Holiday vacations this summer were unexpectedly hit in the beginning of the season by a rapidly declining rupee, making holidays abroad more expensive. Historical trends suggest a weakening of the rupee leads to a decline in outbound tourism. Though the rupee depreciated by significant amounts in comparison to the dollar, the pound or even the baht, the behavior of the Indian travellers have been a thought-out response, blending pragmatism and hope.

But on contrary, Madhav Pai, COO, Leisure travel, outbound, Thomas Cook India has a different view. “While the depreciating rupee has increased pricing for outbound travel, we have seen no adverse impact,” he says. For Indian travelers, both quality and value pricing are of importance adds Madhav Pai. “Holidays are now so entrenched in t he Indian traveller’s DNA that we are unlikely to see a serious impact. In fact, our forward bookings for the season have increased by around 35 per cent. Passenger numbers have shown a record increase of 06 per cent, which reiterates the tremendous potential of the outbound travel segment in India. Also, market feedback indicates that the rupee is likely to stabilise at its Current levels and, therefore, unlikely to cause a dampener on travel.”

Since the beginning of the year, the rupee has depreciated substantially which implies the cost of travel has risen over 20 per cent in the last one year. “Our Far East tours are attractively priced and, despite the rupee depreciation, are seeing extremely strong growth,” Pai goes on to add. “While we did not encounter a noticeable impact for summer, we do anticipate an impact in the coming months, with travellers exploring value-driven options,” says Pai.
Southeast Asia recorded a 13% increase in foreign tourist arrivals so far, making it the fastest growing destination according to preliminary data released by Pacific Asia Travel Association (PATA). But Madhav Pai has a view that even short haul destinations are of great value.”Short haul destinations, such as Dubai, Sri Lanka, the Far East and Mauritius are perennial options, and, in this, price-sensitive scenario they offer great value. India offers a viable option, with strong demand for destinations like Goa, Leh-Ladakh, Sikkim and the Northeast,” says Pai.

Market feedback indicates that the rupee is likely to stabilize at its Current levels and, therefore, unlikely to cause a dampener on travel.” Traditionally the summer holiday season is the peak season for the travel and tourism industry, with several players reporting nearly 40 per cent of their annual revenues from Ql. “People plan for a holiday and a summer vacation is a must for a large number of people,” says Peter Kerkar, director, Cox & Kings. Kerkar says there has not been any shift in the travel pattern amongst travellers due to rupee depreciation. “Our summer bookings have been in line with our growth projections,” he says.

Discount demand Indian travellers love discounts! “Our early bird offers have always seen strong uptake and such deals are invaluable in giving impetus to a sluggish market. Given the customer’s price sensitivities, we have taken a strategic decision to operate a wide range of value tours (for example super budget, budget), in addition to our premium packages,” says Madhav Pai.
“Travellers choose a destination because they like to explore new destinations and not due to currency depreciation. If you have to compare Southeast Asia and Europe, the cost difference due to rupee depreciation is not more than 10 per cent and this is not a reason for shift in destinations.” Down trades, downgrades most industry majors agree that 1101- idayers have been sticking to their budgets and therefore downgrading by either reducing the number of days or staying at a less expensive hotel. “W hat travellers may do if they find holidays expensive is down trade instead of going for 10 days to a European destination, they may go for seven days,” elaborates Kerkar. “This works out to a saving and they may curb discretionary spending like shopping, etc.” Users of travel metasearch site wego.co.in are reflecting the country’s growing concern over the Impact of the exchange rate depreciation on international travel, according to a study released in late June. Travellers are searching harder to find the best flight and hotel deals online. “People were trying to book a hotel a class lower than earlier planned, but they still wanted to travel,” says Jack-son Fernandez, GM, Wego India. There is no denying that the steep rise in the overall cost of travel played a great hand at jeopardizing travel plans. “However, these travellers were only ditching Europe and the US for Southeast Asian destinations – instead of dropping plans,” stresses Manmeet Ahluwalia, marketing head, Expedia India. Rally Malhotra, head, marketing, South-east Asia, I lotels.com, also points to a shift in destinations for its customers, to Southeast Asia.

