2023-08-10 16:14:08
New Delhi: Travel expenses of Indians have surged by 15-20% this year compared to pre-pandemic figures of 2019. Despite the rise in costs, the nation’s travelers remain undeterred. The year 2023 is shaping up as an unusual year for travel, with elevated fares likely influenced by major events such as the G20 summit, the forthcoming ICC Men’s Cricket World Cup, and other marquee events.
New Delhi: Travel expenses of Indians have surged by 15-20% this year compared to pre-pandemic figures of 2019. Despite the rise in costs, the nation’s travelers remain undeterred. The year 2023 is shaping up as an unusual year for travel, with elevated fares likely influenced by major events such as the G20 summit, the forthcoming ICC Men’s Cricket World Cup, and other marquee events.
Thomas Cook India Ltd., a significant player in the travel sector, remains optimistic about this travel boom after announcing its Q1 results. The firm’s CEO, Mahesh Iyer, shared with Mint that a resurgence is evident across various sectors, from hospitality and airlines to travel services, with many industry peers posting strong figures.
Thomas Cook India Ltd., a significant player in the travel sector, remains optimistic about this travel boom after announcing its Q1 results. The firm’s CEO, Mahesh Iyer, shared with Mint that a resurgence is evident across various sectors, from hospitality and airlines to travel services, with many industry peers posting strong figures.
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“Yes, input costs are 20-25% higher so the spending by the customers is still continuing to be higher but the evolution can be seen in the fact that India has moved from a savings economy to a spending economy. People are not averse to taking credit for travel now. These are large, conducive macroeconomic factors impacting discretionary spending on travel. India will also see a per capita income moving from $2500 to $4000 in the next five years. While this looks small when compared to other nations, in absolute numbers, we are a 1 billion economy,” he said.
The company reported a consolidated income from operations for the June ended quarter (Q1 FY24), at ₹1898.9 crore, a near doubling from ₹976.1 crore reported a year ago. Net profit during the quarter rose ₹70.9 crore compared to loss of ₹6 crore a year ago, which was impacted by the Omicron wave.
Its travel and related services segment reported a revenue of ₹1468.87 crore, more than doubling year-on-year (YoY). The leisure hospitality business grew 12% YoY to ₹115.3 crore in Q1 FY24. Its financial services business like forex cards etc., doubled from ₹47.9 crore last year to ₹91.5 crore this fiscal.
For its outbound travel business, the recovery is still at 50% of pre-pandemic levels.
But disruptions by airline operators did wreak some havoc. While domestic travel was trending at around 100% till April, overall domestic business was definitely impacted by GoAir’s grounding and the cancellations led to the company having to give refunds.
“Customer confidence took a nosedive due to this at that time and it had an impact on our domestic travel business. Overall, domestic travel recovery now is 60%. On the international front, long haul is still plagued with visa challenges, more importantly in the European visas where we saw some pains coming into the business. Our rejection rate has been close to 8% and that has impacted the growth we saw otherwise,” he added.
But Iyer is confident because of the government’s focus on domestic travel. This he said, has been akin to what China has done for its domestic travel following its pandemic related shutdown from the rest of the world. For instance in the way of introducing the tax collected at source or TCS on international travel could have a cooling off effect on international travel. “India is moving in that direction in terms of domestic travel, especially from an infrastructure point of view, like regional airlines coming in as well as things like improved train services,” he said.
But now, travellers are no longer putting money into their holidays six months in advance and so the predictability is a little lower. For the next quarter, the company, he said, is trending at 116% in its holidays business when compared to the previous year’s quarter. Its B2B holidays is also growing at a similar 113%, both these numbers are exceeding 2019 levels. Despite the slow start in July due to monsoon and other factors like TCS impact on holiday packages which have waned in July.
“We remain optimistic though, about a strong numbers till the closure of the fiscal year FY 24. Almost all our four segments of the business have done well in this quarter which has aided the profitability at the current level,” said Iyer.
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