Indian travel operators poised for 15-17% revenue growth

India’s tour and travel operators expect 15-17% revenue increase this fiscal year, due to rising domestic tourism and an increasing proclivity to travel abroad, Crisil Ratings said on Thursday. Improving infrastructure, rising disposable incomes, a behavioural shift in travel patterns, and the government’s increased focus on boosting domestic tourism will all contribute to the sector’s revenue growth.

India’s tour and travel operators anticipate a 15-17% revenue increase this fiscal year, driven by domestic and international travel. Improved infrastructure, higher incomes, and a government focus on tourism all helped to drive growth. According to Crisil Ratings, the sector benefited from stable operating margins and strong credit profiles.

The assessment was based on an analysis of the country’s four major travel operators, which account for roughly 60% of the sector’s revenue.

“The credit profiles of travel operators are expected to remain healthy, supported by strong balance sheets and steady operating margins of 6.5-7%, in line with the previous fiscal year, resulting in sizeable cash flows and continued low reliance on debt,” Crisil Ratings said.

Domestic tourism market growth is being driven by micro holidays’ (e.g., quick getaways or staycations over long weekends), growing spiritual tourism, and improved infrastructure (improved last-mile connectivity) that enables travel to newer destinations.

Domestic travel is also being supported by an increase in inbound travel (foreign tourist arrivals) to pre-pandemic levels, as well as strong demand from the corporate and MICE (meetings, incentives, conferences, and exhibitions) segments, according to the rating agency.

Higher disposable incomes, visa-free facilities from 37 countries, simplified visa processes, such as visa-on-arrival and e-visa facilities, and easing visa-related challenges for long-haul destinations are driving growth in overseas leisure travel.

Furthermore, attractive travel packages and Indian airlines’ increased focus on new destinations in Southeast Asia and Central Asia are encouraging international travel, with outbound travel reaching a record high this calendar year, according to the report.

Poonam Upadhyay, Director at CRISIL Ratings Ltd, observed that the trend of ‘revenge travel’ seen following the pandemic has evolved into ‘regularized travel’ in recent years, with a significant shift towards shorter and more frequent vacations for both domestic and international trips.