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Thomas Cook (India) Ltd
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Ladies and gentlemen, good day, and welcome to Thomas Cook Q2 FY '25 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Anand Jain from IIFL Securities Limited.
Thank you, Joshua. Good evening, everyone. Welcome to the Thomas Cook India Limited 2Q FY '25 Earnings Conference Call. Today we have with us Mr. Madhavan Menon, Executive Chairman, Thomas Cook India Limited and the senior management team. Without much ado, I invite Mr. Madhavan to begin the call with his opening remarks, post which we'll begin the Q&A session. Thank you all, and over to you, sir.
Thank you, Anand. Ladies and gentlemen, a warm welcome to the quarter 2 FY '25 Earnings Call of Thomas Cook India Limited. Let me sort of kick off by first introducing my colleagues in the room. We have Mr. Mahesh Iyer, Managing Director and CEO of Thomas Cook India Limited; Mr. Vishal Suri, Managing Director and CEO of SOTC Limited; Mr. Vikram Lalwani, Managing Director and CEO of Sterling Resorts; then we've got Mr. Ramakrishnan, President and CEO of DEI. We additionally have Mr. ebasis Nandy, who is the Group CFO and Mr. Brijesh Modi, who is the CFO of Thomas Cook India Limited. And of course, Urvashi Butani, who is responsible for investor relations.
I'm going to sort of make my opening comments and then hand over to the concern people so that we can sort of walk you through the numbers so that you will have a better appreciation of some of the numbers that we reported yesterday.
So I think we declared a reasonable set of results to the market with a 9% growth year-on-year of the total income from operations without the month-to-month -- the mark-to-market number of the shareholding that we have in quest. Our operating EBITDA margin increased from 7.04% to 8.05%. The earnings per share of -- if I talk of the operating PBT, we closed with INR 1,063 million as againstudy INR 775 million for the same quarter in the previous year. But from an earnings per share point of view, we closed this quarter with INR 1.39 as against INR 1.01 in the previous year.
I think while the performance has been good across all our businesses, barring certain businesses, the reality is that there are several challenges out there, essentially geopolitical and the economic slowdown that we are witnessing across the world. While we have built internal controls to mitigate and manage these risks, I think it's important that we recognize, given the very diversified geographic nature of our businesses. One business or the other is likely to get impacted by this. And I think in the current quarter, if you look at -- in the quarter gone by, if you look at the results of DEI as well as [indiscernible] to some extent, they have been affected by these geopolitical issues that surround [indiscernible] exist in the Middle East.
In terms of consumer appetite from the Indian market, we continue to see sustained demand, especially if I look at the leisure business, both in the short haul as well as in the -- I mean domestic markets. If I look at the foreign exchange business, demand -- our billings on the card have grown year-on-year, and this is supplemented the floats that we have as well as the margins that we have. If we look at the MICE business, it continues in both companies SOTC and Thomas Cook [indiscernible] good numbers. So I'd -- and of course, most importantly, our destination management business is both SITA [indiscernible] India as well as all the other entities across have started firing on all cylinders. And most of them with the exception of -- with the exception of the United States, South Africa -- I mentioned South Africa and [indiscernible] in North America and in the Southern Hemisphere who go into winter. I think these -- all these companies will report a very good season based on the forward bookings that we have received.
I will end by saying once again that we have -- we see great benefit in the diversity of our geographical locations that is the DMS business is spread all over the world with Thomas Cook and SOTC in the B2C space in India, you've got the B2C business out of Hong Kong, and the rest being B2B, but we're getting the benefits of that diversity in our businesses. And lastly, I think the geographic spread again, I will reiterate that. I think that's an important beneficiary for us during the period of crisis. So with that, I'll hand over to you, Mahesh.
Thank you, Madhavan. Good afternoon, everyone, and I'll just take off from where Madhavan left. A quick summary on the numbers that we have at a consolidated level. If you look at the income from operations, we grew by about 9%, as Madhavan said, from INR [ 1,870 ] crores to INR 1,043 crores, and more worthy here is to look at the PBT number, as Madhavan spoke about, the PBT margins, we expanded from about 4.1% to 5.2%, that's about 110 basis points improvement on the PBT margin. If you look at the absolute number, we delivered a PBT of INR 106 crores, which is more comparable with what you look at a seasonally very strong quarter, which is the April-June quarter. So despite the fact that this is not a seasonally strong quarter, I think as a group, we've delivered a strong set of numbers, led by the travel services and within the travel services, the DMS operations, Sterling Holiday Results and of course, the MICE and the corporate travel business [indiscernible]. We also mentioned here is the foreign exchange services, which has had a very good run in the current quarter, and I'll give some synopsis of that in the segmental review.
Moving on to the segment side of it. If you look at the foreign exchange business, the income from operations grew about 8% from INR 77 crores to INR 84 crores. I'll call out here again, and as I've been saying in the last 3 quarters, -- if you look at the Q2 of FY '24, we had the Bangalore Airport sitting in Q2 of FY '24, which is not during Q2 FY '25, and hence, they are strictly not comparable. I just to put a number to that, that INR 77 crores had a INR 5 crore of revenue sitting from Bangalore Airport. It didn't have an impact on EBIT our EBITDA purely because it was a breakeven case, but it did have an impact on the revenue side of it. So if you look at from that growth point of view, essentially this growth will look more like a 10% or 11% growth.
If you look at the EBIT margins, they have expanded from about 37% to 48%, and if you recollect, we've guided the market to a 45% EBITDA -- EBIT margins and this 48% that we are talking about in the current quarters compares to the sequential quarter, which is the April, June quarter, where we were close to about 50%. So we will holding on to these margins and sequentially a healthy margin that we have.
Some of the key highlights on the foreign exchange business has been the growth in the retail business. Our overall retail business grew by about 123% in the current quarter led by education, which is the overseas travel -- overseas education business, which grew a strong 49% as compared to the comparable quarter last year. This was driven by a strong rebound in the U.S. market and also in the markets of Australia. Canada was subdued. And as you know, there is a lot that's happening there, and we expect the impact of that to continue in the next year also. So not much to be expected out of Canada, but I think markets like U.S. and others will catch up on the deficit that will come out of Canada.
If we look at our card loads, we increased by about 6% in the current quarter as compared to the previous quarter. So we are talking about $250 million of load that we did in the current quarter. Now if you look at from a run rate point of view, we are inching closer to a $1 billion mark for the full year, and my expectation is that we'll come very close to that number.
During the quarter, we also added 2 new currencies to our ForEx portfolio, ForEx prepaid card portfolio, which is Saudi real and New Zealand dollars, which means now we have more options for the customers to choose from. We're also reducing the dependency on customers looking at currency note and preferring prepaid cards as an offering to go.
Speaking about the digital side of it, I spoke about it last time around. We've invested in a lot of technology using technology, not only as a route to get across to the customer, but also to manage productivity our ad bookings, the ForEx app that we launched has actually grown by about 119%. So a little bit on a small base. So if you look at the number of transactions, same quarter last year, we were at about 68 transactions. We are at currently about 140 transactions. So clearly, towards growth that has happened in that range in a limited period of time.
