Tongcheng Travel Holdings Ltd

HKEX:780

Earnings Call Transcript 2021-Q4

[Operator]

Good day, and thank you for standing by. Welcome to the 2021 Fourth Quarter and Annual Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would like to hand the conference over to your first speaker today, Ms. Kylie Yeung. Please go ahead.

[Kylie Yeung, executive]

Thank you. Good morning, and good evening, everyone. Welcome to Tongcheng Travel's 2021 Fourth Quarter and Earning Results Conference Call. I'm Kylie Yeung, Investor Relations Director of the company. Joining us today on the conference call are our Executive Director and CEO, Mr. Hep Ma; our CFO, Mr. Julian Fan; and Ms. Joyce Li, VP and Head of Capital Markets.

For today's call, our management team will provide a review of the company's performance for the fourth quarter. Hep will walk us through the company's business performance in the quarter. Joyce will discuss our operational highlights, and then Julian will address the details of our financial performance accordingly. We'll take your questions during the Q&A section that follows.

As always, our presentation contains forward-looking statements. Certain statements are based on management's current expectations and current market operating conditions and relate to events that involve known and unknown risks, uncertainties and other factors, which can cause the company's future results, performance or achievements to differ from those in the forward-looking statements. This presentation also contains some unaudited non-IFRS financial measures. They should be considered in addition to, but not as necessity for measures of the company's financial performance prepared in accordance with IFRS. For a detailed discussion of non-IFRS financial measures, please refer to our disclosure documents in the IR section of our website.

Now let me introduce our CEO, Hep. Hep, please go ahead.

[Heping Ma, executive]

Thank you, Kylie. Good evening, everyone. Thanks for joining our Fourth Quarter and Annual Earnings Call. Also big thanks for your consistent trust and support. We have been doing our utmost in return. In the past 2 years since the initial outbreak of COVID, we stood firm on our core strategies. We consistently penetrate the Chinese lower tier cities. And [ forth hear ] the users' underlying needs with our comprehensive products and services. We continuously made industry recovery amid the huge uncertainties riding on our nimble growth stance to market changes and excellent executing capabilities. We [indiscernible] our efforts to seize every opportunity arising from the COVID crisis. And managed to solidify our position in the travel industry, especially our presence in lower tier cities.

Our user base has grown gradually in the past 2 years with MAUs and NPUs hitting all-time higher during 2021. Moreover, our annual paying users climbed to a historic high at around 200 million by the end of 2021, against the backdrop of uncertainties, marking an important milestone for the company. As we mentioned earlier, we aim at achieving rapid growth for our accommodation business with our persistent efforts. The business has maintained its medium growth momentum in the past 2 years. We constantly step up the investments in lower tier cities to seize emerging demand post-COVID, and enhanced our market business there. During the final quarter of 2021, cross-sell continued to play a crucial role in the segment's growth.

More efforts were made to encourage our transportation ticketing users to experience our accommodating products and services by digging deeper into their consumption patterns and for reference. Meanwhile, we continue to dive deep into users' underlying needs at various scenarios. And act precisely to grab potential opportunities, which, to some extent, leveraged the burden caused by COVID resurgence in the first quarter.

As for our offline user acquisition initiatives, we optimized our operational strategy and further enhanced our efficiency. For the fourth quarter, our domestic room nights sol continued to show preeminent year-over-year growth of more than 20% versus 2019 level, and we're assuming growth of more than 40% in lower tier cities.

Our transportation business, backbone for the company, has established authority mode and won credibility in the past 2 years, as we persistently developed and launched innovative value-added products and services to facilitate the users' travel under validated cost by COVID. In the fourth quarter, our air ticketing business saw a stronger presence in some advantaged regions and even gained footholds in some markets. More efforts were made to attract frequent travels through tailormade services to pursue a more wide user base.

Meanwhile, we cooperate with several consumer brands, which are locally influential to help build our presence in those regions and hence our influence there. As for our train ticketing business, it remained solid in the past quarter. Our intelligent Huixing System, which provides optimized travel solutions, continued to play a key part in better serving users' underlying needs. We dug deeper into the explored transport capacity, and further refined the smart system by providing a combination of train tickets that connect different -- next of the trip, of which the users only need to change the seats on the same train during their journey. This has effectively serve the users' travel difficulties when the supply was in shortage and won greater popularity among users. Once again, demonstrating the significant value of our products and services.

