Foreign travel to cost more on rupee fall

The falling rupee is likely to make outbound travel packages expensive, which may see some shift in destinations from international to domestic.

Sharat Dhall, president, Yatra.com, told dna that the falling rupee will increase all the land expenses, which include accommodation and local transportation. "Definitely, it will have an impact. If you consider a holiday package, the land portion is dependent on the foreign exchange. Airlines typically take a little bit of time to react and revise prices. So, of the total package, around 50% of the cost will be dependent on forex," Dhall said.

He said that while there will be an impact on the land portion, the impact on the package would be fairly limited.

"If rupee goes down 5%, the impact on package cost would be 2-3%," he said, adding that some foreign destinations have not witnessed much increase in prices of hotels and other accomodations on the back of a range of inventories that came in. "The adding up of more hotel inventories in markets such as Europe and Southeast Asia have resulted in not much increase in prices of accommodation," he explained.

Since August 11, the day China announced the devaluation of its currency Yuan, rupee fell by almost 4% to close at 66.65 against the US dollar on Monday. The currency fell sharply by 82 paise on Monday, its biggest single day fall this year.

Dhall said in such situations, sentiment plays a role. "During such situation, people think that there would be an increase in other costs, such as shopping, sightseeing, etc. So, some impact may come in, though there is no impact visible as of now. Those who have already made their bookings are definitely in a more comfortable situation than those yet to book."

However, according to an industry official, people planning a foreign vacation are unlikely to change the destinations, since a 4% change in rupee will impact a package cost by only Rs 4000-8000. "People keep that buffer with them," the official said.

So, while a falling rupee may not see much cancellations immediately, travel industry expects some shift in destinations from international to domestic, if the currency depreciates further.

Shiju Radhakrishnan, founder and CEO of iTraveller's says, "The rupee depreciation has a remarkable effect on the tourism industry. The flow of queries for foreign destinations has lowered to from 25% in June to 18% in August. All international hotels quote prices in US dollar and hence, the rupee depreciation has resulted in increased hotel rates as well."

Rsadhakrishnan also said that people are now more interested in travelling to domestic destinations like Kerala, Goa, and Northeast. "Hence, we are closing more transactions for domestic destinations. The only positive impact of rupee depreciation for Indian tourism industry is seen amongst the tourists who wish to visit India. India will be cheaper for tourists coming from other countries," he added.

Jatinder Paul Singh, senior vice president & head - sales & distribution leisure travel (outbound), Thomas Cook India, said, "The rupee movement has resulted in no cancellations in current or forward bookings and neither do we anticipate any. With travel now a 'must-do' in the Indian calendar, consumers will merely reassess their choice of destination, not their decision to travel. A depreciating rupee has also turned the spotlight on domestic travel, and our new offers showcase 'value-adds' like the under-sea walk and snorkelling included at no extra cost, and to further inspire demand, great price savings."

Thomas Cook has recalibrated its product portfolio and enhanced Asia packages and short haul destinations, supplementing favourites like Singapore, Malaysia & Thailand with new destinations like the Philippines, Vietnam, Cambodia, etc.. It has also introduced value adds like free transfers, dinning, complimentary additional nights, etc.