On the VKYC, which is the video KYC, I think we've had about 1,350-plus bookings, which represents some close to about 80%, 85% growth and also a high success rate, an 85% substance rate on a digital mode, I think, is remarkable. And there are some fine-tuning that we still need to do on this business to make it far more seamless for the consumer, and we are working at it. WhatsApp, as I mentioned previously, again, which generally is used by most companies as a service tool, we are actually using it as a sales tool. We have close to about 2,000 interactions that happen on WhatsApp every day. We have about close to 5x growth in terms of leads, and we have about 300-plus bookings that have happened through [indiscernible].
Consequently, to these initiatives that we have taken, the EBITDA improved for the business from INR 29 crores to INR 42 crores and EBT improved from INR 29 crores to INR 41 crores and in a healthy EBIT margin of 48.8%. Looking ahead, I think into the quarter of October to December, we believe while there will be some softness that will come in the month of December because a lot of travel is not happening during that time where [indiscernible] compared to loads, we believe that the business is poised to that 8%, 10% growth in terms of revenue and about 12% to 15% growth in EBIT. And our guidance to -- the EBIT margin on this business remains steady at about 45%.
Moving on to the travel vertical. As we've spoken about it in the past, there are 2 segments of B2B and B2C to it. And as you will realize, the pie consists of the MICE. It consists of corporate travel. It has got holidays, and it has got DMS. So if you look at from an income from operations perspective, they grew 11% from INR 1,432 crores to INR 1,591 crores. That's a strong growth of about 11% on a very high base. If you look at from an EBITDA margin -- EBIT margin point of view, if you will, again, recollect, we guided the market for a full year guidance of close to about 5%. I'm happy to report that in the current quarter, our margin tax at about 4.9%, this is at the backdrop of a very strong comeback on the DMS performance as Madhavan and Brijesh will speak subsequently. We've had some good [indiscernible] coming out of it. A lot of those units, which were either breakeven or loss-making have turned profitable, and they are adding to the profit margins in the current quarter.
If you look at the mix of business, 25% -- 24% of our business is B2C and 76% is B2B, which consists of the DMS, MICE and Corporate travel. If you look at some of the key initiatives that we've taken that helped the performance during the quarter has been our range of product offerings for the customers, be it in the long haul [indiscernible] side of it. We guided the market last time around that we expect a bit of a longer summer this year, and we saw some shapes of it in the July, September quarter. While long-haul continued, it was not a very strong long haul, but I think the short haul in the domestic side of the business actually held the business very strongly in the current quarter. We actually saw the [indiscernible] business growing by close to 30% and the domestic business is actually growing by about 10% during the current quarter.
You will appreciate that domestic is not the flavor of this season, people preferred delay or -- the delay in travel that happened because of the elections in the April, June quarter actually resulted in travel happening in the July, September quarter, and hence, people prefer to do the short-haul destinations of domestic. But if you look at the overall domestic portfolio on an H1 basis, we are actually the full year that we did for FY '20, we are actually at the same level in H1 of 2025. So clearly, I think the comeback on the domestic side is very, very strong. The short-haul side of the portfolio is also firing very, very strongly.
Our focus on digitization on this business continues. We are trying to acquire customers digitally and continue to do a lot of activation in the marketplace. I would have also seen that we've gone to the market with our offerings on Europe for summer of 2025 with some attractive price points. And I believe that we are trying to excite the market as we prepare our journey for the long haul in FY '26.
If I talk about the MICE businesses, I think as you will again recollect, last year, we had the benefit of G20 and government events that happened during this quarter. Obviously, this whole year, we haven't done any G20 or government initiatives, notably so because of the election and some in decides on their part. But despite that, our MICE business continued to grow, specifically mention of SOTC where they are having a record year, where they will actually surpass all their previous in terms of our top line as well as profitability.
As far as Thomas Cook is concerned, again, we are having a good year. My expectation is that we will close on a high -- on the MICE side this year also. If you look at the destinations that we have covered right from U.S.A. are down to New Zealand, I think we've got customers traveling all across, which also says that almost all the markets are now ripe and customers are choosing their destinations to travel, and we are making them to travel too.
If you look at the corporate travel business, again, if you look at the mix of the pie, you look at a small contribution of 2%, but that's because we only recognize the revenue here. And putting that call out because this question usually comes out to us, saying why is it a small component. But if you look at the portfolio, that's a very strong portfolio, just about close to INR 650-odd crores of volume every quarter. And that volume has grown by about 13% in the current quarter as compared to the comparable quarter last year. We added 6 new corporate accounts during the year. Our digital adoption has been very high. We matched that by about 400 basis points moving from 54% to 58%. Again, we've spoken about margin expansion as an opportunity on this business.
If you see our non-air and card business, we have grown by 49% and 23%, respectively. I had mentioned this in my previous conversation also, our focus is on the non-air side of it, which is what we believe the margin expansion will happen. And I think we have executed well on that front.
Overall, I think it's been a good journey as far as the travel vertical is concerned, both on the B2B and the B2C side of it. And we believe that the growth rates that we've indicated to the market will help sustain this in the medium term. Debasis, you want to talk about the DMS ?
Yes. Thank you. Thank you, Mahesh. So as Madhavan said, and Mahesh also alluded to it, the DMS business as well as the inbound in India grew by about 20% during the quarter. Of course, this is not a season for the inbound business in India. The season really starts from October and goes on until early April. But nevertheless, in spite of that, it had a decent quarter. The overseas DMS business grew very strongly, especially markets related to Southeast Asia, where you have anticollision [indiscernible]. We saw good growth in countries like Thailand, Indonesia, Vietnam and Malaysia -- as well as, of course -- as well as Singapore.
Likewise, in U.S., our unit AlliedTPro, experienced strong growth in this quarter, largely because of good travels. And South Africa delivered steady growth in this quarter with focusing mostly on the group travel as well as the [indiscernible].
Our unit in Middle East [indiscernible] lagged behind, primarily because this was not the season for [indiscernible] is the summer for Dubai. And also, it did get influenced by the geopolitical tension that exists in the Middle East. And in East Africa, the East Africa performance declined slightly because one of our key customers had gone bankrupt in the first quarter, we have spoken about that during last meeting that we had. And obviously, this taking the time to cover loss around and find new customers to replace that volume.
But overall, I think it's worthwhile saying that the DMS business has really sort of come back from its own. It has recovered greatly. And today, as a group of companies, it's a far price from [indiscernible] become profitable. And between the DMS and the inbound India business, they contribute to 50% of the overall travel segment volume. I would now -- with that, I'd now like to hand over to Vikram, Vikram Lalvani and his team in Sterling. Vikram, can you take over on here?
Yes, sure. Thanks, Debasis. And good afternoon, ladies and gentlemen. I'm Vikram Lalwani, the Managing Director and CEO of Sterling Holiday Resorts Limited. I'm based in Chennai, and I'm also joined by Mr. L. Krishna Kumar, our Chief Financial Officer of Sterling. It's such a privilege to speak with all of you again today.