Furthermore, we increased the system's coverage of transport rules by integrating bus ticketing and car-hailing services to provide greater convenience to our users. Our bus ticketing business has seen strengthening growth over the past 2, 3 years, contributing meaningfully to the expansion of the company's user base. In the fourth quarter. Although under the shadow of the COVID resurgence, the businesses showed strong momentum and maintained impressive growth. Its value register more than a 400% growth compared with the same period of 2019.

During the period, we continued to roll out bus ticket vending machines across the country, which, by the end of December, reached more than [ 10,000 ] and we sought further penetration into countries and towns across Mainland China by cooperating with urban and rural bus operators, which has added to the growth of the business. At the same time, efforts were diced up to increase offline users' frequency of online purchase through effective marketing initiatives. The repurchase rate has improved greatly since the beginning of 2021.

Besides, we marked device value-added production services to bus ticketing users to serve into the potential needs. In the coming year, the bus ticketing business will remain a crucial instrument for the company to grow its user base. While more efforts will be made to enhance monetization capability of the segment.

Looking back into the past 2 years, I'm thrilled at what we have achieved under such disruptions caused by coronavirus. Our user base has grown bigger. Our core business has gained greater shares, and our brand has established a stronger presence in lower tier cities, along with our organization efficiency and capabilities greatly improved. As such, we have emerged a bigger and stronger under the baptism of COVID. In February, the NDRC published a guideline with multiple supportive measures to help the recovery of service-related sector, including the travel industry.

Earlier, the State Council has also announced the 14th 5-year development plan for the travel industry, which emphasized the importance of promoting smart tourism with digital and intelligent scenarios as well as expanding the application of new technologies in tourism. All this signaled that the government is very supportive of the development of the travel industry.

The road to recovery has been bouncy and rough as coronavirus continuously evolves and the uncertainties lingered -- linger around, which poses persistent disturbance to the travel industry. However, we remain confident on China's travel industry, which persists huge growth potential and contributes meaningfully to the nation's economy. We will make substantial efforts to increase the efficiency of China's industry -- China's travel industry by exploiting our technology and the Internet expertise to our suppliers and partners within the travel industry.

We will bear in mind our core corporate value. Customers come first and constantly provide users with supreme travel experience. And besides, we will make continuous efforts to fulfill our social responsibilities and contribute to society with common prosperity.

With that, I will turn over the call to Joyce. She will share with you our operational highlights for the fourth quarter of 2021. Joyce, please?

[Joyce Li, executive]

Thank you, Hep. Last quarter of 2021 was winded with challenges as resurgence of COVID-19 cases occurred from time to time throughout the period, which led to strict-ever restrictions and consequently weighing on travel willingness and demand. Both business in Malaysia travel were hit during the quarter. Nevertheless, we held on to our flexible operational strategy and proactively sought opportunities and huge fluctuations. Our efforts paid off. We, once again, managed to outperform the industry peers, constantly demonstrating the relevance of our business as the excellence of our execution capability.

Last year, we further deepen cooperation with Tencent and build a more solid relationship. We joined hands with quite a few players within Tencent ecosystem to better engage younger users at different scenarios. During the past quarter, we increased our advertising in Tencent ecosystem to enhance engagement with our target users as well as increasing brand awareness. With a broader corporation with several widely known IPs entitled by Tencent and along a series of interactive marketing campaigns aimed at generation fee. And enable to be the one of a client to platform that understands younger users. Meanwhile, we continued our cooperation with QQ browser, and had our brand highly exposed at several portals, which enabled users to get access to our Weixin program whenever and wherever possible. Besides, we further optimized our operation in Weixin searching portal by driving users from our mini program but also to Weixin Video Accounts to establish a sustainable interaction with the users.

On the other side, we push forward with our efforts to diversify our traffic sources. We enrich the content on our own app and optimize its interface to enhance user experience that uplifting the overall marketing efficiency. Besides, we continue to extend the cooperation with China's major handset vendors at multiple fronts. We launched metasearch function with one of the handset vendors, through which the users can easily find their principal travel products and services in keywords on their mobile phones.

We have also led innovative Voice Assistant function. This has facilitated users' access to travel information and order placing, greatly enhancing user experience. At the same time, we upgraded our itinerary reminder service by integrating the change of location to better care for our users. For the past year, we were awarded as the Most Popular Quick App and Best Partner by one of the most influential handset vendors.

