Domestic travel operators to see 15-17% revenue growth in FY25: CRISIL

Rising domestic tourism and increasing propensity to travel overseas will expand the revenue of India's tour and travel operators by 15-17 per cent this fiscal, CRISIL Ratings said on Thursday.

Factors like improving infrastructure, rising disposable incomes, a behavioural shift in travel patterns, and the government's increasing focus on boosting domestic tourism will further support the sector's revenue growth.

The assessment was based on an analysis of the country's four major travel operators, who account for about 60 per cent of the sector's revenue.

"The credit profiles of travel operators, too, are expected to remain healthy, supported by strong balance sheets and steady operating margins of 6.5-7 per cent, in line with last fiscal, resulting in sizeable cash flows and continuing low reliance on debt," CRISIL Ratings stated.

 

In the domestic tourism market, growth is being fuelled by 'micro holidays' (e.g., quick getaways or staycations over long weekends), growing spiritual tourism, and better infrastructure (improved last-mile connectivity) facilitating travel to newer destinations.

An increase in inbound travel (foreign tourist arrivals) to pre-pandemic levels and high demand from the corporate and MICE (meetings, incentives, conferences and exhibitions) segments are also supporting domestic travel, the rating agency said.

For overseas leisure travel, growth is being led by higher disposable incomes, visa-free facilities from 37 countries, simplified visa processes, including visa-on-arrival and e-visa facilities, among others, and easing visa-related challenges related to long-haul destinations.

In addition, attractive travel packages and increased focus of Indian airlines on new destinations in southeast Asia and central Asia are spurring international trips, driving outbound travel to a record high this calendar year, it said.

Poonam Upadhyay, Director at CRISIL Ratings Ltd, observed that 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. This will, in turn, ensure healthy double-digit revenue growth for travel operators this fiscal as well," Upadhyay stated.