Travel operators FY25 revenue seen jumping 12-14% on top of 30% this fiscal: Crisil

Mumbai: Higher airfares and volume which reached the pre-pandemic levels across segments, including long-haul travels, will help the tour and travel sector report healthy revenue growth of 12-14 per cent next fiscal on the back of a record 30 per cent growth this fiscal, says a report.

The double-digit growth seen for the next fiscal comes on the heels of a record high growth in the current fiscal, wherein the sector is poised for a revenue growth of 30 per cent, which is about 18 per cent above the pre-pandemic peak, Crisil said in a report Monday.

The report also expects higher revenue growth to cushion the increased outgoes by way of the revised tax rates on tax collected at source on overseas travel packages which is in an upswing as the visa-related curbs are easing.

Operating margin, too, is expected to be healthy at above 6.5 per cent this fiscal and the next, despite the higher promotional spends, backed by operating leverage benefits and various cost optimisation/automation initiatives since the pandemic, says the report which is based on the numbers of four major travel operators (Thomas Cook, Makemyyrip, Yatra and Easemytrip) accounting for 60 per cent of the revenue.

According to Poonam Upadhyay, a director with the agency, growing overseas travel and the rising demand for short getaways are propelling the growth of tour and travel operators. The TCS rate hike may have a limited impact on demand as expenditure per individual per trip is usually much less than the Rs 7 lakh threshold for over 80 per cent of tour packages.

It can be noted that after much dilly-dallying, the government from October had increased the tax collected at source on forex spends above Rs 7 lakh per individual to 20 per cent from 5 per cent.

According to Shounak Chakravarty, an associate director of the agency, travel operators will likely increase promotional spends by 100-150 bps to further leverage the demand surge from across segments. Higher scale will help keep operating margin at 6.5-7 per cent this and the next fiscals.