As for our offline user acquisition initiative, they continued to contribute meaningfully to the growth of our paying users as well as facilitating our penetration into lower-tier cities. In the past quarter, we continued to roll out bus ticketing vending machines, covering most of the cities across China. To further penetrate counties and the towns, we joined head with urban and rural bus operators to have our scanning code on those buses, which brought even higher user acquisition efficiency. More significantly, we successfully tapped into the huge student market. Through our tailor-made campus cut, which went viral in a short period, and helped us win consumer demand of student users.

Furthermore, we increased investments to enhance our brand presence among younger generations as part of the efforts to build a travel platform that is set for young people. We continue to roll out online advertising inserts, especially targeting the younger cohort. In addition to online drama, we also placed advertisements in programs, such as animation movies and NDA games, to have our brand highly exposed and enhanced brand awareness and recognition among our target users. Through a series of branding campaigns, we believe we have primitive advantage to occupy existing place in the mind of younger users and win over such population.

Our paid membership program, Black Whale, has also made huge progress since its initial launch in 2019 as we consistently look into users' underlying needs and act precisely to satisfy the needs that they we were even unaware of. During the quarter, we further optimized our membership service by allowing users to customize the period of validity and benefits based on their preference and needs, innovatively creating new demand. By the end of December 2021, the accumulated number of Black Whale members further increase of 11 million, which was the purchase frequency more than 2x the rate of ordinary users.

With those aforementioned efforts, our average MAUs for the fourth quarter posted a healthy growth of 15.9% versus 2019 quarter 4, and reached around 238.6 million despite agnostic sentiment throughout the quarter. Our average MPUs for the fourth quarter maintained growth momentum and climbed to 30.8 million, representing a year-over-year growth of 13.7% for the 2019 quarter 4 level. And thanks to our effective offline acquisition initiative, end user-oriented products and services. During the year, we launched an innovative market initiative called Blind Box of Air Tickets, which attracts massive young users to platform and thus contributing to the growth of our user base.

Our average MAUs hit a record high at 277.9 million for the second quarter of 2021. While our average NPUs struck a new high of 33.6 million for the third quarter of 2021. Moreover, our 12-month paying users continue to grow and hit a historical high of nearly 200 million even in the depth of COVID resurgence. Achieving the goal we set at the very beginning of 2021. In the coming quarters, we will continue to increase investments to win overall users, which we believe will benefit us in the coming future.

Turning our transformation from OTA to ITA. On one hand, we are devoted to perfecting users' travel experience by constant investments in technology. Our intelligent Huixing system, providing users with optimized travel solutions, especially when there are no available tickets or direct route, which not only meet user demand, but also help run the transport network more efficiently. Meanwhile, with further enhanced intelligence of our AI-driven customer service, making to more human like when interacting with the user thus improving the customer experience.

On the other hand, we are committed to empowering the business of our partners by our advanced technology and internet expertise aiming to build a more resilient and highly efficient travel ecosystem. We provide technology solutions to several major airports and airlines to help increase their operational efficiency. We also provide such solution for more individual and small chain hotels to help run their daily operations more efficiently.

As a socially responsible enterprise, we are fully aware of our social obligations and proactively participate in social welfare activities to give back to our communities. In the depth of COVID pandemic, we launched a wide initiative such as penalty pre-changes or cancellations to help users better plan their trip and protect their safety. When Omicron virus occurred in Suzhou and Shenzhen, we act swiftly and joined hands with the hotels to provide medical staff and volunteers with great accommodation to pay tribute to their sacrifice.

Entering the spring festival travel season, we joined hands with the local government in Gangzhou and Beijing to help migrate workers return home safely by providing end-to-end pickup and drop-off service. And this was not the first time, we've been doing so for several years.

On the other hand, to help revitalize the rural areas and facilitate sustainable development of the local economy, we worked with Yan’an Airport and a local government in Yan’an to prompt local produce on our platform by leveraging our Internet expertise and brand influence. In the coming future, we will consistently take part in social activities that contribute to a better society.

With that, I will hand over the call to our CFO, Julian. He will share with you our detailed financial results for the fourth quarter and the year of 2021. Julian, please go ahead.

