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November 22, 2011

Indians give foreign trips a break as rupee plunges to new lows

NEW DELHI: Foreign travel bookings out of India for this winter have gone down considerably, with international holidays becoming expensive - thanks to the rupee plunging to new lows.

Delhi-based D.Paul's, which was clocking a growth of 70-80% growth year-onyear till October, said the business slowed down 20%. "Winter packages are nearly 17-18% more expensive compared to summer season," R Singh, director of D.Paul's said. Add to that rupee devaluation and other factors, like airport development fee, the total travel package cost increased 30-35%.

He said that even if a consumer has booked his holiday package in advance, he needs to pay the differential amount, based on the rupee-dollar exchange rate. A travel company usually puts such conditions in their agreements with outbound tourists.
Travel operators said that floods in Thailand, which is the most popular destination among Indians, also contributed to the slowdown. Indian families usually travel to short-haul destinations in south east Asia during the winter season, and Thailand contributes 20-30% of the overall travel footfalls going abroad. Other destinations like Australia and New Zealand are also popular during winter season.

"Even as some islands of Thailand are unaffected, consumers are being cautious. Singapore on its own is very expensive which leaves travellers with no option but to visit Malaysia, where prices have shot up due to high demand," a travel company executive who did not want to be named said. "If we were expecting to grow by 30% during the winter months, we have grown only by 10%," he added.

The winter season is the second largest holiday season for Indians after the summer months and the Diwali breaks when schools announce vacations. In addition, traditional wedding season leads to a large number of honeymooners opting for holidays around this time of the year.

But high prices for international holiday packages have put the Indian families at the backfoot as they are being more cautious booking at the last minute as well as looking for shorter trips this winter.

"In the past few weeks, bookings for airline tickets for leisure destinations are down by 7-8% from a year ago," said Ankur Bhatia, executive director Bird Group, a travel solutions company.

Tour operators are also noticing late bookings by Indian families. Travel companies usually sell nearly half of their inventories by October-end. This time around, bookings for Christmas and New Year packages are expected to happen as late as the first week of December. Some travellers are also postponing their holidays to the January-March quarter hoping for the market to stabilise.

Rajeev Duggal, managing director of Kuoni India, one of the biggest travel firms, said that companies are closely watching the situation with uncertainty in economic conditions as well as currency value fluctuations. "Growth for bookings has slowed down during the third quarter as consumers are opting for shorter breaks and are being cautious about international holidays.

Some are even postponing it to the fourth quarter," he said, adding, "that going by advance bookings, the January-March quarter could see higher growth in volumes than the October-December quarter".

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