funded. So in terms of our longer term targets of achieving the 15% to 20% margins, how many years -- it's difficult to answer, but broad, how many years do you think will it take to kind of reach there?

Ashwin it's a great question and I think you also answer it by saying it's really hard to answer. The reality is that we are definitely in better control and we will be in better control rather. And I also think that, if anything, this will definitely accelerate that point, but like I said even earlier, last week's call, I don't think we are in this kind of space that where we are going to give a premium right now to turning profitable over growth. Growth continues to be the topmost priority for us in the hotel segment and I think if we can keep seeing high growth coming in, like Rajesh was just answering previously, then we are not definitely in a position where -- in a mindset where we want to stop that. So, some of this we are going to play as it goes along, but definitely it becomes more closer now than it was earlier. So I think that is a fair point and fair comment to make. But we will have to give you more and more kind of color on that as we go along.

Secondly, like, while you restricted your comments in terms of any indications on how goibibo looks in comparison to MakeMyTrip across financials or across parameters. is there anything incremental that you can provide in terms of their scale versus yours, or their losses versus yours, or something to the effect in terms of their share on hotels versus yours?

Nothing much as yet, Ashwin. Hopefully, once the transaction closes, we might be able to get back with more details.

And just one last bookkeeping one. In terms of packages segment, approximately how much would have been the decline in terms of transactions here from a YoY perspective?

On packages, is it?

Yes.

So, packages -- and we've been calling this out, the packages we're largely looking at in the buckets of domestic and outbound. While domestic has kind of remained flattish, outbound actually has seen growth during the quarter. So that's encouraging and that's what we were trying to call out in the script as well, that outbound we have seen some amount of growth returning.

And Ashwin, if I could just add, the decline on domestic -- sorry just one additional comment -- decline on domestic is actually understandable to an extent, given that -- as we spoke about it last time also that a lot of the -- now bookings are happening standalone a la carte, and the key destinations which are really package destinations, that are being picked up as far as just packages bookings are concerned. And we also need to keep in mind that this quarter for packages specifically is a low season quarter. So we do think that the growth, even on domestic packages, could come back in the high season quarter for the key destinations. I mean just like-to-like comparison from a destination standpoint. On an overall basis, we would see a decline, because a lot of the hotel bookings that were happening offline have moved online.

And approximately what's the mix of outbound versus domestic in packages?

So, outbound versus domestic on packages, at least in transaction terms is now kind of almost getting to similar levels. At least in the off-season quarters, it's kind of on similar levels. Come peak quarters or in a high travel season quarters, it's more like domestic is maybe about three-fifths of the total and outbound is perhaps two-fifths of the total.

(Operator Instructions) Lloyd Wamsley, Deutsche Bank.

Hi, again this is (inaudible) on behalf of Lloyd. Just one or two quick questions. Sort of on similar lines as one of the previous questions, in terms of sales and marketing as a percentage of bookings, just wondering, you said obviously (technical difficult) you get enough online penetration. Just wondering if you could talk about what you see, where you see this settling longer term? Once you sort of reach an equilibrium state, where do you see this settling? That would be number one. And then number two is, any initial reactions or any initial traction numbers, anything you can share in terms of Rightstay? Thank you so much.

So, I'll take that. If you really look at the sales and marketing expenses are -- sales promotion and marketing expenses as a percentage of gross bookings was close to about 11.1% in Q4 of last fiscal. And for the last two quarters, it's now kind of averages out to about 9.5%. So we do have seen some amount of efficiency come in on the marketing and sales promotion expenses. Clearly, if you would recollect, before we got down to the high growth strategy about three quarters, four quarters back, this used to be in the range of about 3% or so. And we believe once we kind of are in a steady state, we would expect this to come down in the 3% to 4% range in the longer term.

And just anything in terms of Rightstay?

Yes. So, on Rightstay, I mean obviously early days, since we have just kind of launched in the last few weeks, but we've seen some early traction. So, on a good day we probably would end up doing 100 bookings a day. It started with obviously 5, 10 bookings a day and all that. So it's kind of improving by the week, but obviously early days right now.

Thank you. And at this time, I'm showing no further questions. I would like to turn the call to Jonathan Huang for closing remarks.

Thank you everybody for joining our fiscal Q2 2017 earnings call. We look forward to speaking with each and every one of you pretty soon. And that concludes our call for today.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone have a great okay.