Skift Take
The Indian tour and travel sector is poised for robust 12-14% growth in the current and upcoming fiscal years. The growth, despite high airfares, shows cost doesn’t matter when it comes to travelling.
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The Indian tour and travel sector anticipates 12-14% growth in the current and upcoming fiscal years, according to a report by Crisil.
The driving factors include sustained high airfares and nearly pre-Covid levels of volumes across various segments. This growth encompasses long-haul travel, where visa challenges are gradually easing.
Operational Resilience: Despite increased promotional spending, the operating profit margin is expected to exceed 6.5% in both this fiscal year and the next. This resilience is supported by operating leverage benefits and various cost optimization and automation initiatives implemented since the pandemic. Healthy cash flows and strong balance sheets are expected to bolster credit profiles.
Overseas Travel Dynamics: Growing outbound travel, especially post-pandemic, and rising demand for short getaways propel the growth of Indian tour and travel operators. The recent Tax Collected at Source (TCS) rate hike is predicted to have a limited impact, as individual trip expenditures typically fall below the INR 700,000 threshold for over 80% of tour packages.
Challenges and Considerations: While the sector is poised for growth, tour operators may face difficulties monitoring per-traveler limits during the transitional period due to a lack of sufficient tracking mechanisms for travel spending. Key monitorables include the growth in commercial air fleet, airfare fluctuations, changes in tax structures, and inflation trends.
Leisure Segment Insights: In the overseas leisure segment, short-haul destinations, primarily in