MakeMyTrip (MMYT) Q3 2026: Hotel Volume Soars 20%, AI and GST Tailwinds Drive Segment Shift
MakeMyTrip’s Q3 2026 showcased a major shift toward high-growth, high-margin hotel and ancillary segments, with AI-driven personalization and government GST cuts fueling new demand from Tier 2 and budget travelers. The quarter’s results highlight MakeMyTrip’s ability to offset air market disruption and accelerate online penetration via product innovation, strategic inventory expansion, and a deepening focus on non-premium segments. Investors should watch for continued margin stability, sustained volume-led growth, and the competitive implications of AI-powered digital agents as the Indian travel market digitizes further.
Summary
- Hotel Volume Acceleration: Room night growth in non-premium hotels surged, propelled by GST rate cuts and digital expansion.
- AI-Led Customer Shift: Myra’s rapid adoption is deepening engagement, especially among new users from smaller cities.
- Margin Resilience: Strategic mix shift and disciplined cost management are supporting profitability even as marketing spend rises.
Performance Analysis
MakeMyTrip delivered robust growth in its core hotel and bus segments, offsetting air ticketing headwinds from December’s pilot duty rule disruption. The accommodation business posted 20.3% YoY volume growth, with GST cuts on sub-Rs. 7,500 rooms catalyzing demand and driving a notable mix shift toward budget and mid-tier properties. This shift, while diluting gross booking value (GBV) growth to 15.9% YoY, is not a structural weakness, but a direct outcome of lower tax-inclusive pricing. Standalone hotel room nights grew 20.6%, with the non-premium segment outpacing at 23% YoY.
Air ticketing margins grew 20.4% YoY in constant currency, driven by international travel, now 43% of segment margin, as domestic air volumes faced supply constraints. Bus ticketing and ancillaries both posted over 25% YoY margin growth, reflecting MakeMyTrip’s diversified model and cross-sell initiatives. Marketing spend spiked to 5.6% of gross bookings, reflecting both high seasonality and the pivot to higher-margin segments. Despite this, operating margin improved to 1.82% of gross bookings, and adjusted net profit grew, supported by scale and segment mix.
- Segment Mix Shift: High-margin businesses like hotels, packages, and ancillaries are driving blended margin gains.
- Bus and Ancillaries Growth: Both segments saw strong double-digit growth, aided by inventory expansion and cross-platform integration.
- Cash Position Strength: Over $800 million in cash and equivalents underpins continued investment and buyback activity.
Overall, the quarter demonstrates MakeMyTrip’s ability to capture demand across travel modes and price points, while leveraging technology and government policy tailwinds to sustain profitable growth.
Executive Commentary
"Our diversified product portfolio and market leadership continues to act as mitigating factor in case there is any macro disruption that happens in one of the segments. For instance, while domestic air was impacted in December, we were able to capture some of this demand on other means of transport like bus and cabs."
Rajesh Mago, Co-founder & Group Chief Executive Officer
"Our air ticketing adjusted margin stood at $107.9 million, registering an year-on-year growth of 20.4% in constant currency. This robust performance was driven by strong growth in international air ticketing business, which now accounts for about 43% of the adjusted margin within the air ticketing segment."
Mohit Kabra, Group Chief Operating Officer
Strategic Positioning
1. AI-Driven Personalization and Digital Agent Expansion
MakeMyTrip’s Myra, its AI-powered virtual agent, is rapidly scaling, now handling over 50,000 daily conversations with a 72% “good conversation” rate. The tool is driving engagement in early trip planning, with 15% of conversations in this phase and 45% of users from Tier 2 cities or smaller, leveraging vernacular voice. AI is also automating half of post-sales queries, boosting service scalability and efficiency, while supporting hotel partners via GenAI-powered analytics.
2. Segment Diversification and Cross-Sell
MakeMyTrip’s one-stop-shop strategy, now including tours and activities, is deepening wallet share and customer stickiness. The company is integrating inventory across rail, bus, and cabs, and expanding international outbound with features like end-to-end visa guidance. Cross-platform partnerships, such as with Grab in Southeast Asia, are extending reach and convenience.
3. Policy Tailwinds and Market Penetration
The GST rate cut on hotel rooms under Rs. 7,500 has unlocked substantial demand in the budget and mid-tier segments, with both customers and hoteliers shifting toward this price band. MakeMyTrip’s inventory now covers over 2,050 Indian cities, and nearly 100 new cities sold hotel properties for the first time in the last year, highlighting deepening online penetration and first-mover advantage in underpenetrated markets.
