Indians are downsizing their travel dreams following a decline in the rupee

By

Maneesh Pandey

PUBLISHED:

16:54 EST, 31 August 2013

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UPDATED:

16:54 EST, 31 August 2013

The rupee is wrecking holiday plans. The declining value of Indian currency against the US dollar has begun to hurt the middle class.

It’s the money, honey, say one Delhi couple who have just seen their Indonesian honeymoon washed away by the paralysing effect of Manmohanomics.

The Kumars (name changed) had grand plans for a post-nuptial celebration in Bali as their honeymoon fell within their budget of Rs 1,25,000.

Impact: The decline in the rupee has caused middle-class travellers to rethink their holiday plans and opt for destinations closer to home

The Kumars had booked the trip three

months in advance. But because of the rupee’s free-fall, today they have

been forced to settle for the backwaters of Kerala.

“Their

budget has gone up by at least Rs 35,000-Rs 40,000. The middle class

travels with a fixed budget so they had to opt for a domestic

destination,” says Guldeep Sahni of Weldon Tours.

The current condition of the Indian rupee has forced many outbound

Indian travellers to change their vacation and travel plans over the

October to December period.

There

is already a 30 per cent dip in bookings compared to the business that

materialised last year in the same three peak travel months.

The worst affected are corporate incentive tours. Nearly 25 per cent have been postponed till the rupee improves.

Packages

Except for Australia and New Zealand, travel plans for destinations

where the US dollar and the euro are being quoted in holiday packages

are being affected, say travel agents and tour operators.

Alternative: Popular holiday destinations such as Goa have become a sought after alternative to Indians looking to get away from it all

“There are two categories of travel requests coming to those handling outbound circuits. One is from those who are sceptical about the future economic scenario and, wanting to defer their plans, have called for cancellations.

“I have got 12 such bookings cancelled, each having a family or a group of two to six persons or more,” says Sahni, adding, “The second is those who have not yet confirmed their plans. We’re calling them regularly… they’re closely watching the scenario and want the dollar-rupee situation to improve. There is an almost 30 per cent decline in bookings compared to what I got last year.”

There is worse still. Some travellers, who don’t have the option of getting their money back, are requesting travel agents to adjust their star category of hotels and reduce the durations of tours to make up for the rising travel cost.

This is true particularly of those who had planned to go to long-haul destinations; they are now negotiating with their travel agents to switch to cheaper destinations (closer to India) in Southeast Asia.

Manoj Mishra, who had booked a five-star package for Singapore and Malaysia worth Rs 75,000 per person for seven nights, had to settle for a four star package as that is what was available at the same price.

“I can’t change my family’s travel plans at this moment so I will settle for what falls within my budget,” Mishra said.

Travel agents have their eyes fixed on the currency converter. As says Raghuvinder Singh of D Pauls Travels: “Till the US dollar was hovering at Rs 62 booking and requests were coming. But once it touched Rs 65 to the dollar, they have stopped coming.

“We generally used to get a confirmed booking after three calls. Today, even after 10 to 15 calls, bookings are not materialising.”

Added Sahni: “The traveller is not clear. Blame it on the slump in the economy. Today only I got three calls, all different requests – one for South Africa asking me for a short-haul destination, another for Europe asking me to cancel and look for an Indian destination, and the third asking me to change the hotel star category to suit the pocket in a Far East destination.”

Affected the worse are the plans of corporate dealers and sales teams going for incentive tours overseas.

“Nearly 20 per cent to 25 per cent overseas corporate tours have been put on hold as these are large groups and their budgets, even if it goes down by 20 per cent, will cost lakhs of rupees,” says S K Dewan of Dewan Travels.

Rupee free-fall is boon for Indian hospitality industry

The flip side of the abysmal depreciation of India’s currency against the US dollar is that cash registers in the Indian hospitality business have started ringing with the sound of rupees.

Many middle-class Indians who have enjoyed holidays on foreign shores the past few years suddenly find the prospect of a vacation abroad unaffordable and are turning to the domestic option.

Hotel groups in India are happy with the surge in reservations by domestic tourists as well as from foreign visitors.

One Indian banker has cancelled a trip to Italy and will settle for five-star luxury in Goa. About 15 million Indians vacation abroad annually, says Reuters.

The free-falling rupee has helped along a 35 per cent surge in domestic tourism between January and June, according to industry body ASSOCHAM.

Travel companies in India see sense in mining this domestic surge. Thomas Cook’s over 800 tours within India have raised domestic enquiries for the winter by 15 per cent while other major players are also offering more destinations in the country as well as discounts.

The most popular tourist destinations – Goa, Agra, Jaipur and Pune – stand to benefit the most from the surge in domestic and foreign tourism.

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Indians are downsizing their travel dreams following a decline in the rupee