[Lei Fan, executive]

Thank you, Joyce. Good evening, everyone. The past year was striking with uncertainties brought by evolving COVID resurgence. However, we almost fully recovered to the pre-COVID level for all business lines and significantly beat industry average, thanks to the successful execution of our strategic initiatives, such as lower-tier cities' penetrations, offline user acquisitions, innovative product and service offerings and cross-selling. Although there were rapid COVID cases arising in some domestic regions in the fourth quarter, the Chinese government reacted more precisely and effectively to minimize the negative impact on travel and the economy.

In the fourth quarter of 2021, we reported a net revenue of RMB 1.85 billion, representing a 1.8% increase from the same period in 2020 or a 5.6% decrease from the same period in 2019. If we exclude the impact of the broad state international travel and reduce the prepurchase business, the like-for-like net revenue achieved a 1% growth compared with the same quarter of 2019. For the bottom line, in the fourth quarter, we achieved RMB 250 million adjusted net profit with 13.6% net margin compared with 16.9% net margin in quarter 4 2020.

The temporary margin decrease was for the sake of our mid long-term growth and market penetration. On one hand, we invested more in branding and advertising, as Joyce just mentioned to strengthen our brand image among our targeted users. On the other hand, we kept investing in new products and services for future business growth, such as bus ticket vending machines, car hailing services, content and private traffic acquisition as well as hotel travel solutions.

All those investments will be additional contribution to revenue growth in the following years. Accommodation reservation revenue achieved RMB 562 million, representing a 13% decrease from 2020 or a 9% decrease from the same quarter of 2019. If we exclude the negative impact of international travel and prepurchase business, the like-for-like accommodation reservation revenue recorded a 2% decrease compared with the same quarter of 2019.

Domestic room nights booked more than 20% growth compared with the same period of 2019, way better than the industry growth. Geographically, room night sold grew over 40% in lower-tier cities compared with the same quarter of 2019, thanks to the effective execution of our cross selling within the company and the accurate offline and online marketing campaigns in targeted markets. ADR dropped compared with the same quarter of 2019 due to short-term headwinds faced by the hotel industry as well as our strategy to further penetrate lower-tier cities. The blended take rate of the accommodation reservation business continue improved when compared with that of 2019, as the VAS revenue contribution increased along with the effective implementation of the one-stop shop strategy in our accommodation business.

Transportation ticketing revenue for the fourth quarter of 2021 was RMB 1,075 million, representing a 7% increase compared with the same period of 2019 or a 9% decrease compared with the same quarter of 2019. The year-over-year increase compared with 2020 was mainly driven by the additional revenue contribution from bus ticketing which achieved more than 100% growth compared with 2020 as well as the continued improvement in blended take rate, thanks to our cross-sell execution and more contribution from Huixing solutions and other value-added products and services.

Other business revenue was RMB 209 million in this quarter, representing a 29% increase and 37% increase compared with the same period of 2020 and 2019, mainly driven by the extension in our Black Whale membership card, PMS business and advertisement business. The other revenue has contributed 11% to our total revenue, a further increase from the same quarter in 2020 and 2019. We are looking forward to further monetization and contribution from new products and services in the following quarters and following years.

Gross margin was 74.6% for the fourth quarter of 2021 compared with 73.7% in the same period of 2020 and 73.9% in the previous quarter. The margin improvement was benefited from our streamlined operations, intelligent customer service ability and revenue mix change in the past year. In the fourth quarter of 2021, our adjusted EBITDA achieved RMB 422 million with 22.8% EBITDA margin, slightly dropped from 24.3% year-over-year.

Adjusted net profit achieved RMB 250 million with margin decreased to 13.6% from 16.9% year-over-year. The temporary margin decrease was due to more investments in branding, adding R&D for new products and development. Service development and administrative expenses in the fourth quarter of 2021 increased by 7% from the same period of 2020. Excluding share-based compensation charges, service development and administrative expenses in total accounted for 25.7% of revenue in the fourth quarter compared with 22.5% of revenue in the same period of 2020, mainly because we hired more employees in product and R&D for new product and service development while further optimizing staff composition in this quarter.

