Tourism industry prepares for a surge in short, local trips

After being one of the worst-hit sectors in the pandemic for close to two years, travel and tourism industry is finally seeing a recovery. Strong pent up demand, along with easing of domestic restrictions in the face of limited reopening of international borders, has brought Indian destinations into the spotlight, travel companies say. Places like Leh-Ladakh, Kashmir, Himachal, Uttarakhand, Andamans, Kerala, North East, Goa, and Gujarat are some of the most preferred travel locations post the opening up of the industry.
 
Travel and tourism giant Thomas Cook India has seen a significant surge of 500 per cent in July as compared to a low base of last year. But even month-on-month the company saw a 150 per cent growth in India.

“Our domestic bookings have already crossed our pre-pandemic levels and this in just 9 months of 2021. Our forward pipeline is robust, propelled by the upcoming festive season (over 5x growth over 2020), with key segments being multi-generational family units, young professionals/millennials and couples/honeymooners,” said Rajeev Kale, President  and Country Head (Holidays, MICE, Visa), Thomas Cook India.
 
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The company says that it is not just seeing a surge in demand from the metros but also from mini-metros like Pune and Tier 2 and 3 markets like Jaipur, Lucknow, Indore, Madurai, Kochi, Nagpur, Aurangabad, etc. A lot of people, travel companies say, prefer socially-distant travel options.

“With the pandemic ushering in focus on travel options away from crowds, we have created demand for outdoor/adventure elements via the launch of our unique and exciting biking trips to destinations like Leh, Srinagar, Manali, Sikkim, and South India and we are seeing uptick from diverse segments like millennials and c-suite head honchos. To push the envelope further, we have incorporated truly eclectic and non-standard accommodation including stays in havelis, forts, colonial villas and plantation bungalows amidst verdant tea/coffee estates,” Kale says.

He adds that the first phase of domestic reopening saw demand for easy to book, practical holidays such as workations, staycations, drivecations, affordable luxury holidays, etc. “Travellers sought quick breaks to counter the stresses of work from home and home chores and at convenient short drivable distances within their city of residence. Today, we are seeing a discernible shift from merely drivecations during the earlier phase post reopening, to increased uptick for flight inclusive holidays – indicative of growing consumer confidence in air travel,” he said.
 
Credit ratings agency ICRA said that the industry witnessed faster-than-expected ramp up in Q2 FY22, because of lower restrictions, increasing pace of vaccination and pent-up demand, which resulted in revenge travel. “The industry is expected to clock at least 45-50 per cent of pre-Covid-19 revenues in FY22. Further, it is also likely to report operating profits in the current fiscal, aided by improved operating leverage and sustenance of some of the cost-optimisation measures undertaken in FY21. However, the situation is still evolving and remains contingent on the efficacy of vaccines and a potential third Covid-19 wave,” it said in a report.
 
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It added that the revenues are expected to improve by 85-90 per cent sequentially in Q2 FY22. Occupancy has picked up, with the August '21 pan-India premium hotel occupancy at 44-46 per cent. It also pointed out that travel during the festive season will act as a key demand booster for the industry in Q3 FY22.
 
“Demand in the last few months has come from staycations, weddings and travel to driveable leisure destinations, and from special purpose groups. There is the new trend of biscations (which is working from a resort) that is picking up. Business travel pickup has been mainly to project sites/manufacturing locations from specific sectors,” Vinutaa S, Assistant Vice President and Sector Head, ICRA Limited, said.
 
Homegrown hospitality player OYO said that another interesting trend is that a majority of travellers prefer making bookings closer to the travel day as long weekend trips, short breaks or experiential travel to domestic locations have witnessed a spike in demand. Travellers are increasingly opting for short-haul destinations, it said.

“This is a striking shift from the pre-Covid-19 era when travel was extensively planned and bookings were made weeks or even months in advance. Global travel restrictions adversely impacted the travel and tourism industry, however, we significantly improved our unit economics during this period. We believe our shift towards leveraging products and technology and our focus on core growth markets has helped us navigate through the challenges created by the Covid-19 pandemic as well as create a robust foundation for future growth,” an OYO spokesperson told Business Today.

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The company said that its adjusted gross profit margin improved from 9.7 per cent in FY20 to 33.2 per cent in FY21. Within 12 weeks of joining the platform, OYO-powered hotel storefronts generated 1.5 to 1.9 times more revenue on average compared with the average revenue estimated at independent hotels of a similar size in India, Indonesia and Malaysia respectively in 2019, the company said
 
Taking cues from Janmashtami, Ganesh Chaturthi and Dussehra long weekends, the industry expects a similar spike during upcoming long weekends in the next couple of months.