India's astonishing rise in foreign travel spending: From $11 million a year to a billion a month

The meteoric rise in spending on foreign travel by Indians began almost a decade ago, according to India's central bank records. Illustration: Suneesh Kalarickal

Indians are spending vast amounts of money on foreign travel, breaking all kinds of records in the process. In January, for instance, they spent nearly $1.49 billion on foreign travel, which represents a sequential increase of over 31 percent from the $1.13 billion spent in December 2022. It also marks an increase of over 50 percent from January 2022, when they spent $989 million on foreign travel.

Based on available data, it appears that Indians are on track to spend twice as much as they did over the whole of the 2021-22 financial year, having already spent $11.4 billion in the current fiscal year, against $6.90 billion in the previous fiscal year.

Revenge travel up despite rise in costs

Before the COVID-19 pandemic hit, Indians had already broken foreign travel expenditure records in FY 2019-20 by spending $6.96 billion. However, the pandemic brought that trend to a halt, with travel spending plummeting to just $3.23 billion.

Despite an overall increase in travel costs, the pandemic has led to a surge in demand for travel, with many people engaging in ‘revenge travel’.

“There is extreme optimism in people that are not eschewing travel at all. The overall cost of travelling has gone up due to various factors like an increase in airfares, accommodation, etc. Now, people end up spending more than they used to,” says Nishant Pitti, CEO and Co-Founder of EaseMyTrip, a listed travel portal.

Pitti says his company achieved three times the growth in Gross Booking Revenue (GBR) for international bookings in the first nine months of FY23 compared to FY22. GBR is the total revenue generated from customer bookings before any deductions. This significant growth in revenue clearly indicates an increase in demand.

A decade-long travel boom

The meteoric rise in spending on foreign travel by Indians began almost a decade ago, according to India's central bank records. In FY 2014-15, Indians spent a mere $11 million on foreign travel. That has now gone up by a staggering 104,000 percent since then. Cumulatively, Indians have spent $40 billion since FY2014-15.

Ajay Sharma, president and founder of Abhinav Immigration, identifies affordability and availability of direct flights to preferred destinations as key factors driving the travel boom. He added that Vietnam, Dubai, and Bali have been among the most preferred destinations for Indians in recent times, leading to them becoming overcrowded and abnormally expensive.

He also added that crisis-ridden Sri Lanka could make a return as a popular choice among Indians wanting to visit abroad.

Amidst this travel boom, EaseMyTrip is witnessing record bookings for international destinations such as Dubai, Thailand, Vietnam, Nepal, Saudi Arabia, and Qatar.

Travel now, pay later

Technological advancements have not only made it easier for fintechs to extend credit to customers but have also contributed to the surge in spending. 'Travel-now-pay-later' options have become a popular choice among travellers, allowing for bookings to be made closer to the travel date and making destinations that were previously out of budget more accessible.

This payment flexibility enables travellers to pay for their travel experiences in monthly installments, making holidays more affordable and manageable.

As a result, we have seen a shift from domestic to international travel by Gen Z customers, with the option of TNPL spreading the cost of their travel over 3, 6, and 9 months.

According to Akash Dahiya, Co-Founder and CEO of SanKash, a 'travel-now-pay-later' fintech player, millennial adoption has increased even more rapidly than last year, with 58% clubbing two international destinations or vacations in a year.