4. Margin Management and Capital Allocation
Despite elevated marketing spend, MakeMyTrip’s disciplined approach is maintaining high-teens segment margins and improving operating margin as a percentage of gross bookings. The company continues to invest in AI and organic initiatives, while executing its largest-ever buyback, repurchasing $46.1 million of shares and convertible notes in Q3.
5. Competitive Moats in Domestic Hotels
MakeMyTrip’s dominance in domestic hotels is increasingly clear, with limited OTA competition and a long runway as online penetration remains in early stages. The company’s breadth of budget and mid-tier inventory, tailored AI features, and direct traffic strategy reinforce its moat as global players focus on international and premium segments.
Key Considerations
Q3 2026 reflects a pivotal mix shift and operational resilience as MakeMyTrip capitalizes on digital adoption and government policy changes while navigating sector-specific disruptions.
Key Considerations:
- AI and Digital Agent Adoption: Myra’s traction is driving new user engagement and early-stage trip planning, especially in smaller cities.
- GST-Induced Segment Shift: The GST cut is accelerating demand and share shift toward sub-Rs. 7,500 hotel rooms, with hoteliers adjusting pricing to capture volume.
- International Travel Growth: Outbound demand and new features like visa guidance are deepening MakeMyTrip’s international air and hotel business, now over 43% of air margin.
- Bus and Ancillary Upside: Inventory expansion and cross-sell strategies are sustaining high growth in bus and ancillary segments, diversifying revenue streams.
- Margin and Cost Discipline: Despite higher marketing as a percentage of gross bookings, stable segment margins and capital allocation discipline are supporting profitability.
Risks
Domestic air supply disruptions, such as those triggered by new pilot duty rules, remain a near-term risk, potentially capping growth in higher-frequency travel segments. Competitive threats from global digital agents, including Google and ChatGPT, could alter trip planning dynamics, though MakeMyTrip’s direct traffic and proprietary data provide insulation. Currency fluctuations and ongoing GST impact will continue to affect reported growth optics for the next year. Management’s outlook assumes no major macro shocks or regulatory changes beyond those already absorbed.
Forward Outlook
For Q4, MakeMyTrip expects:
- Hotel and bus volume growth to remain strong, with GST-driven mix shift persisting
- Domestic air recovery to be gradual, with supply normalization anticipated into next fiscal year
For full-year 2026, management expects:
- GST-related optical impact on gross bookings and revenue to persist for the next four quarters
- Continued investment in AI, digital expansion, and selective buybacks
Management highlighted that volume-led growth and segment mix will remain the primary drivers, while operating leverage will be limited until accommodation exceeds 50% of business mix. Operating margin improvements will be incremental, with a focus on scaling high-margin segments and maintaining cost discipline.
- GST rate cut to support sustained demand in budget and mid-tier hotels
- AI and digital agent innovation to deepen engagement and online penetration
Takeaways
MakeMyTrip’s Q3 2026 results highlight its strategic agility, with a clear pivot toward high-growth, high-margin segments and digital-first engagement. The company’s ability to absorb air market shocks, scale AI-powered personalization, and leverage government policy changes underscores its competitive positioning in India’s rapidly digitizing travel sector.
- Volume-Led Growth: Hotel and bus segments are driving the business, with GST and AI fueling both demand and engagement, especially outside metro areas.
- Margin Stability: Strategic mix shift and cost discipline are supporting profitability, even as marketing investment rises to capture new growth.
- AI and Digital Moat: Proprietary data and AI-enabled features are deepening MakeMyTrip’s competitive moat, especially as global digital agents eye the Indian market.
Conclusion
MakeMyTrip’s Q3 2026 marks a decisive shift toward volume-driven, high-margin segments, with AI and GST policy providing strong tailwinds. The company’s diversified model and digital-first execution position it well to sustain growth and defend profitability as India’s travel market continues its online transition.
Industry Read-Through
MakeMyTrip’s results signal accelerating digitization in Indian travel, with government policy and AI adoption unlocking new demand and shifting value toward budget and mid-tier segments. Other OTAs and travel platforms should anticipate intensified competition in non-premium hotels and ancillary services, as well as rising customer expectations for AI-powered personalization and vernacular support. The success of Myra highlights the potential for digital agents to drive early-stage engagement and conversion, a trend likely to reshape travel planning and fulfillment across emerging markets. Global players eyeing India will need to contend with MakeMyTrip’s entrenched inventory, local data advantage, and direct traffic strength.