I'm pleased to announce that Q2 FY '25 marks our 17th consecutive profitable quarter at Sterling. Q2 is typically the leanest quarter in the leisure business as we are all aware. Sterling has delivered a respectable EBITDA margin of 32.7%, up from 31.9% in the same quarter last year. Our EBITDA has grown by 25% from $313 million to $391 million, and our EBIT has increased by 24% in value terms, resulting in margin improvement of 80 basis points and 50 basis points, respectively.
From a turnover point of view, we've grown by 22%, reaching close to INR 1,200 million. During this quarter, we also took the opportunity to ramp up our inventory supply, and we've added and opened 5 new resorts in the previous 90 days. This brings our total resort count now to 54 resorts across 47 destinations in India and with over 3,000 homes. So quarter 2, actually, we had 2 milestones achieved. One is the 50 resorts and the second is 3,000 rooms.
I'm also pleased to announce that we've achieved these 2 milestones in quarter 2 by September 30 of this year. Just to give you a sense of indication as to how the ramp has taken place. In the last 18 months, we have added practically on an average 1 resort a month. We remain committed to our focus and strategy of expansions to an asset-light model by adding revenue lines going forward. And we have a pipeline of another 23 resorts in the pipeline slated to open in the next 18 months. We will continue to invest in strengthening our leadership given the ramp that's coming in the next couple of months, investing in preopening leadership teams and shall also continue to invest in the right opportunities involving technology and processes for efficiency and scalability.
As you are aware, in the past, we had putting a lot of investments in revamping our entire ERP system at the back end and changing our entire property management front end. Apart from that, we've also launched a SterlingOne, which is our proprietary digital distribution platform, and we are now investing also in lead generation platforms as we go ahead. In quarter 2, our occupancy rate was 49%, which includes the new resorts higher during this quarter in a staggered manner over these 90 days with over 250 as a room base. So therefore, there was an increase in 8% in the total inventory. We sold 124,000 room nights in the quarter when compared to 113,000 room nights in the same quarter last year, and we maintained a healthy average rate despite a lean season of 5,400.
Our F&B revenue has shown a strong growth of almost 18% year-over-year, driven by increased participation in dialing at our resorts. F&B of food and beverage remains an important area of focus. And we expect it to continue to contribute to our top line as well going forward in the coming quarters. We continue to remain debt free and with healthy cash reserves.
As previously communicated, we sunset the acquisition of members for our long-term membership product that is the 25 years in July 2023. As part of a shift towards ramping our hospitality segment. This strategy also enabled us to expand our number of resorts quickly and on an asset-right model. Just to give you an indication again that last year same time, we had 41 resorts and today, we have 54.
I would also like to share that with effect from September 2024, we have also sunset the acquisition of new members for our short-term membership product, which is a 10-year term and have significantly reduced its member of acquisition activities during this quarter. As a result, Sterling will no longer acquire new vacation ownership customers, but will continue to service our existing eligible member base by focusing also on growing our hospitality business.
On the customer satisfaction front, we have seen significant improvements in our TripAdvisor rating. 65% of our resorts are now ranked in the top #5 in their respective locations and 25 resorts hold the #1 position in the market. Looking ahead, we expect Q3 to be a strong quarter during the holiday season that's kicked in and wedding season as well. On a longer-term basis, we continue to remain optimistic on our growth trajectory. We expect the demand to continue to grow at a CAGR of approximately 10% over the next few years and driven primarily by a strong domestic demand growth of 20%. That's where our Sterling's major focus is.
We are excited about our ongoing portfolio expansion plans as well that adds on to new lines of businesses on the top line and we shall continue to focus on delivering strong financial performance and enhanced customer experiences [indiscernible].
I would now like to pass on and hand this over to Mr. Ramakrishnan, who will talk about DEI.
Good evening, ladies and gentlemen. My name is K. S. Ramakrishnan. I'm the President and CEO of DEI. We, at DEI had a fairly challenging, but anticipatedly challenging quarter. It's not our best quarter in the year always, particularly because most of our business is in the Middle East, and it's the warmest month in the Middle East for that matter.
Our revenue has dropped from INR 235 crores in the previous year's quarter to this year to INR 209 crores. This drop has been largely due to the largely [indiscernible] the U.S. operations closure. Looking to the profitability, we have decided to wind down the U.S. operations, which had a revenue gap and has a [indiscernible] on cost until the last quarter of this year. The geopolitical situations as quite a few of past colleagues have mentioned, has not been in our favor in the Middle East and Maldives in particular. But with the U.S. Presidential Elections of the back, we are anticipating the environment to get a bit better.
To hedge ourselves, we are focused a lot on our acquiring more accounts in the Far East. For example, we've grown the Indonesian market by 50% this year, which will continue to be accretive in quarters to come. In our business, typically, when we start -- when we expand into new partnerships, it takes about 2 to 3 quarters before we start delivering profitability on the same. As we hit the peak season this quarter, we believe the pent-up travel from the Western tourists will be hopefully in our favor, both in the Middle East and Far East. To add to this, the quarter also was -- has been challenged with again, a planned double cost that comes to us on our technology implementation. This would probably continue for another quarter or 2 as we go live on the second half of next year, fully with our new technology solution.
Over and above this, the good part of the business has been that we've had some successful renewals of [indiscernible] partnerships between UAE, Maldives, Malaysia, Singapore and Indonesia. More than 80% of our key partnerships that is due for renewal, 4 has been renewed. There are 14 new partnerships signed in the UAE, Maldives, Malaysia, particularly in Indonesia and China, we had about 8 new partnerships signed up, 9 of these partnerships have already been launched as operations predominantly in Malaysia, Indonesia and China.
On a concluding note this -- while it's not as an aberration, as I call it, and will be there for a quarter or 2, but would not be [indiscernible]. We are very hopeful that the future looks much better than what it was in the past. Thank you very much.
Madhavan [indiscernible] some closing comments before we go at start of with Q&A.
I think I'll draw your attention to the last paragraph in my statement made in the press release is that so far, primary -- our first priority was to cover recovery in the business volumes. And our focus looking forward is on ensuring sustainable growth and profitability. I think this is an important point that I'd like to reiterate because it does allow a degree of change in our focus. Thank you. .
We now open the floor for Q&A.
[Operator Instructions] The first question is from the line of Chetan from Systematics.
Congratulations to the team on the good set of numbers. My question is on DEI, like where all our businesses are showing steady growth. DEI has seen a high single-digit decline in the first half of the year. So what kind of growth and margins can we expect for the full year and for FY '26?
First of all, I think before I hand over to Ram, let me also just remind everybody on the call that it is not against our policy to make forward-looking statements. So we can talk about the performance of this quarter for which we [indiscernible]. And we can talk in general without any numbers about how the business is shaping up in the current quarter. But if you want definite guidance in terms of numbers for the rest of the year or even the year after, we would be constrained about that.
Qualitative guidance would do that?
Yes. So to answer you, as I said the last quarter, in terms of the last 2 quarters are not our best quarters. Our best quarters are the quarter -- the next quarter, that is October to December and January to March. From that perspective, fundamentally, our business is looking robust and strong from an operational perspective. We did close U.S. and that was sizable reason. The reason we closed it was not profitable. We took that call to make sure that we focus towards only profitable businesses. So on that aspect, I think we are starting pretty comfortable.
