Indian travel operators set for 15-17 per cent revenue increase

India's tour and travel operators are on track for a remarkable 15-17 per cent increase in revenue this fiscal year, driven by rising domestic tourism and a growing trend of international travel. This growth is noted by several key factors including improving infrastructure, higher disposable incomes, evolving travel behaviours, and increased government initiatives to promote tourism. Last fiscal year, the travel sector saw a dramatic revenue surge of approximately 40 per cent, reaching around Rs 14,500 crore, which was 20 per cent above the pre-pandemic peak.

Poonam Upadhyay, Director at CRISIL Ratings Ltd, highlighted a significant shift from "revenge travel" post-pandemic to "regularised travel," marked by shorter, more frequent vacations. “Moreover, growing middle-class aspirations, rising urbanisation, affordable packages, steadily increasing income levels, and the government’s focus on boosting Indian tourism will maintain the strong momentum in the tour and travel sector. This will, in turn, ensure healthy double-digit revenue growth for travel operators this fiscal as well”, she added.

Domestically, the surge is driven by the popularity of micro holidays, staycations, and spiritual tourism, supported by improved last-mile connectivity. The return of foreign tourists to pre-pandemic levels and high demand from corporate sectors and MICE (meetings, incentives, conferences, and exhibitions) also bolster domestic travel.

Internationally, higher disposable incomes, visa-free access to 37 countries, streamlined visa processes, and attractive travel packages are propelling outbound travel to new heights. Indian airlines' focus on new destinations in Southeast Asia and Central Asia further stimulates this growth, despite a recent hike in the tax collected at source on overseas travel packages.

Anil More, Associate Director at CRISIL Ratings Ltd, emphasised, “Strong customer retention, diverse revenue streams, various cost-optimisation measures, and investments in technology/ automation undertaken since the pandemic will keep operating profitability of travel operators healthy at 6.5-7 per cent in line with last fiscal, despite higher marketing spend. Interest coverage ratio will also continue to be strong at over 5 times, in line with last fiscal.”