With over 50% share in bookings, MSME-led travel agents market to become $65 billion in 5 years

By: |
November 01, 2021 2:10 PM

Ease of Doing Business for MSMEs: Currently, India is having a bilateral air bubble arrangement with 28 countries including the US, the UK, France, etc. Under the agreement, the two countries perceive each other to be safe and allow their passengers to travel back and forth without Covid restrictions. 

While the recovery has kicked off, the MSME-led travel agent sector is categorically seeking the lifting of the international flight ban. (Image: Pexels.com)

Ease of Doing Business for MSMEs: Even as the government has extended the ban on scheduled international passenger flights till November 30, 2021, the travel market has started to look up with ease in Covid restrictions and the ongoing vaccination drive. After witnessing more than 50 per cent reversal in businesses in FY21 due to the pandemic, the travel sector, which is dominated by small and mid-sized businesses, is likely to see a steep recovery in the coming financial year followed by a spike to cater to pent-up demand. So much so that the overall market is expected to cross $125 billion in size in the coming five years. 

Improving travel infrastructure and growing access to passports by Indians would help the travel sector to grow to around $127 billion by FY27 from around $74 billion in FY20, as per the latest report by management consulting firm RedSeer’s research arm RedCore. Importantly, travel agent companies are likely to continue having over 50 per cent share in the market in terms of the channel of bookings. Agents would continue to have around 52 per cent market share between FY20-27, translating into a cumulative booking value of $65 billion in FY27. 

While the recovery has kicked off, the MSME-led travel agent sector is categorically seeking the lifting of the international flight ban. Currently, India is having bilateral air bubble arrangement with 28 countries including the US, the UK, France, etc. Under the agreement, the two countries perceive each other to be safe and allow their passengers to travel back and forth without Covid restrictions. 

“Travel agent segment is MSME dominated. While the recovery will be there but we need more international flights and that’s what we have requested the government also. Without the lifting of the ban, there won’t be a resumption in full form. Also, there have to be coordinated policies between countries for business to ease in terms of Covid tests, vaccines approved, etc. Domestically also, some states have their own regulations even if there is no spike in cases. The ban I believe would be till March next year.  Thankfully, there are flights at least under the air bubble arrangement,” Jyoti Mayal, Director, New Airways Travels and President, Travel Agents Association of India told Financial Express Online.

Subscribe to Financial Express SME newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises 

Currently, there are around 3 lakh leisure travellers-focused travel agent businesses scattered across travel packages, cab and bus bookings, which are medium in size; and individual operators and non-travel focused businesses that are usually small entities, as per the report. While medium agents have an average monthly turnover of around Rs 15-20 lakh, individual operators operate on Rs 7-10 lakh turnover average monthly turnover. Large agents focusing on corporates have monthly turnover of Rs 3-5 crore. 

Ahmedabad-based Shreeram Patel who runs travel agent business Unicorn Travels said his business has only been able to recover to around 50 per cent of the pre-pandemic level turnover. “We witnessed contraction to around 2-3 per cent after the pandemic which has now improved to only 50 per cent. We expect things to move further from March next year onwards. It also depends on when the government will lift the international travel ban as 70 per cent of my business is focused on international travel. So it is still a long way to go,” Patel told Financial Express Online. 

National Council of Applied Economic Research (NCAER) in a study conducted in January 2021 on economic losses for households engaged in tourism and policies for recovery had said that 14.5 million tourism jobs were expected to be lost during the first quarter of 2020 following by 5.2 million jobs lost during Q2, and 1.8 million jobs lost during Q3. The data was shared by the Minister of Tourism G Kishan Reddy in the Lok Sabha in July this year. According to a government statement in June this year, free visas will be issued to the first five lakh foreign tourists or till March 31, 2022, whichever is earlier, with a total finance implication of Rs 100 crore.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.