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The travel and tourism industry of India is likely to reach 35-40 per cent revenue of the pre-pandemic level in the current financial year, according to a report. With States beginning to ease restrictions and vaccination rates expected to improve, domestic travel is seen picking up slowly from the second quarter.
However, segments such as international holidays and inbound travel may see recovery only in the second half, and that too only if travel restrictions are eased in foreign countries," Crisil Ratings Senior Director Manish Gupta said. He also noted that with meetings and events shifting to the online mode, corporate travel is expected to remain under pressure.” Overall, therefore, revenue this fiscal year may reach only a little over a third of the pre-pandemic level, that is 35-40 per cent," he added.
The Crisil Ratings report further stated that while companies have raised capital last fiscal and will continue with cost-control measures to cut cash losses, therefore, a significant decline in travel and continued uncertainty about the pandemic will weigh negatively on their credit profiles.
The industry was brought to a standstill in the first quarter of last fiscal which eroded revenue 95 per cent year-on-year. Then the second wave set in and under its impact, the first quarter of this fiscal is expected to be almost a washout once again, this time because of state-level lockdowns.
In FY22, too, the industry is expected to post operating cash losses of around INR 150-200 crore, which is significantly lower than last year, mainly on account of improved bookings and continued control of costs. Moreover, the report stated that the travel operators have limited dependence on debt as their working capital cycle is typically negative because of high customer advances and creditors compared to low receivables.
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