As I said, one of the biggest reasons was the geopolitical scenario, 50% of our business is focused between Middle East and Maldives. And that, I guess I don't have any foresight on how quick it will get certified. The current trend looks that it's getting better. And hopefully, we should not have in [indiscernible]. As far as future goes, -- we are, as always, been focusing on growing our business. We've been signing new businesses all the way through for the last couple of years, and that will continue.
Okay. And one more question. What is the cash for the business, excluding the restricted gas for ForEx as on the end of the quarter?
Okay. So we have about INR 1,800 crores of cash on our balance sheet on each or close to over INR 500 crores on account of the float. So the balance can be considered to be unrestricted. And by the way, I would also like to mention the B2C cash is not really restricted in terms [indiscernible] in terms of long-term usage. We cannot use that money for long term, but it is perfect using the rules to use that money for short-term purpose for managing working capital.
The next question is from the line of Dhaval Shah from Girik Capital.
Sir, excellent set of numbers across various segments. I have a couple of questions. Sir, first question, bookkeeping one. So what is the India outbound number for the quarter, which was[indiscernible] last quarter.
Dhaval, this is Mahesh. Thank you so much for the complement on this performance with that number that you're referring to is INR 385 crores.
[ 385 ]. This is including both long and short, right?
Excluding domestic.
Yes, exclude domestic. This is outboard India, including long haul and short haul?
Including long and short, yes.
And sir, my second question is on this RBI -- RBI some paper which was floated, I forget the name, which we should have basically led to consolidation in the ForEx market. So any new development happening on that you would like to highlight? .
Dhaval, we haven't heard on that. We understand that there have been conversations, and if I to just look at as an indicator for that in the recent past over the last 2 quarters, RBI has been canceling a lot of [indiscernible] licenses. And there will be multiple reasons for it. I'm not saying this is directed towards that policy only. But I think a lot of cancellations that I've seen indicates that RBI is taking to move in that direction.
But I am conjecturing at this point time, I don't have data to do that. But on the specific policy that we're referring to, which is around consolidation and time to [indiscernible] a few set amenities, there has been no fresh update either from RBI or no discussion paper. Obviously, there was a discussion paper that was rolled out. And as industry particulars, we have participated and given our view also on that.
Got it. Got it. And sir, my third question is on the -- again, on the outbound travel. So broadly, when we talk about upgradation of the consumer, more premiumization. So in our business, outward business, how do we see a customer upgrading. So 1 is taking his first foreign holiday or it could be taking 1 more holiday. And within that foreign holidays, do you see a trend where they're upgrading from your different categories of packages, an upgradation within that. Anything just to understand the trend of how the spending is changing over the last 3-year period?
So last year may not be a good comparison at this point in time, clearly because we've seen only recovery coming from '23, and we are in '24. So I really don't have a '22 data to comment on Dhaval. Just to give you a sense on how the market behaves. Typically, we can acquire customers at first time holidays goes going overseas or they could be domestic travelers. You will appreciate that Thomas Cook was not a dominant domestic travel player prior to 2012, 2014. It's only in 2013, '14 that we started to do some noise around this business, and we built it to scale at this point in time.
And you know India is a very dispersed large market. So we are not relevant at every place. We are looking at certain markets, certain states, and then we are very focused on those. And that's where we want to continue to build because otherwise, we'll be very irrelevant and a small market share in many of those parts where people travel to. So we've chosen our space where we want to be, and we have wanted to stay relevant to that market. That's point one.
Point number two, from a customer life cycle or a customer journey point of view, typically, it could be acquired as a domestic customer who then probably will take a short haul trip with us and then migrate to become a long-haul travelers. Even if it comes to us as a long-run journey, we may probably start with the group to around Europe, and then probably go to U.S. and Australia again on group tour. And in most cases, what we see is that people who actually have gone on a group trio Europe then come become ayou're[indiscernible] customer, and we want to do a little more deeper to understand the culture, experience, the culture of food and others in those specific countries. So that's the journey typically customer follows.
Prior to the pandemic, we used to have about 2.5x. I mean that's the kind of repeat ratio that we had for our customer. We have not been benchmarking that today. Obviously, we have to have 2 good seasons behind us to kind of start tracking that again, but probably somewhere in 2026, we should be able to start projecting those numbers again.
Interesting. And lastly, sir, this [indiscernible] Kings has been acquired by a peer, and so any comments you would like to give with regards to what you expect in terms of competition and they've acquired a couple of Indian brands also the package -- holiday package brands. So any thoughts on that? Because -- so while we at last [indiscernible], when we were discussing about the players in Indian market, [indiscernible] Kings was out. And now that old brand is coming back to the market. Maybe it will take some time. But any thoughts on it?
Dhaval, it's just an announcement of that having acquired the brand. I think it's too early to make any pronunciations about how successful the brand will be at this stage. So I think we'll refrain from commenting on it. Let's wait and see. I mean this market is big enough for another start-up. And I'm using the word specifically start-up because the old -- the brand owners of the old brand are not the owners of the new brand. This is a completely different environment. So we have to see all the start-up contracts.
Interesting. And any inflationary pressure do you see on your cost going forward?
Not really actually, if you see, as I mentioned, if you look at our EBITDA and EBIT margins, we've been holding steady on our gross margins or rather improved in some cases, like on ForEx. We've improved by about 10 basis points. We look at the holiday on the B2C side of it, we improved by about 50 basis points. So we are seeing some expansion on margin inflation pressure at this point in time. And I think we've been fairly good in terms of managing our cost also and discretionary costs where it has to be. I think we've been very cautious about how we spend our money. And as I said, our focus has been on the digital adoption. We've been spending money on the technology side of it improving productivity.
So we're trying to find a balance that so that the inflationary pressure, it will come. It will come to bite at some point in time, but I think we are managing it even better. I mean just to give you a case in point, if I look at the H1 numbers or rather the cost numbers, they still trend 15% below what we were in FY '20. So yes, I think to that extent, we're managing it fairly.
I'll also add that some of the input costs in our industry have been high for some time, especially airfares and hotel rates. So these are stabilized. So any inflationary pressure in terms of the costs other than maybe salaries in reality may not be significant. .
Sir, this end for domestic hotel and air fare or overseas also.
Internationally as well as domestically, airfare fairly stable. If you look at the last couple of quarters, air fares have been stable. Hotel rates, while they are going up in certain markets, in reality, they are most seasonal. Otherwise, they have been stable. So I think their contribution to inflationary pressures will be limited. I'm not saying that disappear completely, but it will be limited to say the least.
Understood. So in that context, generally, if you compare some domestic destinations, the airfare plus the hotel is expensive than going to Southeast Asia or going to Dubai or somewhere in nearby on a short-haul outbound. So are you seeing a trend more and more trend. We have been discussing this since a couple of quarters on the call, but you see that trend continuing and increasing where customers making a comparison and then taking a outbound package?
So people do that comparison. They will compare domestic versus a short haul to that extent. But please remember that when you look at the domestic -- the price points that you see high either whether it's on the hotel or it's on the airfare. These are more like the weekend holiday long break kind of period. There are the shoulder months or the shoulder weeks or shoulder days, where you actually don't find that kind of a price. I mean the data point that Madhavan was also referring to is that we look at our corporate travel, and that's a good barometer that we use. If you look at the average ticket price on the domestic side, they have remained flat compared to '23 to '24.