Selling and marketing expenses in the fourth quarter of 2021 were flat compared with the same period of 2020. In this quarter, we reduced some of the investments in online marketing and user promotion activities due to short-term headwinds in the industry caused by COVID resurgence. While investing more resources in branding and advertising, both online and offline, to strengthen our brand image for the long run. Excluding share-based compensation charges, selling and marketing expenses accounted for 39.4% of revenue in the fourth quarter compared with 39.9% of revenue in the same period of 2020 and 40.2% of revenue in previous quarter. As of December 31, 2021, the balance of cash, cash equivalents, restricted cash and short-term investments was RMB 5.4 billion.

Now let's move to our results in fiscal year 2021. As Hep and Joyce mentioned, we successfully led the industry recovery and achieved several important breakthroughs in the past year. All our product lines have almost fully recovered to pre-COVID level or even surpassed the performance in 2019. Net revenue in 2021 achieved RMB 7.54 billion, representing a 27.1% increase year-over-year or a 2% increase compared with 2019. We held on to the flexible operation strategy during the year to further enhance our back-end and marketing efficiency. But the main focus of the company in the past year turned to further market penetration and investing for the future and in the post-COVID backdrop. Our user base further expanded in the past year and both MAUs and MPUs hit record highs during the year.

Our domestic accommodation room nights for the whole year of 2021 booked almost a 40% increase from 2019. Thanks to successful execution of lower-tier cities penetration strategy, with more than 60% growth in lower-tier cities compared with 2019 level. Bus tickets sold achieved more than 270% increase from 2019. In terms of the profitability, our gross margin in 2021 increased to 74.9% compared with 71.4% in 2020, due to the continuous improvement in operational efficiency and the upgrade of customer service automation.

For the full year of 2021, adjusted EBITDA achieved RMB 1.9 billion compared to RMB 1.4 billion in 2020. Adjusted EBITDA margin was 25.1% in 2021, increased from 23.0% in 2020. Adjusted net profit achieved RMB 1.3 billion in 2021 compared to RMB 950 million in 2020. Adjusted net margin was 17.2%, increased from 16.1% in 2020.

Last, entering 2022. The Omicron variant remained through the country, and again -- shaking the travel industry again. However, the Chinese government is now more experienced in controlling the spread of the virus, and we believe the situation will be under control in a quick and effective manner. Though facing challenges for the short run, we are still very optimistic that the recovery will be on track as willingness and demand for domestic travel remains resilient. More importantly, we have built an effective and flexible strategy to deal with uncertainties caused by COVID.

Based on our latest situation, we expect our quarter 1 net revenue to increase by 0% to 5% year-over-year compared with 2021, and we expect that our adjusted net profit will be in the range of RMB 200 million to RMB 250 million. This forecast reflects our current and preliminary view, which is subject to changes.

Before closing my speech, I'd like to reiterate our optimism about the future of our company. We will definitely catch the opportunities post-COVID through strategic priorities so as to grow our business in targeted markets. And thus create more value for our users, suppliers, employees and shareholders.

With that, operator, we are ready to take questions now. Thank you.

[Operator]

[Operator Instructions] Your first question comes from the line of Alex Poon from Morgan Stanley.

[Chun Poon, analyst]

Congrats on the very good results in a very difficult environment. My first question is related to our margin trend in 2022. And since we already achieved 200 million annual paying users, what's our strategy on marketing expenses in 2022? And do we still aim for much stronger paying user growth? Or we would try -- we would start protecting margin because of the uncertainty in the COVID situation?

[Lei Fan, executive]

Okay. Thank you, Alex. Actually, for the margin guidance in fiscal year 2022, actually, with the very uncertainties brought by the resurgence of COVID cases recently, it is extremely difficult for us to give a full year guidance at this moment. But actually from our results in the past 2 years, it is very clear that we are very able -- we are able to recover faster than the industry and outperform other players. In terms of margin guidance, actually, we will adhere to our flexible and lean management, on one hand, focus on the efficiency of our marketing investments. And on the other hand, keep improving our operational efficiency.

But meanwhile, this year, we will utilize the savings from efficiency improvements and scaling to enrich our product portfolio for better monetization in the long run. And we will also be devoted to the sustainable development of the company to actually create more value for the whole society. But in sum, actually, we will try to maintain a same level of the profitability as last year because -- after we view the flexible and lean management.

[Chun Poon, analyst]

If I can have a follow-up question regarding our market share gain strategies in 2022. Can you elaborate a bit more on the strategy to gain market share in 2022?

