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Rupee fall cuts foreign holidays short

Source : BUSINESS_STANDARD
Last Updated: Sat, Jun 29, 2013 19:00 hrs

The recent fall in the value of the rupee has hurt the holiday plans of Indians travelling abroad. Tour operators claim people are preferring to cut their trips shorter to fit their budget, while some are changing their destinations.

For new bookings, tour operators say most travellers are in a wait-and-watch mode, hoping for the the local currency to regain some lost ground vis-a-vis the dollar. "We have not seen many cancellations as far as our bookings are concerned. People who had booked a few months back are going ahead with their plans. However, due to the rupee fall, costs for travellers are expected to go up by around 20 per cent," said Niraj Dev, head of outbound travel at Yatra Online Pvt Ltd, which runs travel portal yatra.com.



While travellers are not cancelling their holiday plans per se, many are indeed opting to cut their holidays shorter to fit their budget. Besides, short-haul destinations have emerged as favourite. "Instead of a 10-night Europe or US tour, travellers now prefer a six-night stay, or look at changing the category of hotels to suit their budget. Also, demand for the shorter destinations like Thailand, Dubai, Singapore, etc is rising," Dev added.

Keeping the new trend in mind, Yatra.com has been quick to launch shorter and more targeted packages. Last month, it had launched packages for just the east coast of the US or ones that would cover only the west coast, instead of a longer entire US tour itinerary.

The local currency's performance against Southeast Asian currencies was better compared with it fall versus the greenback. While the rupee has dipped 12.86 per cent against the dollar and by 12.46 per cent against the euro in the last two months, it declined around 9.22 per cent compared with the Singapore dollar. Against the Thai Baht, the rupee fell 5.93 per cent, while the fall was 7.34 per cent compared with the Malaysian ringgit.

Hence, destinations like Thailand, Malaysia and Singapore have emerged as favourite places among Indian travellers.

According to the Associated Chambers of Commerce and Industry of India (Assocham): "Indian tourist outflows have registered a significant decline to the extent of 15-20 per cent in the last two months due to the falling rupee."

D S Rawat, secretary general of the Assocham, said: "Indian travel companies are also reducing the number of days from packages to make it more affordable for globetrotters. Most middle-income groups are looking to offset those costs by opting for shorter duration stays and looking at budget accommodation options."

The industry body further estimates that last year, nearly 15 million Indians travelled abroad on business and leisure, an increase of 10 per cent over the previous year. Over the past three months, travel costs and accommodation have gone up by 20 to 25 per cent. Vishal Suri, chief executive officer, tour operating, Kuoni India, too, echoed the same sentiment.

"Travellers are opting for breaks where the price is controllable." He further said there had been a spurt in demand for domestic and short-haul holidays. Long-haul travellers are opting for more affordable packages. Kuoni, for example, is offering discounts on its Europe package to attract tourists to visit European countries despite the fall in rupee. Suri, however, maintained that while budget issues have come to the fore, his firm had not seen many cancellations. Others like Thomas Cook have come up with offers like 'early bird discounts', and 'Holiday pe Holiday, Free!' schemes to boost demand.

However, interestingly, the currency fluctuations seem to have not affected travel plans of tourists from India's smaller towns. As Madhav Pai, director, leisure travel (outbound), Thomas Cook (India), said: "Tier II and III markets have been the power house of our growth story despite the depreciating rupee. With the launch of our regional tours like 'Vishwa Parikrama' and 'Satrangi' with the comfort of home-cooked food, tour managers who speak the local language and brochures printed in the regional language have worked for us."

Thomas Cook, on its part, has been passing on the benefits of direct contracting with local hotels overseas. While outbound packages have gone up 10-15 per cent, bulk buying has enabled the company to leverage pricing troughs due to slowdown in most western markets, Pai said. "Anticipating price sensitivity, we had launched a range of products to cover every price point - from super budget, budget, value to premium," a strategy that has worked for them, he claimed.

EXPENSIVE TRAVEL
|Most travellers are in a wait-and-watch mode, hoping for the the rupee to regain some lost ground vis-a-vis the dollar
|Demand for short-haul destinations has gone up
|Destinations such as Thailand, Malaysia and Singapore have emerged as favourite places among Indian travellers, as the rupee has fared better against the dollar compared with the currencies of these countries.

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