On the international side, actually, we've seen close to about a 1 percentage dip. [indiscernible] average fares. There will be the separation that you will see on a certain destination on certain segments. But overall, I think they have remained flat.
Okay. Okay. Great. Great. And sir, on mice, how many -- in terms of the corporate holidays, what we do for corporates. That would -- how many new customers you would have added in last 1 year? Any data points you can share?
Not [indiscernible], but I guess if I could just do a quick [indiscernible], I guess, we would have added about 20, 25, 30 customers to our portfolio, on an average 2 customers a month. I think that's the kind of [indiscernible].
The next question is from the line of Nirav Savai from Abacus.
Congratulations for a good set of numbers. So my question is pertaining to this other income part. Is it mainly related to the ForEx float which we have or any breakup that you can provide?
Lastly -- Hi, this is Debasis here. Lastly, the increase in other income, which has gone up from INR 27 crores to INR 43 crores is contributed by the additional interest on the bank deposits, INR 8 crores out of the INR 16 crores comes from there. And there is some exchange gain on foreign currency transactions, which contributed to the balance. There are some pluses and minuses here and there, I am not getting into the small numbers, but these are the 2 primary.
So generally, on every quarter basis, we see some fluctuations happening because you put it ForEx part separately and then there is other income apart from the ForEx part. So how do we see this going forward at least for FY '24, excluding the ForEx part, any number if you can help us out with?
I can't give you a number, but as principal again, it's very easy to say that the interest in bank deposit will continue and actually will rise with the volumes because the company has a lot of cash, which is trying to deploy in safe deposits with banks and other places. And therefore, the returns on that will continue to -- continue to increase the other income. Of course, things like exchange gain is something that we can't predict that would obviously fluctuate quarter-on-quarter, but the bank interest and deposits will continue.
The second one was on the tax rate side. In the last call, you had alluded that you will continue with the previous regime for FY '25. And how long would this continue even for FY '26 would be having a higher tax rate? Or how do we see that?
So you need to consider the fact that Thomas Group is not 1 company. We are talking about multiple companies to the group. In -- for example, there are 4 companies, 3 India, 4 large companies in India, or rather [indiscernible] All of them have shift [indiscernible] shifted to a 25% tax regime. However, Thomas Cook is in the old tax regime because of business, which I have spoken and you are also aware of it because of [indiscernible], et cetera. And it will take a couple of years to sort of utilize that and move out of it. Thomas Group continues on a stand-alone basis, continues to be the most profitable and [indiscernible] profitable. And therefore, the tax rate that Thomas Cook pay made a significant role in determining the overall effective tax rate.
And of course, the overseas entities have taxes [indiscernible] that also has a role to play in the overall ETR.
So I understand the overseas would be relatively much lesser than 34% we are paying here, right?
May not be, actually. I mean we always think that taxes overseas are lower. It may be lower in places like U.S., for example, when the last president brought it down, but there could be higher in certain other distinations.
Okay. So overall, at consolidated level...
[indiscernible] thing that I started to put this and let me also with this I think 1 thing that you need to keep in mind is, what is the contribution of Thomas Cook as a standalone entity to the overall PBT. If I take the current half year, it's easier to do it on a half year basis. If you look at the entire half year, the total PBT is about INR 219 crores, out of which about INR 125 crores has come from for Thomas Cook. You can see that reflected in our stand-alone and the consolidated results. So Thomas effectively is more than 50% of the total and Thomas Cook's tax rate is about effectively on about 35%. So therefore, that has been bearing on the overall tax rate. And -- is that -- does it make sense? Or should I?
[indiscernible] subsidiary performance in international companies would have also become profitable now, which were not there particularly last year.
There is also a seasonality matter, like, for example, [indiscernible] some in a given quarter, some [indiscernible] but other innings may not be. [indiscernible] Like, for example, let's talk about PCI, right? In PCI will not be profitable in the first 6 months of the year because the season starts from October. Likewise, there are advantages in the Middle East. It will be profitable only in the last month [indiscernible]. So there are always a fluctuation age. So what would finally matter is actually the overall tax rate for the year rather than going quarter-by-quarter. But for guidance, you can consider to be in the range of 30%, 32%, 33% because Thomas Cook will continue to have the highest rate.
Right. So about 32% is something which you feel at [indiscernible] level on annual basis, it should be?
Yes, there could be -- I mean there could be a percentage here and there fluctuations, but by and large, that's the guidance.
Right it. And lastly, what would be the total value of land which we are holding now?
Vikram, would you like to answer that question? What's the total value of land held by Sterling?
It's close to INR 500 crores.
Okay. And Sterling would not be using it? Does the satellite model is something which will continue going forward?
Yes, we are using an asset right product right now. When we get into greenfields, we will evaluate at the right time when to get into greenfields. I think the opportunity is there right now to ramp the portfolio using an asset-light model because that's a faster way of ramping, number one. Number two, even in our existing results, our own results, we have potential to sweat the asset.
For example, in our [indiscernible] Valley, we have 108 rooms, but we've actually built the entire back end for 150 rooms. So just incremental CapEx that's required to expand even in some of these current assets. So those are the priorities right now. As and when we get into a greenfield possibility of feasibility, we will certainly look into that. But right now, the focus is on the [indiscernible].
The next question is from the line of Deepak Lalwani from [ Unifi ] Capital.
My first question is on the B2C travel. We've recovered about 60% versus a pre-COVID level in the first half. So can you provide an outlook on this number going forward?
Deepak, Mahesh here, I think we've been talking about it in the last 2 calls again, and I will repeat this. Look, the patterns of travel have changed. Our guidance remains to the fact that we expect this to recover close to 85% to 90% for the full year. We are not changing that guidance at this point in time unless something changes in the external environment. The mix of the business definitely will change. It was driven by long haul in the pre-pandemic, it's driven more by short haul and domestic now. I think we remain committed to a [indiscernible] at this point in time.
Understood. And sir, you were earlier indicating a higher number. So the 90% recovery, how should we read this number? Is there a challenge on our market share and relevance of our product?
It's got nothing to do with market share. I think in must realize that we have to sell what the customer buys. If there is no demand for the long haul [indiscernible] challenges around Visa and others, we will not be trying to push that market because we'll be spending marketing dollars, trying to create the demand for which doesn't exist in the marketplace. So clearly, we have to go out of the products that customers buy. I mean, today, if you look at the social media, people are talking about is patients like [indiscernible], Vietnam. And I think that's the flavor of the season. So I'd rather put my money where the mouth is rather than try and lose the money on destinations that are currently not seeing traction. That is point #1.
Point #2, I think Madhavan spoke when he was talking about the B2C business because it also includes Hong Kong. Now in terms of recovery in Hong Kong because it's dependent on the China traffic, we expect the recovery in Hong Kong only to be at about 50% for the full year or maybe 55%, 60%. So there is some shortfall that's coming out from there. But I think from an India business point of view, we'll actually see the recovery to be closer to the 30% 90% that we've been consistently maintaining that.