[Lei Fan, executive]

Actually, for the market share gain, of course, after the -- post-COVID, the first important one is the online penetration. We think that there is still very ample opportunities to further increase the online penetration rate of the whole travel industry. Moreover, we believe that the pandemic is driving the acceleration of online penetration of the travel industry. So that will create more opportunities also for large platforms like us and to gain market share from the offline and also from the small-scale platforms, et cetera. And also, we have a lot of -- we tend to do this. For example, we have a good relationship with Tencent ecosystem.

We believe there are still a lot of potential for us to further develop. In the past year, we further deepened the cooperation with Tencent and encouraged new users at different scenarios, for example, the Weixin moment and also the public account is actual, which allowed us to gain more user continuously and gain market share as well. And at the same time, we put extra effort in developing other channels, including quick APP and offline user acquisitions. And have achieved the outstanding results in those channels.

For example, for offline user acquisition, we joined hands with hotels, bus operators and tourism attractive operators to transform offline booking habits to online habits. So all of these offline initiatives serve as the effective channel to acquire new users and also to gain market share for the company as well. Actually, we think our addressable market is still very huge, very huge because the online penetration rate for lower-tier city hotels, and it's only 25% to 30%. We mentioned this number a lot of times. And also the online penetration rate for bus ticketing is still very low single digit. Although we achieved a high growth last year for the users that we acquired from the bus vending machines, more than 60% was completely new to our platform.

And this trend is ongoing. It is golden time for us to dig into the offline market and accelerating the digitalization and online penetration at this moment, especially post-COVID. Meanwhile, for existing online users, our main target is to enhance the frequency and stickiness to pursue a higher ARPU in the future. For example, we will execute the cross-selling, we will strengthen the cross-selling within the company from transportation to accommodation and also inside the transportation from train to bus, from base bus to air ticket, et cetera. So that is the several reasons that I would like to list for you for the company -- all of those with us at the very important tools to take share, take market share in the whole traveling industry.

[Operator]

Your next question comes from Brian Gong from Citigroup.

[Brian Gong, analyst]

It's quite decent results, especially considering tough environment. So my question is about commencement to share your expectation for the full year top line performance, considering more difficulty to control Omicron. Do we still expect a more material recovery in the second half of this year?

Also, the short-haul travel has been relatively resilient compared to long-haul travel last year, but there have been more lockdown and stricter movement control recently. So my question is that how do those stricter measures impact our short-haul travel performance based on our observation recently?

[Lei Fan, executive]

Okay. Thank you, Brian. Actually, as I just mentioned, we can see the market is still very fluctuating, and users booking window is very short. So for the long run -- for the quarter 2 or fiscal year -- the whole fiscal year, we think it's too early to tell -- the visibility is still quite low. But we believe the government can effectively control the spread of the virus, and the domestic travel market can rebound quickly. But actually, I can share some performance -- latest performance for the quarter 1 because in quarter 1, actually, it's very, very volatile performance.

At the very beginning of this quarter, we could see the travel demand was still very suppressed by the negative impact of the pandemic. However, we were very encouraged by the performance during and after Chinese New Year. Although the government suggested people to stay in their working cities during the Chinese New Year to reduce traveling. But it was not mandatory, like what was required last year. The sporadic cases appeared in some of the cities in January and February, but the government controlled the spread and virus -- spread of the virus with more targeted and flexible management and travel restrictions.

So as we mentioned in our prepared remarks, the NDRC also published a very positive guideline with multiple supportive measures to have the recovery of service-related sector, including the travel industry to stimulate the economy rebound of the domestic markets. So actually, in the late January and the whole February, we observed a very strong rebound for our performance, which largely beat the industry. And our accommodation room nights grew very nicely, and ground transportation tickets also realized hyper, super hyper growth in volume compared with 2020 and 2019, supported by the drastic increase in bus ticketing volume.

But however, things changed in March. The pandemic became more severe and was spread in most of the provinces and cities -- and big cities. The government also adjusted the control level promptly aiming to stop the virus spread effectively to trade up for faster reopening in the near future. For sure, the business especially -- I think especially the transportation business was badly impacted in March. And the performance dropped year-over-year hugely. But we are very optimistic for the faster rebound in the next few quarters as what we observed in the past year and also in the Chinese new year this year.