According to our hotel pricing index, prices in various destinations have changed. Keyur Joshi, COO, MakeMyTrip, says short haul destinations did better this season. More than the currency fluctuation, sentiment also hurt prospects, he adds. “While we did not encounter a noticeable impact for summer, we do anticipate an impact in the coming months, with travellers exploring value-driven options,” says Pal. “Short haul destinations, such as Dubai, Sri Lanka, the Far East and Mauritius are perennial options, and, in this, price-sensitive scenario they offer great value. India offers a viable option, with strong demand for destinations like Goa, Marian, Leh-Ladakh, Sikkim and the Northeast.” “Our Far East tours are attractively priced and, despite the rupee depreciation, are seeing extremely strong growth,” Pai goes on to add. “Southeast Asia recorded a 13 per cent increase in foreign tourist arrivals so far, making it the fastest growing destination according to preliminary data released by Pacific Asia Travel Association (PATA),” points out Ahluwalla. People, especially young couples and individuals, are also going to Cambodia, Vietnam although Thai-land, Singapore and Dubai remain favorites. Lebua’s Deepak Ohri points out that more Indians visited his hotel this summer than the previous one. “People have got used to currency fluctuations, and Bangkok is still cheaper than many Indian destinations,” he points out.
Cleartrip has a comprehensive IN payment option for its customers, _ for all international and domestic flights as well as hotels. It opens online- travel to a completely new set of customers, who require a different payment approach, Says Noel Swain, EVP, supplier relations, Cleartrip. “There is a huge set of Indian wanderlusts keen to travel with family but restricted by budgetary constraints. Airfares and hotel stays add up as the biggest component of travel expenses for them. We want to urge them to use our EMI option. Our partnership with three leading Indian banks and Standard Chartered ensures we cover a large base of credit card holders. In response to our customer’s needs we are adding further bank partners.” EM1S made for about 7 per cent of business this season. For Clear trip, Swain says it took active steps to stimulate the market such as suggesting cheaper nearby airports to chosen destination, or trying to make customers book well in advance. Expedia has been offering great discounts and offers. This included a discount of MOO on domestic air tickets on all destinations, a discount of Z1,000 on an air ticket, if tagged with a hotel booking, leading to a surge in bookings by 350 per cent over the previous month.
For those planning a foreign trip. Expedia offered 60 per cent off on hotel bookings in Thai-land. They have also had an aggressive ad campaign through the season. Malhotra says deals were crucial this season. “We used coupons for Facebook, which were popular. Non-monetary elements such as various freebies were sought after by the value conscious customer.” Domestic draw Indian tourists also shifted their focus to domestic travel this summer. Ahluwalia points out that international tourism expenditure by Indians has amplified over 10 times in the last decade. “While this being true, painting a contrast is that those who might have holidayed abroad are thinking local due to the turbulence in the travel market and the slump in the value of rupee,” he says. “This has fuelled domestic travel demand alongside inbound tourism. Destinations such as Rajasthan, Kerala, Aridamans, Kashmir, Leh, Ladakh and Sikkim, that usually foreign tourists flock to in a normal year, are witnessing a spurt in Indian travellers.” Josh i feels that India became a cheaper destination for inbound travel as well. “Kashmir, Ladakh and the Northeast saw lots of demand, but the problem lay in the lack of capacity,” he says, pointing out that India has not got the benefit of reduction in rupee value, lie hopes the rupee-to-dollar rate will be back to less than 50, for growth in the sector. Pal has a word of caution though. “The rupee depreciation came in towards the end of the summer sea-son and the true impact, if at all, would be expected only in the forth-coming months,” he says. Given that the Olympics will be next test for outbound tourism, it will be interesting to see tile number of Indians to pay and go.