Understood. And sir, your growth in DMS business is actually [indiscernible]. So what is this -- what is backing this growth? What is the company doing the initiative, if you can explain that would be helpful. And what -- and should this growth rate sort of continue based on initiatives that you've taken?
So I will take that question, Debasis here. We have executed a turnaround strategy for the DMS business. And we started this process soon after we acquired the DMS. But obviously, our efforts were delayed because of COVID, but how post-COVID we have been able to execute the settings that we had in mind, which consists of several things, actually, very, very briefly, if I talk about the key initiatives because around rationalization of cost, which was about automating resonation costs, automating the entire business and also finding new customers from new source markets.
So -- this has been executed over a period of time, and we are now seeing the benefits of that. So this is not something that -- it's not a flash [indiscernible] sustainable thing. It's an initiative that will sustain over a period of time. And therefore, we do not see [indiscernible] wider growth rate would [indiscernible]. Of course, there are geopolitical disturbance and like what we have seen in the Middle East, those sort of disturbances will happen. And honestly, we cannot do much about that. But at an overall level, I think the growth will continue. This is what Madhavan also alluded to in his opening remarks. This actually shows the benefit of having a diversified portfolio. Geography can be diversified portfolio to be precise. So even part of the -- one region is affected by circumstances [indiscernible] control, the other should continue to flourish.
Sure. And thirdly, sir, my question is on the Sterling business. We've done well on the cost side, sequentially, our costs are down despite opening new resorts. So how should 1 view the cost line item and the EBITDA margins for this segment?
Vikram, you may like to answer that question?
I'm so sorry, can you just repeat the question again, please?
Yes, sir. So our costs in the Sterling business are down sequentially despite opening new resorts. So how should 1 view the cost line item and EBITDA for this segment?
Okay. See, it's -- we opened 5 hotels this quarter. But a lot of the invested in those higher hotels actually were executed in quarter 1, I would say, in the months of May and June. -- because a lot of these hotels would open July, August in September. So a lot of large -- a large portion of these costs are actually consumed in quarter 1, which gets reflected in quarter 1. So when we hope in the results, we don't incur that expense of 3 opening [indiscernible] that day when we open it. We actually incurred [indiscernible]. So therefore, when we opened 5 this quarter, we actually did see that impact in May and June.
And as you're aware, in quarter 1, April was a very bad month for various reasons. So therefore, most of the investments have actually happened in May and June in terms of preopening. So similarly, this quarter, we are looking at opening 2 or 3 hotels, of which we've already taken the cost. In quarter 4, we are looking at possibly 5% or 6% to [indiscernible]. So which means that at least 30, 60 days out a typical preopening cost starts kicking in until you open the resort and then you are able to equalize that result. So does that answer your question?
It does. And sir, what should 1 look at the EBITDAs for the segment? Because on the last year basis, in Q1, you were down. So for the full year, what should 1 look at?
Yes. Again, I'll not give a particular guidance number, but let me tell you that while the headwinds [indiscernible] we were still value had be down even over the last year. We still maintain a healthy EBITDA of 23%. Despite this [indiscernible] we are about 30%, 32%. And most of the hospitality industry that anything between [indiscernible] is a very, very healthy EBITDA.
So even going forward, depending on seasonality, if you look at it from a hospitality, it will be in the range of how the hospitality play is at this point in time. Obviously, we will try to have a premium over the end. If you have to see Q3 and Q4, there are much better quarters in what compared as Q2. Q2 is always a dangerous quarter for leisure. And weather could have also play [indiscernible]. This year, thankfully only apply in 1 small region. It did not happen in most of [indiscernible]. So that's how it's adding [indiscernible].
But, we will just we will continue to invest in leadership and industry opening that will happen because these keep adding on to the revenue line. And in most of these cases, I had mentioned when I opened most of these resorts in March and [indiscernible] Q1 and into Q2. We are in those regions like Rajasthan, where we needed to ramp, which are traditionally not the season at that time. But we had to [indiscernible]. Other which way you would risk the [indiscernible] this year. So which is why we are seeing the ramp in those hotels from October.
The next question is from the line of Mithun Aswath from Kivah Advisors.
Just wanted to get a sense on the travel-related business. You've seen improvement in margins despite this quarter revenues being lower quarter-on-quarter and not really being the season, what actually drives your margin? Because obviously, last quarter was slightly disappointing in a more seasonal quarter. But this quarter, in a non-seasonal quarter, your margins are higher. I'm just trying to understand for us to judge how margin trajectory will move -- what are the monitorable that we should follow?
Mithun, this is Mahesh here. First, I'm not sure why you read this as the last quarter not being a good quarter. I thought we had a strong set of numbers that we delivered in a traditionally strong seasonal quarter. So I think I would like to stand that corrected on that one. On the point of saying what has worked in the current quarter, I think we've spoken about it in the initial field also. And I think Debasis also spoke at length about it when we spoke about the DMS business. The are [indiscernible] trajectories that have had the margin improve in the current quarter, and I'm specifically referring to the EBIT margins, which has moved up from close to 3.9% to 4.9%. That's about 100 basis points improvement.
The drivers for it is obviously the DMS business, and I'm talking in the order of priority DMS business because some of them were either loss-making or breakeven. They have all started to make profits. So those are added to the profitability straight on. So incremental revenue has gone into incremental profit also, cost base remaining the same. Also, if you look at the B2B and B2C businesses within India, I think they have registered a strong growth. We've had 11%, 12% growth in some of the major markets. And they have also expanded their margins by about 30 to 50 basis points, all of which has added to the increase in the EBITDA and the EBIT margins. Also to mention here, we -- our focus has been on productivity improvement, technology enhancements, all of this, which helps in reducing or keeping our costs constant on a higher increase in revenue base. right. I'm just trying to understand, in the first quarter, we didn't see a stronger EBIT margin. So is it that the seasonality of the DMS businesses to actually kind of drives the quarterly differences in EBIT margin. That's what I'm just trying to understand, is this structurally an improvement, which we will see quarter over quarter now?
So Mithun, the way we've said it, and you will recollect and I will request that you look at the transcript of our previous call. We have guided the market to a 5% range on the EBIT margin for the travel business as a whole. Now you will appreciate that there is B2B, B2C in it. And there is seasonality of business system, within India and overseas DMS. So obviously, we'll find a quarterly fluctuation that has happened in this -- but overall, we will look at for the year, it should end up at closer to that 5% mark, which is what our guidance to the market is -- and clearly, as I said, again, the drivers for it is the margins previously did not start up because some of this overseas DMS were built in the profitability. And now they have started to become profitable, and they will continue to add to our profit going forward.
Albeit there will be some seasonal impact that will come in, but our guidance to the 5% range remains good.
Right. So when you say 5% range, we're almost at that -- or do you say the overall for the year, the 5% for the next 2 quarters will be better?
We are not saying that it will be better, but we are saying that we will work towards a 5% range for the overall travel segment. I think that's the guidance. So you will have a quarter where it will look like a 4.2%, 4.3% because of some markets not firing or some business, not firing. But overall, I think our endeavor is to push the margin towards a steady state of about 5%.
The next question is from the line of [indiscernible].
