Backed by rising disposable incomes, improving infrastructure and government initiatives to boost tourism, the Indian travel industry is set to witness robust growth in financial year (FY) 2024-25, as the outbound tourism numbers are projected to exceed 30 million in 2024 compared with 27.3 million in 2023, according to a report by Crisil Ratings. India’s tour and travel operators are also set to register a 15 to 17 per cent revenue increase this fiscal year.
According to Crisil, the growth in revenue of India’s tour and travel operators will be on a high base of last fiscal. The revenue jumped around 40 per cent year-on-year (YoY) in FY 2023-24 to about Rs 14,500 crore, surpassing the pre-pandemic peak by 20 per cent. The credit profiles of travel operators are likely to remain healthy, due to strong balance sheets and steady operating margins of 6.5 to 7 per cent, Crisil reported.
Growing spiritual tourism, increased preference for micro-holidays or quick gateways, aided by improved infrastructure have led to the growth in the domestic tourism market. An increase in inbound travel to pre-pandemic levels and robust demand from corporates and meetings, incentives, conferences and exhibitions (MICE) segments have also played a major role in boosting domestic travel, as per Crisil.
“The trend of ‘revenge travel’ seen after the pandemic has evolved into ‘regularised travel’ in recent years with a significant shift towards shorter and frequent vacations, for both domestic and overseas trips. 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,” said Poonam Upadhyay, Director, Crisil Ratings.
As far as overseas leisure travel is concerned, the growth in that segment is supported by higher disposable incomes, visa-free facilities from 37 countries and simplified visa processes, attractive travel packages and increased focus of Indian airlines on new destinations in Southeast Asia and Central Asia.
As a result, the number of Indian nationals travelling overseas is projected to surpass 30 million mark in 2024, up from 27.3 million in 2023.
“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 to 7 per cent, in line with last fiscal, despite higher marketing spend,” said Anil More, Associate Director, Crisil Ratings.
However, revisions in visa guidelines, growth in commercial air fleets, sharp movement in airfares, changes in tax structure, and inflation are likely to impact the sector.
