Travellers may see expenses rise 8-10%; likely to downtrade, opt for cheaper destinations
The sinking rupee is taking the wind out of the Indian traveller's sails.
With the local currency poised to hit the 73 per dollar, outbound tourists are set to see 8-10% increase in their travelling budget, according to experts.
The tourism industry is like "stock exchanges" where reactions are "instant," said Subhash Goyal, general secretary, Federation of Associations in Indian Tourism and Hospitality.
"Though the super-rich won't be impacted, budget traveller and the middle-class Indian travellers will feel the heat of the falling rupee," Goyal said, adding that outbound tourism will take a 5% hit in the long term.
Marzban Antia, vice-president of Travel Agents Association of India (TAAI), concurred.
"The total land arrangement (accommodation and transportation) costs will rise for travellers going abroad," he said, adding that "a major hit will be taken by the airlines, which have to refuel at international destinations. Fuel forms 24-26% of their expenses."
According to tour operator Thomas Cook (India) Ltd, about 25% of its group travellers will be impacted by the rupee fluctuation.
Travellers will have to dig deep into their pockets on various levels.
"First, the airlines have already started raising flight ticket charges. Second, both international hotels and ground transportation costs will shoot up 8-10%," Ashwini Kakkar, entrepreneur and former president of TAAI, told DNA Money.
"Moreover, visa pricing is connected to dollar costs. So in the coming weeks, visa costs will also go up," he said.
Amid this, domestic tour operators are also feeling the pinch.
"Tourists from abroad generally make bookings three-six months in advance. So an operator dealing with inbound customers received its payment then, say at a value of 67 at that time, will have to shell out around 72 today for hotel accommodation and transportation," Kakkar said.
While the rupee is currently witnessing a depreciation against the US dollar, its upside against some currencies will lead travellers to choose destinations such as the UK, Canada, South Africa and New Zealand, said Rajeev Kale, president and country head- leisure travel and MICE, Thomas Cook (India) Ltd.
"Also, depreciating rupee tends to steer strong demand for short haul favourites such as Singapore, Malaysia, Thailand, Dubai, Abu Dhabi-Yas island, Hong Kong-Macau and emerging destinations such as Vietnam and Cambodia," he said.
Goyal said other places benefitting from the trend will be Indonesia, Thailand, Dubai and Turkey, among others.
So how can a traveller beat the rupee fall?
One can take an indirect flight instead of a direct one, said Karan S Anand, head of relationships and supplier management, Cox & Kings India Ltd, which can help the travellers save up to 7-10%.
"In addition, travellers also choose to downtrade from a five-star or a boutique property to a three-star one," Anand said, adding that more and more travellers are option for Cox & Kings EMI (equated monthly installment) option.
"Budget travellers and backpackers can reduce their travel duration from, say 10 days to seven, to beat the rupee impact. In order to keep the budget in control, they can also book a slightly less expensive hotel," said Goyal.
Indians will have to readjust their travel budgets by curtailing expenses on shopping, entertainment or dining in favour of must-do experiences/sightseeing, said Kale, adding that group travellers may drop an optional tour while at a destination.
Thomas Cook said it will rework the company's product portfolio by enhancing packages, especially for short hauls, supplementing favourites such as Singapore, Malaysia and Thailand with new destinations such as the Philippines, Vietnam and Cambodia.
"Secondly, (we will) introduce value-adds (like child discounts/buy one get one free, discounts on dining, offers on airport/hotel transfers, accommodation upgrades) – and these work well in light of the depreciating rupee," Kale said.
Interestingly, rupee fluctuations put India back in the spotlight, catalysing the domestic travel business.
"We can expect a boost in this segment. Inbound tourism would increase because the country looks cheaper to the travellers abroad," according to Thomas Cook.
The trend, in turn, will also boost domestic tourism because of Indians preferring local destinations instead of international ones.
A depreciating rupee gives a fillip to domestic travel, Kale said, adding, "2018 offers 16 long weekend opportunities and Indian travellers seem to be utilising every such travel opportunity."
Thomas Cook said it has seen a significant interest for local destinations such as Andamans, Goa, Daman, Gujarat for quick getaways. Coorg, Kodaikanal, Mysore, Hampi, Gokarna, Puducherry, Mahabalipuram (Southern markets), Jaipur have become travellers' immediate favourites. "Our forward bookings for Summer 2018 reiterate this with growth of over 31%," it said.
BEATING THE BLUES
- Travellers also choose to downtrade from a five-star or a boutique property to a three-star one
- Short-haul destinations such as Singapore, Malaysia, Thailand, Dubai may be preferred
- "Budget travellers and backpackers can reduce their travel duration from, say 10 days to seven
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