My question is specifically from the app business. What kind of numbers do we have from Thomas Cook app? And given these times that the people mostly go online to search for travel needs -- what is our focus on this ad basis?
So I think there are 2 parts to this, [indiscernible]. One, while I mentioned about it, I think I was giving a reference to the foreign exchange app, which we just launched, I think it's pretty young in that sense. We've seen some fairly decent traction. I'm quite pleased about how we perform. No, maybe there's a lot more for us to do. And you will appreciate that a lot of GI changes and then customer experience that comes in will enhance the usage of that, and we have had and we have to create more use cases for the customer to keep coming back on that. So that's work in progress.
On the holiday side of it, into the reference that you made, people are going online. I think we've always said we are an omnichannel operator there. We allow the customer the choice of choosing the channels that he wants to access us from. It could be a physical digital, it could be a call center or a combination of all. I think that's how we enable the customer to come. Are we focused on pushing the customer to an app? Yes, we are doing that to the extent that it's a state proposing somebody coming to a book and probably a holiday or a vacation to go up or looking only for a flight option to go up, we will try [indiscernible] to go to that so that I don't have to spend my expensive labor, pressures and expensive labor to end of service that customer all rather push to a straight processing. So yes, this app has it's own advantages and disadvantages, advantages in the sense that you could reduce your cost base lower. Disadvantage is that we for upselling opportunities reduce. So we'll have to final balance that.
It's a journey. We are also upgrading our app because we also believe that for it to become a self-serve customer -- customer-usable app, there are changes that we need to do. So as you will see, we keep adding more features to that. Currently, our focus has been on servicing customers who are booking our holiday, and that's what we focus on it over the last 6 months or so. Now we are trying to make it a sales app where we will engage a lot more with the customer, along with the service options so that he sees more compelling reasons to keep coming back on it.
So I can say that share from the application business is going to increase in future for you or the competition like MakeMyTrip or Yatra have such high app downloads and the customer accessing those apps will hamper your business in future?
The way I would look at it is that our digital businesses will continue to grow. That's our focus that's going to be. But it's a choice that the customer makes, how he wants to come across to us. We are -- while we will match the customer to go digitally and transact with us, but please understand for an experienced business that we are for a higher ATV business that we are, a lot of customers choose to work with us off-line or through a contact center, and that's how this business is. But yes, if you look at it from a trajectory point of view, our online adoption or the our online penetration on the holiday business and specific was in single digits prior to the pandemic, we are currently closed at about 15%, 16%. So we kind of improved our journey there, and we keep investing in growing that journey as we go along.
Another question of my [indiscernible]. I believe you said that you're pausing some new customer acquisitions for the results it correctly?
I'm so sorry, I didn't get your question again. Can you repeat it please.
So I just heard while on the -- on this call only that you are pausing new customer acquisition for Sterling Resorts. Have I heard it correctly? Or is [indiscernible]?
That's right, we had paused it for the long-term membership last year in July, and we are not [indiscernible] even though short-term membership, which is a tenured product.
So just wanted to know that why we have done this in the light of where we have only 50% occupancy in those resorts and there are a lot more that needs to be covered. Is there any specific reasons for that?
See, the idea is actually to move towards the hospitality segment. We understand that there is a headroom enough -- and despite the fact and imagine that headroom, we are able to actually meet actually, our growth will be far more phenomenal. We believe that the hospitality segment is [indiscernible] before. And that's how we've been able to even scale and expand and add new revenue streams and new revenue lines. We do have headroom in occupancies. To that extent, the upsides are there.
Also number 2 is this being the leanest quarter of -- in those 9 states, we just had 3 days which are holiday [indiscernible] dates, which are typically the independence period. How leisure business work, [indiscernible] 90 to 95 days are the days where you access revenues per occupancy as well as [indiscernible]. And in the remaining [indiscernible] are actually filling up volume using other segments like MICE spreading and various other demand generators to induce people to travel even during a off peak days. That's why you're attracting different markets [indiscernible]. So to that extent, the headwind is there. But we believe that the future growth in Sterling will be when we are in the hospitality segment.
And in fact, as we say that, we've been recognized very much as part of our hospitality and more and more today. In fact, we are even in the top 10 in the country as far as the number of hotels and locations are concerned. And we will continue to keep growing that group.
So are you saying that we will be -- in spite of holding down new customer acquisitions, will still be moderating or moving into the resorts on like the hotel business kind of thing?
That's the idea. And the member acquisitions have stopped we are servicing the existing members that we have. And in fact, if you see that is also an advantage for us because fulfillment has happened even during weekdays, which is traditionally a low demand period. So I think we are well poised to -- that's how we've been able to transform and scale as well. If you've tracked us in the last 2.5 to 3 years. And we believe that this is the route that will make us succeed.
Just want to have 1 remark that kind of a suggestion that -- we have -- I've asked a question on application. And my point with the application is that because we have a very low kind of star ratings on applications. [indiscernible] certainly, I'm not say bad but certainly not so good reviews. And if you can monitor that, we can get away with that. That would be a nice thing. As I've heard with my own friends that using Thomas Cook, they first go to the application reviews and then [indiscernible].
[indiscernible], thank you so much for that suggestion. We will take that onboard. And I'd just like to reiterate here. Look, our app journey is not fully developed. And one of my colleagues here in the room just reminded me that our website that we use is very mobile friendly. So our journey has been more on the website at this point in time and app is work in progress. So we are not fully there, but the suggestion and recommendation from your friend is well noted, we'll look at that. Thank you so much.
The next question is on the line of Akshath [indiscernible] Ventures.
So I have just 2 questions. One is on the financial service margin guidance. So we have been guiding the market for 45% and we have done around 50% [indiscernible]. So would you like to reiterate the guidance? Or are we seeing any -- are we expecting any debt in the H2?
And my second question is about keeping question. So in your segment results, there is a line item below EBIT, [indiscernible]. So can you before just understanding, can you tell us what are the expenses that are included in this?
Akshath, I'll take the first part of it and I will leave it to my CFO to come on the second part of it. This is Mahesh. To your question, yes, we've done well in the last 2 quarters in terms of our average margins, and I think it's stacking up really well. But our guidance to the market remains at about 45%. It doesn't mean that we're going to lose or going to give away the margins that we get on the business. But I think it's more important that we give a steady state kind of thing rather than talk about one-offs and onetime because you will come the next time around and say that your EBIT margins have dropped.
So I don't want to be saying and I'm talking from the lens of saying what the business is now it operates. Obviously, there are opportunities for us. There are these onetime things that come our way and we take the benefit of that. Clearly, you will see a shift that may happen over a period in time when our portfolio on the prepaid card keeps growing because that's what the dependency on cash will go down. And when you look at the prepaid, you will not only make exchange margins, but you also make money on the float, which all adds up to the overall margins in this business. That's the way it stacks up, but I think it's a journey.
We continue to be guiding the market to the 45%. But obviously, we're not going to leave away any opportunity that comes our way to grab that additional [indiscernible].
On the second part of the question, which is on common expenditures, these are expenditures incurred, which is not allocated to any of the businesses or the 4 segments, [indiscernible] level. Those are the expenses [indiscernible] I really don't see too much of movement on those expenses. So you can consider whatever is the current level of expenses that will continue for guidance.
