Foreign tours to cost more as rupee weakens, but demand to increase

Source : BUSINESS_STANDARD
By : Aneesh Phadnis
Last Updated: Tue, Sep 27, 2011 19:20 hrs

The fall in the rupee’s value against the dollar is making foreign travel costlier. According to Ashwini Kakkar, executive vice-chairman of Mercury Travels, last week’s jump in dollar rates would increase foreign tour costs by 11 per cent.

"Those who have already booked won't get impacted,'' he said, while adding that travel abroad this winter wouldn’t be affected. "Overall, four million Indians are expected to travel abroad in October-December. There is 12 per cent industry-wide growth,'' he stated.

Typically, half of foreign tour costs are paid in foreign currency. While tickets and visa charges are paid in rupees, the hotel costs and ground transport cost at destinations are paid in foreign currency. Except for Europe, Australia-New Zealand and South Africa, travel agencies get quotations from local hotels and service providers in US dollars. As a result, a fluctuation in the dollar price can impact tour costs.

The rupee fell sharply to a 28-month low and ended close to Rs 50 to a dollar last week, amidst uncertainty in the global economy. Credit rating agency Crisil has said it expects the rupee to strengthen to Rs 45-46 against the dollar by next March.

"The dollar rates will hurt us. We had made bookings by factoring a particular exchange rate. We have to now pay more while remitting the amount to hotels or our local agents abroad, since the dollar rate has risen,'' said Nayan Marphatia, CEO of Miloni Tours.

"Forward bookings are very encouraging — an increase of approximately 50 per cent over the previous year. Bucking the trend, Europe continues to be of interest. We’ve been able to sustain pricing levels due to our volumes and better buying. Besides the Far East & Mauritius, Spain is now a hot favourite,'' said Haresh Koyande vice-president, travel (outbound), at Thomas Cook.

Rajiv Duggal, managing director of Kuoni India, is expecting good volumes for their outbound tours. The summer travel season (April-June) was not such a good one for tour operators from India and many bookings were cancelled as tourists were unable to get UK visas in time. Several tourists had to change their travel dates because of this.

"We are growing 25-30 per cent year-on-year,'' Duggal said, adding there was a good response for tours to Southeast Asia, Australia and South Africa. Companies such as Cox and Kings are luring tourists with discounts, while SOTC (Kuoni's outbound division) have tours where a wife and a child can travel for free.


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