What's more, we are well prepared for the release of public demand and we'll capture the opportunities by providing our supreme product and service as our user sales in some for the whole quarter -- of quarter 1, we had a very good start. But met some challenges in March, which was somehow a trade out for a volume reopening in the near future. We now forecast a 0% to 5% revenue growth compared with the same quarter of last year, as we mentioned in the prepared remarks. And looking forward, a much higher growth rate for the rest of the year.

And in terms of your -- the second question is related to the short haul. Just to reflect to my comments before. Actually, the short-haul traveling in March have -- for sure, have some impact by the COVID-19, by the virus spread. But it was very limited compared with the long haul. For example, for the company, we observed that the transportation for the air and for the train in March, especially in the second week and the third week of March, dropped like 50% or even higher compared with last year. But for the accommodation or the short-haul -- because accommodation and bus ticketing as a signal for the localization consumption also for the short-haul traveling, just dropped for 20% -- around 20%. So the impact is very limited because the areas that are largely impacted by the recent resurgence are very still -- very robust and energetic. So that is also why we are very confident for the product demand release in the quarter 2 and the rest of the year when the situation is back to normal.

[Operator]

Your next question comes from the line of Ellie Jiang from Macquarie.

[Ellie Jiang, analyst]

I just have a quick question to follow up on our profit comments. So just now we are talking about -- for the full year profit, we're hoping to kind of make it comparable with last year. What's our base assumption for the full year profit kind of outlook given the current pandemic situation? And I guess, quickly, just to follow back. If we look at the prior rounds of COVID waves in China, we you usually see this V-shaped rebound curve and it's usually released immediately after the ease of travel restriction. So just for this round, do we expect to do something differently? Or do we expect some pickups in, for example, sales and marketing expenses heading into second quarter or third quarter for a potential release of demand?

[Lei Fan, executive]

I think -- first, I think Joyce could give you some comments on your second questions for the rebound. And also, I will give you some color on the profitability. Joyce, please.

[Joyce Li, executive]

Yes. Because currently, we all see that we're still under the depth of COVID, and also the government has implemented strict control measures to contain spread of the COVID. And currently, we couldn't tell when the overall policy will be changed. But we can see that the Chinese government is more experienced in controlling the spread of virus with more precise and flexible approaches to amidst the affected areas. For example, recently for the confirmed cases, just with the mild symptoms, the patients should be quarantined but no need to be sent to the hospital.

And as Hep mentioned earlier, according to the NDRC guidelines released in February, the government is also eager to support the recovery of the economy and the truck industry. It also guided the local government to avoid excessive control measures and travel restrictions, which is a signal that the government wants to prevent the unmet lockdowns. So we are still very confident in the resilience and vitality of the domestic travel industry, as what we could see in the past, the travel market can rebound very quickly once the COVID situation is stable.

[Lei Fan, executive]

Yes. I will add more color on the margin side. Yes, actually, we are very confident that the margin in the short- to medium-term future will be relatively stable because our business is relatively mature. And also the margin improvement, there is some kind of a space for margin improvement. For example, from scaling as our revenue rocket up in the rest of the year. And also from operational efficiency enhancement, but we will definitely reinvest it in brand advertisement and marketing and new product development. We will reinvest these savings -- these kind of savings in those parts.

For example, we'll be more aggressive to develop and penetrate the markets for our accommodation, but ticketing and attraction ticketing business. And also, we will explore the cross-sell and monetization opportunities for car hauling and local consumption, et cetera. So we may also start to develop our outbound business when the growth is open.

And also the [indiscernible] business to drive additional revenue subjects for the future. So all of those initiatives are the revenue engines for the next 2 years hyper growth for the revenue. So that is our single logic. We will save the money from the scaling and from efficiency enhancement, and we will put the additional money to reinvest on the marketing dollars and also our new product and development and also the research.

[Operator]

Your next question comes from the Ronald Keung from Goldman Sachs.

[Ronald Keung, analyst]

I have two questions. First is, I want to ask about how -- you just talked about expecting much faster growth the second quarter and onwards. But what we've seen, for example, is some recurrence in August in kind of fourth quarter and in first quarter. So as you talk about expecting hyper growth in the cost planning. Just want to hear if we're expecting hyper growth, is our cost planning usually in sync? Or would actually revenue then cost there's some lag? So if we are planning for a hyper growth and we plan more costs and if another wave of COVID comes, how fast do we adjust our cost base to maintain a more stable margin outlook for the year? So it's about recurrence of COVID and on cost planning.