Next question is from the line of Meet Shah from [indiscernible].
Thank you for the opportunity and congratulations on a great set of numbers. My question is on B2C side of the business. While we have -- we have given the new guidance of around 80% of the recovery of FY '20 numbers despite lowering our guidance, we still need to grow 70% in the second half of this year. And generally, the second half is kind of slow compared to the first half. So do you really see that we would be able to meet this number?
So Meet, as I said, look, you have to also the overall [indiscernible] how it's shaping up. The deficit that we have seen is coming [indiscernible] and not necessarily are on the short haul. Short and domestic is actually firing. So for us, when we look at holiday, we are [indiscernible] our customers. We are experienced creators for customers. So we look at it as an overall portfolio. Well, obviously, it's important to look at as to how different parts within that portfolio also play out. But if the customer [indiscernible] are changing, we want to be staying relevant to that reference of that customer. That's point number one.
Point number two, -- as I mentioned, we have not seen a smart recovery as well as 1 of our B2C business, which is overseas in Hong Kong, I think that recovery subpart. And we don't expect that to change dramatically over the next 6 months or so. So I think that's also a bit of a drag on the overall numbers. But from a growth perspective, and if I have to just look at some of those forward-looking trends that I'm seeing, I feel very confident to the guidance that we have given in terms of the full year.
Okay. So got it. And my next question is on the MICE side of the business. While we are seeing the slowdown in the economy, there is a slowdown in pains and FMCG sector. What kind of growth outlook you would like to give for the second half for the MICE business?
So again, Meet, the good part of the MICE is that we started to get a feel of the book or the order book a little ahead because most of these events are planned well in advance. So looking into that, I think we have a decent good order book. But yes, I agree. And there is a bit of a slowdown that's happening in that space. Profits are looking up very strongly. But I think you must also understand a lot of these businesses that happen on MICE, it's dependent on the distribution or distribution network that they have. And when the competition intensifies they have to do that much more to keep the distribution agile and active. So I think there wouldn't be too much of sharp tax that may happen in that. And when new competition or new competitors come into the market, you have to do that much more to keep -- it's like running faster on the same treadmill to stay where you are. So I think that's the kind of syndrome that you will continue to see.
So I wouldn't worry too much about it. We've said the business has the ability to grow at about 12%, 15% on the top line. And I think that will hold good for the current year, unless something dramatically changes in the economic environment.
Okay, sure. And what about the government business because in H1, we have seen the slowdown on the accounts of election? And what kind of demand are we seeing in H2 from government portfolio?
So we are in conversations. There are multiple bids that are at this point in time happening, not that [indiscernible] has put up a lot of bids out there, specifically in the sports category, which is what we did last year. There are some inquiries. There are some that has happened. In fact, I'm happy to report that in the month of October, we did 1 such event, not [indiscernible] government, as semigovernmental. But yes, there are some events that are happening, and we've started to participate in it, but very early to kind of predict what the next 6 months will be because some of these take a longer gestation to happen. And we will appreciate it's a bidding process. So we'll have to be very intensive -- and we also need to plan for how the money cycle works because some of those government bids money doesn't come in so very easily. And since we have some learning curve coming out of the previous experience, we want to be very careful about how we plan for this.
Okay, sure. And my last question is on the Sterling Resorts. While we have seen a healthy growth in the numbers the average room rate is a multi-quarter low. Is it only on the account of inventory? Or is there any other reason? And any guidance or any aspirational number, which management would like to do an ARR and occupancy?
Okay. So let me answer on the [indiscernible] the quarter 2 is the leanest quarter for leisure business. And we actually practically had only 3 or 4 long holidays out of the 90 days. But despite that, I think INR 5,400, INR 5,500 is still a very respectable number to maintain and hold. We operate in 3 different segments of hotels. One is the upper with scale, the upscale and the upper upscale. So it depends on the seasonality, average rates also tend to start changing.
Like take for example, in Q3 the average rates are bound to go up over Q2 because of the number of holidays that we have and the number of weddings also that we have. So it's a lot in the seasonality factor that comes into play. So quarter 3 will have a stronger average rate realization compared to quarter 2.
As far as the occupancies are concerned, -- the occupancies, as I said, this -- we've ramped up 5 hotels, which is almost 250 rooms over a staggered period of 90 days. And order base of 3,000 that we have currently, that itself is forms actually [indiscernible]. So to that extent, the occupancy is actually slightly understated because technically, if I have to remove this 250 rooms, I would have done [indiscernible] that would have been an occupancy percent. But in terms of number of rooms that we sold, as I mentioned, number of room nights that we sold is [indiscernible]. So the demand has gone up. The number of room nights sold has gone up. But just because there is a base increase in the 90-day period of opening, that's why it got impacted by 8%.
I was just comparing average room rate on a Y-on-Y basis, I think that is comparable if not 1Q.
Yes. Technically, if you see Y-o-Y, [indiscernible] first half it takes into account both the peak season and the leanness season, except for the fact that early this year, April, where we had severe headwinds because of the election. But typically, you see even in the month of May, I'll just give you an example. We did an average [indiscernible] in the month of September, it was INR 5166 and then it averages out to what it is. So it all [indiscernible] the seasonality of the business on the month, the average rates tend to fluctuate. This is because we have a dynamic rate system of management, number one.
The fungibility of the rate can go from a INR 5,000 level even up to INR 8,000, INR 9,000 level, depending on the demand and depending on the kind of season it is in. So to that extent, the fungibility issues, and that's the advantage that we have. We have also a high rate fungibility the mix of results will keep changing as we keep ramping up. As I said, that we ramped up the results in Rajasthan in the first half. Now they will start producing far better ARR even in winter because that's why the Rajasthan hotels work, as they don't work in summer. So -- but in summer, we are actually trying to gather volume as much as possible to cover our fixed cost and to gain an incremental amount so that we are able to get the EBITDA that we want.
So you have to look at it in totality from both what and occupancy and an average rate can both be combined produce. And that's what the entire effect is in terms of revenue.
Okay, sir. So sir, if I were to look at the year's perspective, what kind of expiration numbers which we would like to have on both ARR and sort out?
See, as we all mentioned, I think the guidance on the aspiration number is something that we will avoid mentioning. But let me tell you that -- as I said that the current quarter is a [indiscernible] quarter. Most of our results have ramped. The idea is to actually sweat the assets so that we are able to grow the revenue line. It's a combination of volume and rate. we play very actively depending on demand supply, depending on what happens, [indiscernible] speaking about high airline rates, then we still the market into gold drive to destinations, et cetera. We do this thing every day. So as to actually get tactically the highest deals.
I think that concludes the session. Thank you so much.
Thank you so much. As there are no further questions from participants, I now hand the conference over to the management for closing comments.
I only have -- I think we've said enough about various aspects, and I think the questions were very interesting and enriching in terms of the information out. I just want to mention 1 thing that based on some suggestions we received from you and queries, we have expanded the way we presented some of the numbers in our presentation. So I'd request you to sort of go through several of the additional slides that we have included we believe that those will be of help to you. And we are, as always, open to suggestions of additional things that you want. Thank you. Thank you very much.
Thank you so much. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.