Indian travellers planning overseas holidays are now looking at Southeast Asian, West Asian, South American and African destinations as a depreciating rupee makes traditional hotspots like the US, Europe, and Australia more expensive.
The Indian rupee, which has crossed the 80 level against the US dollar, has depreciated around 8 percent since the beginning of 2022.
Indian travellers are now looking at countries like Thailand, Malaysia, Indonesia, South Africa, Singapore, Mauritius and the Maldives to spend their holidays, according to data collected by online travel agents and market experts.
Japan, China, Vietnam, Cambodia, Paraguay, Mongolia, Zimbabwe, and Iceland, along with Qatar, Dubai and Turkey are also big tourist hotspots for Indians looking to travel overseas to this year.
"The depreciating value of the rupee, clubbed with the hike in crude oil prices, have impacted the travel plans of Indian tourists, affecting price points of airfares, accommodation options and sightseeing, among others," said Aditya Gupta, Senior Vice President, Hotels & Holidays, Yatra.com.
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Off the beaten path
The cost of travel packages to the US and Australia increased by about 8-10 percent in June compared to May, Gupta said.
Nishant Pitti, CEO and co-founder of EaseMyTrip, also said Indian tourists are likely to favour destinations where the rupee has appreciated against local currencies.
"There are many alternative international destinations that the domestic travellers may consider instead of the popular and costlier ones. While there are immediate alternative options in neighbouring countries like Nepal and Bhutan, Indian tourists may also try out off-beat countries like Paraguay, Mongolia, Vietnam, Zimbabwe, Iceland, etc, where the rupee is a stronger currency with more exchange value," said Pradeep Shetty, secretary of the Federation of Hotel & Restaurant Associations of India.
Porus Doctor, partner and consumer industry leader at Deloitte India, said destinations such as Japan, Thailand, the Maldives and Mauritius have become more attractive as the Indian rupee has strengthened against their currencies.
He noted that the rupee has appreciated by 14.6 percent against the Japanese yen so far this year.
"The shorter travel distance, as compared to Europe and North America, which makes airfares more attractive and affordable, is an additional benefit," Doctor added.
Rajeev Kale, President & Country Head, Holidays, MICE, Visa, Thomas Cook (India), also spoke of a strong uptick in travel to destinations like Thailand, Singapore, Indonesia, Mauritius, the Maldives, Vietnam and Cambodia.
Daniel D’Souza, President & Country Head - Holidays, SOTC Travel added that the agency was witnessing an increase in demand for travel to closer-to-home and easy visa destinations like Thailand, Singapore, Indonesia and the United Arab Emirates and also islands like the Maldives and Mauritius, with demand up by 30-35 percent month-on-month.
Impact of a depreciating rupee
Rajiv Mehra, President, Indian Association of Tour Operators, said outbound tourism will become more expensive and expects a 5-10 percent decline in numbers over the next few months.
Indian travellers will have to spend more in rupee terms for day-to-day expenses after reaching their destinations, noted Karan Anand, Head, Relationship, Cox and Kings.
When the rupee falls against major currencies, people tend to trade down, Anand added.
"Instead of a four-star hotel, people might choose to stay in a three-star one. Some might even stay further away from the city centre," Anand said.
Travel and food blogger Chaitali Aggarwal, who last month took a trip to Canada, said foreign travel turned out to be very expensive because of the weak rupee.
"Had it not been the graduation ceremony of my brother for which we went to Toronto, we wouldn't have taken the trip because the value of the rupee went down so much. Also, due to COVID-19 for two years, we were unable to go to Canada. But if this was just a summer vacation we wouldn't have done it," said Aggarwal.
She pointed out that the stay in Canada was very expensive and they had to look for other options for accommodation.
"We were looking at Airbnb, hotels. For an Airbnb, the price was insane. A one-two BHK (bedroom-hall-kitchen) accommodating four to five people, which cost us around Rs 10-12,000 a night during our last trip in 2018, this time when converted to INR was coming to about Rs 30-40,000 a night. So we ended up crashing at an apartment belonging to my brother's friend," she added.
Aggarwal, who spent Rs 1.5 lakh per person for air travel, had to cancel other plans during her trip to Toronto.
"I had plans to go to Montreal but we had to cancel that entirely because it was turning out to be expensive in every way then -- be it a road trip, bus tickets -- all was turning out to very expensive," she said.
Boost to domestic tourism
A weaker rupee is a double-edged sword for the hospitality and tourism industry. Domestic destinations will find more traction among travellers, industry experts said.
The depreciating rupee will be a boon for domestic travel and yet-to-be-explored Indian destinations will be on the radar of travellers, said Rama Karmakar, Tax Partner, People Advisory Services, EY India.
"The significant upside to movements in the rupee is putting the spotlight on domestic tourism and we are witnessing demand for locales like Kashmir, Leh-Ladakh, Goa, Kerala, Pondicherry, Coorg, Ooty and Munnar,” said Kale.
SOTC's D’Souza added that fluctuations in the rupee were driving demand not only for India holiday options but also for value options like domestic cruises that offer all-inclusive pricing and are easy on the wallet.
EY India's Karmakar said that while a weak rupee is a concern for Indian travellers, there was no slowdown in demand for travel.
"The situation is not yet so dire to say that all plans for foreign holidays will be put on hold. With the impact of COVID in the past couple of years, travel, especially foreign travel is back," he said.
Deloitte India's Doctor said that a leading travel portal has noted that pent-up demand post the removal of travel restrictions imposed during the peak of the COVID-19, continues to exceed supply.
"Plus, the upcoming festive holidays starting from October this year until December may witness increased leisure travel among tourists (in India)," he added.Shetty of the Federation of Hotel & Restaurant Associations of India said travel segments such as eco tourism, cultural tourism, wildlife tourism and medical tourism will receive a boost from foreign tourists due to a depreciating rupee.