And then second question is on take rates because recently, we just had a very unfortunate and sad air accident yesterday. So if we have more people taking high-speed rail, for example, in the short term, can you remind us the take rate of rail versus air ticketing around sort of per particular basis, how is our profitability on these two channels? And just want to hear, have we seen any change in shifting modes just at least for the short term?

[Lei Fan, executive]

Thank you, Ronald. In terms of the first question, actually, we have mentioned a lot of times. The company is very good and flexible and lean management. Our total head count is relatively stable and the total health or the spending for the employees are relatively stable. So that will be adjusted down at the scaling effect for the rest of the year. So actually, the most important part of the cost structure is the sales and marketing dollars. And the sales and marketing dollar for the management team, we can be very flexible and adjust the strategy. Sales marketing strategy according to the market situation, according to our revenue growth.

But in total, I will give you more color of how we spend our sales and marketing dollar in 2022. We have already explained a lot of times that we're trying to continue our investment in the markets to penetrate the market and especially in the post-COVID time. So there will be a cost saving, as I mentioned, from scaling an improvement in operational efficiency, but we will reinvest these savings for future business expansion.

For example, we -- for online part, we will launch more accurate promotion accurate promotion in target areas and scenarios as to acquire more users. And also, we will explore new traffic channels, such as short video platforms, content platform, local location-based platforms for example, the Baidu Map and Golden Map. But sharing platform is there for user acquisition online. And at the same time, we will continue to penetrate the market with our offline user acquisition initiatives including the bus vending machine, attracting ticketing vending machine, et cetera, and bus cumbers.

But all of those investments is relatively -- it's related to the ROI. We will control the ROI. So that was a very positive relationship to the revenue growth. And also, we will invest in brand advertisement so to strengthen our brand image and awareness. So that is our -- how we manage our business and how we manage our sales and marketing dollars and what its relationship with the -- for the sales and marketing dollar and the revenue growth.

In terms of the take rate -- recent take rate, actually, for transportation, I will explain separately for accommodation and transportation. For transportation, in the past several quarters or past 2 years, the take rate from -- blended take rate for transportation is quite stable. In past quarter, in quarter 4, it slightly improved for the take rate of transportation because of the -- in quarter 4, there's a sporadic cases spread in the Mainland China. So people would like to buy insurance and also would like to use the Huixing system for the convenient service.

But in the future, actually, the blended take rate for transportation, actually, we think it's quite stable because that is another important focus for the company to improve the take rate from transportation side. The most important one is to cross-out the users from transportation to accommodation and also attraction tickets from air, train, bus to accommodation because accommodation has far more higher take rate, blended take rate than transportation.

So that is not our main task to improve the take rate. But we get it will quite stable in the future. But for the accommodation segment, in the past quarter, several quarters and the past 2 years, you can observe that we have a very obvious improvement on the accommodation take rate year-on-year and quarter-on-quarter. There's two reasons, obviously. One is all of the players, OTA players, right now in the market, are very prudent or very discipline on the couponing. So that is the first reason.

And the second reason is our one-stop shop strategy for accommodation reservation business. Nowadays, we have more than 10% of the contribution -- revenue contribution from our VA app, value-added service, in the accommodation group. And in the future, we are very confident that the VA app will be improved -- will be increased in the future because we have now offered various product and service to our customers and also the creative product and service is ongoing. So that is my comments on the take rate.

[Operator]

Your last question comes from the line of Thomas Chong from Jefferies.

[Thomas Chong, analyst]

I have a question on the outlook for the accommodation volume. And how should we see the pricing in the top and low-tier cities in the first half of 2020 and full year?

[Lei Fan, executive]

Actually, I mentioned we have some visibility in the quarter 1. But actually -- especially for the accommodation, the booking window is quite short. So we have very limited visibility on the pricing and also on the volume side for the first half, for the quarter 2. But on the pricing or the ADR side, we still have some challenge on the total industry for the hotel industry. The ADR or the pricing of the hotels dropped significantly compared with 2019. But anyway, we think that is a short time cut win. It will be turned back after the situation is back to normal. Thank you.

[Operator]

There are no further questions at this time. I would now like to hand the conference back to today's presenters. Please continue.

[Kylie Yeung, executive]

Thank you. We are closing the call now. If you wish to check our presentation and other financial information, please visit the IR section of our company website. Thank you, see you next quarter.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.