Falling rupee diverts foreign travel traffic

Travel to S-E Asia and domestic destinations gets a boost as the weak rupee makes Indians choose them over dollar destinations for holidays

    The value of the rupee, which has fallen below the psychological resistance level of 59.52/dollar, has put a spanner in the works not only for students planning to study abroad, but also for those who had plans to vacation abroad. With foreign trips becoming costlier for Indian tourists, many people are either cancelling or cutting short their foreign trips, or opting for domestic holidays, says a survey conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM). According to the survey, “The foreign tourist outflow registered a significant decline to the extent of 15-20% due to the falling rupee. In the wake of the record rupee depreciation, Indian tourists are not just cutting their vacation days, but are opting for holidays within the country rather than going abroad.”

Travel agencies say there is indeed a decline in tourists going to dollar destinations. Richa Goyal Sikri, director of a travel agency, agrees that the depreciation in the value of the rupee is resulting in a fall in tourists going out for vacations. She says there’s a 15% drop in outbound travel to dollar destinations, which are usually packed during the holiday season. “If the equation between the rupee and the dollar doesn’t change soon, there might be a 30% drop, which would be rather alarming for us,” she adds. Sharat Dhall, president of a travel website, agrees. “For the past few days, we have also been seeing the impact of the rupee hitting an alltime low. Travellers are opting for South-East Asian destinations and even Europe, but destinations such as the US and Canada have, all of a sudden, fallen out of favour with Indian travellers,” he says.

The disenchantment with dollar destinations has apparently led to a focus on nondollar destinations, that is, destinations without dollar currency. Madhav Pai, director of a multinational travel firm, says, “Indian travellers have become increasingly valueconscious. With the declining rupee, customers have begun weighing all options. There has been a significant shift to shorthaul destinations,     including the Far East,     Dubai, Mauritius and Sri     Lanka, with newer entrants     like Vietnam, the Philippines
    and Cambodia.” Other places like Bhutan have also made it to the itinerary of Indian travellers, says Sharat.
    There has also been a shift to domestic destinations. Rajeev Kale of an international travel company says, “The weakening rupee has given an exceptional impetus to domestic travel — especially the North-East, the Andamans, Kerala, Karnataka, Goa, Rajasthan and the temple circuit of Tamil Nadu.” Karan Anand of another travel firm says that many people are preferring to go Kashmir.

Those who have not changed their holiday destination have shortened it to fit their budget. Richa says, “The major difference that is noteworthy is the number of days covered in a single holiday. Indian travellers are opting for short-haul destinations to match their travel dreams with their budgets.” Naman Thakur, an engineer who changed his vacation plan, says, “The cost of international packages has gone up by 15-20%. I have changed my plan. An average seven-nights’ Europe cruise is around US $1,400 per couple. Instead of seven nights, I made it three nights.”

For Indians, this may not be the best time for outbound travel, but foreigners are cashing in on the low value of the rupee for their vacations. Richa says, “Since the buying power increases, the same facilities — hotels, food, transport, shopping etc — become more cost effective. This has definitely caused a welcome surge in foreign tourist bookings for the winter season. We have already seen an approximate 25% rise in the number of bookings from people whose holiday budgets have been boosted by the falling rupee.”