The tour and travel sector is expected to see robust revenue growth of 12-14% in the upcoming fiscal year. This positive outlook follows a remarkable 30% growth in the current fiscal year, surpassing the pre-pandemic levels in various travel segments, including long-haul journeys.
The anticipation of double-digit growth in the next fiscal year builds on the current fiscal performance. The sector is on track to achieve a substantial revenue growth of 30%, marking an impressive 18% increase compared to the pre-pandemic peak. This information was highlighted in a report by Crisil released on Monday.
The report anticipates that the elevated revenue growth will offset the rising expenses resulting from the revised tax rates on tax collected at source on overseas travel packages. This trend is on the rise due to the easing of visa-related restrictions.
The report indicates that the operating margin is anticipated to remain robust, exceeding 6.5 percent in the current and upcoming fiscal year. This resilience is projected despite increased promotional expenditures, as it is supported by the advantages of operating leverage and various cost optimization and automation measures implemented since the pandemic. The findings are derived from the performance data of four leading travel operators—Thomas Cook, MakeMytrip, Yatra, and EaseMyTrip—constituting 60% of the total revenue.
Poonam Upadhyay, a director at the agency, highlights that the expanding trend of international travel and the increasing desire for brief getaways drive the expansion of tour and travel operators. The recent hike in TCS rates is expected to restrict demand since the individual expenditure per trip typically falls below the INR 7 lakh threshold for over 80 percent of tour packages.
After prolonged deliberation, the government raised the tax collected at source on individual forex spending above INR 7 lakh to 20 percent from 5 percent starting in October.
Shounak Chakravarty, an associate director at the agency, anticipates that travel operators will boost promotional spending by 100-150 basis points to capitalize on the heightened demand across various segments. The increased scale is expected to maintain the operating margin at 6.5-7 percent for this fiscal year and the next.
