The rupee depreciating against the US dollar is not a dampener for Indian travellers’ plans for foreign trips during this winter holiday season.
The rupee fell 4 paise to hit an all-time closing low of 83.41 (provisional) against the dollar on December 13 on the back of the American currency strengthening overseas.
Forex traders said a steep fall in crude oil prices from $76 per barrel to below $73 levels provided support, but a muted trend in equity markets triggered negative bias against the local unit.
While a falling rupee is burning a bigger hole in the pockets of Indians travelling abroad, the higher intent to travel, more disposable income and FOMO (fear of missing out) are keeping the demand high despite fluctuations in the exchange rate and higher airfares.
According to data from Yatra.com, there has not been any decline in demand for outbound travel.
"Due to the falling rupee, travelling to the US, Europe and Australia has become costlier. However, there is no impact on the demand yet. We have seen an increase of 20 percent in demand for outbound travel compared to last year," a senior Yatra.com official told Moneycontrol.
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Similarly, local travel agents are not experiencing a drop-off in travel plans.
“We are not seeing anyone shelving travel plans because of the dollar going up. Nor are we seeing people downgrading to less premium properties (hotels). Also, the change is sub-5 percent in terms of travel budget," Sanjay Dang, managing director of Le Travelworld.
He added that for a vacation abroad, travellers do factor in 5-10 percent fluctuation in the cost. Hence, it is not impacting outbound travel.
He added that the dollar has risen against the currencies of other countries as well, resulting in cheaper visits to these nations. There is also the seasonality factor.
"In addition, this time of the year Indians are only travelling to meet family and friends to places like the US or Canada. These places at this time of the year are too cold for holiday travellers. Indians plan to travel to these destinations in summer," Dang said.
Airlines are also not affected, given their buffer of business travel.
"Corporate travel has picked up significantly in 2023, after the pandemic. and while a weaker rupee may have some impact on the plans of leisure travellers, corporate travellers are not hindered by currency fluctuations," a senior official from Air India said.
He added that Air India has seen a 20 percent jump in corporate travellers in 2023 compared to last year.
Rajiv Mehra, president, Indian Association of Tour Operators (IATO), too, said that figures and trends do not indicate any slowdown in the number of people holidaying abroad.
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“Outbound travel is growing and it is a factor of the general economy doing well, better connectivity and overall cost being the same as airfares and hotel room rates of overseas destinations are almost equivalent to those in popular domestic destinations,” he said.
Mehra reiterated Dang’s point that the rupee has not depreciated as much against other currencies, which has not affected travel costs to destinations like Thailand, Dubai, Malaysia or Vietnam.
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“Most Indians for the year-end or Christmas breaks usually tend to travel to the Middle East or South Asian nations. Bali is in great demand because Vistara has started a new non-stop flight (The airline began daily non-stop flights between Delhi and Bali on December 1, 2023). Then Singapore, Malaysia, Thailand are locations where Indians are travelling to for end of the year travel,” Dang said.
While airfares are higher by 30-40 percent versus pre-Covid levels, travelling to some destinations may not make a big dent in the pocket. Airfares to short-haul or closer-to-home destinations like Bangkok, Dubai, Abu Dhabi, Mauritius and Bali are on a par with last year, said Indiver Rastogi, president and group head, global business travel, Thomas Cook (India) and SOTC Travel.
“Airfares to Singapore, Kuala Lumpur have witnessed a marginal increase of 3 percent. Sri Lanka has witnessed a drop in airfares of 7-9 percent compared to last year from Delhi, Hyderabad and Chennai, and an uptick of 6 percent from Mumbai,” he added.
Top international destinations that have been booked for travel by Indians include Dubai, Bangkok, New York, Colombo, Bali and Male, according to data from online travel platform Ixigo.
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“Demand remains robust and is only on the upswing. This can be attributed to an improvement in the economy and a change in attitudes where people are open to splurging on travel. The surge in travel can also be attributed to a major spurt in traffic from tier II and tier III cities,” said Ajay Prakash, board member, Federation of Associations in Indian Tourism and Hospitality (FAITH).
Shanti Kohli, managing director of Amber Tours, said that her recent visit to the international Luxury Travel Market, a flagship luxury travel trade show in Cannes, France, showed how most countries are eying Indian travellers. “Destinations like Hong Kong are offering good deals to tourists. India is being looked at as a very important market in the global market,” said Kohli.
Analysts, however, said that if the rupee continues to weaken, outbound travel volumes could be hit.
"As the rupee weakens, travel outside India automatically becomes more expensive. We will see a reduction in outbound travel due to this," senior aviation analyst Lokesh Sharma told Moneycontrol.
In the last one year, the US dollar index has appreciated 1.9 percent, while the Indian rupee has depreciated nearly 2 percent against the greenback in the same period.
The rupee fell more than 10 percent in 2022 against the dollar, performing worse than almost all Asian currencies. It closed the 2022-2023 financial year at 82.18 to a dollar.
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