Travel on a high, but tour operators' margins down

While the trend of outbound travel "" holiday as well as business "" has increased this year, the margins for tour operators have come down.

"With costs towards staff, airline, hotels going up, our margins have been hit. In business travel, margins are almost wafer-thin now while holiday margin is down by about 20 per cent year on year," said Anil Bhandari, managing director of International Travel House, a subsidiary of ITC Ltd.

The industry, however, feels the trend will be sustainable with volumes seeing a 26 per cent year-on-year growth. While the outbound travel figure was likely to touch 6 million in the current calendar year, inbound travel would be around 3.8 million, said Subhash Goyal, president of Indian Association of Tour Operators (IATO).

"Higher disposable incomes have increased the propensity to spend more on travel. Overall, travel is ninth on the spend wishlist of an Indian household from last year's 13. Globally, it is at number 2," said Ashwini Kakkar, managing director and COO of Thomas Cook.

Further, domestic travel is turning out to be more expensive than outbound, thereby making overseas travel a better holiday option. "One can find a good five-star hotel room for $40-50 a night in Singapore, but there is nothing like that in India," said C V Prasad, vice-president of the Travel Agents' Association of India.

These days, Singapore, Malaysia, Thailand, Maldives and Sri Lanka are the top cheap destinations that people flock to, while US, UK and Europe remain the chosen ones.