Foreign travel demand high despite weak rupee as firms absorb cost increase

Foreign leisure trips are 7-10 per cent costlier because of the rupee's weakness. Demand, however, remains strong and many customers are paying 60 days in advance to lock in better rates, say tour operators.

Travel services firm Thomas Cook India has seen 30 per cent overall growth in winter tours this year, with demand mainly for short-haul destinations such as Bali, Dubai, Abu Dhabi, and locations in Southeast Asia. There has been 26 per cent growth in forward bookings for packages next summer.

“Our data indicates that impact of currency fluctuations is limited, with 25 per cent of our group travellers indicating they may drop an optional tour at a destination,” said Rajeev Kale, president and country head (holidays) at Thomas Cook India.

Since January, the rupee has depreciated 13 per cent against the US dollar and nearly 10 per cent against the euro, thus increasing tour costs. The foreign exchange component is around 70 per cent of the tour cost and can be paid 15-30 days before the travel date. 

RBI norms allow customers and tour operators to purchase the foreign exchange component 60 days before the travel date. Thomas Cook said it was seeing early requests for tour related forex transactions to lock in the rate. “The demand and bookings for winter holidays are robust. We see encouraging demand from travellers who wish to travel to Europe and the US in 2019. We faced a similar situation in 2013 when the currency depreciated, but travel was not affected,” said Karan Anand, head of relationships, Cox & Kings.

 

According to Rakshit Desai, managing director at FCM Travel Solutions, package costs to the US and Europe have increased by 10-12 per cent, but tour operators are not passing on the entire increase to customers to keep prices affordable and competitive. “There will be an impact on the margins of travel companies,” he said. A 15-day Europe tour, which was being sold for Rs 200,000 a person last year, is now priced at Rs 215,000. 

Reduction in visa fees, easier visa norms and currency depreciation in countries such as Egypt, South Africa, Indonesia, and Turkey is attracting Indian leisure tourists. After floods in Kerala hit tourism in the state, Sri Lanka witnessed a 40 per cent increase in bookings. Karan Anand of Cox & Anand said there was 20 per cent growth in travellers to Turkey and South Africa.

“Last year, we saw a 7 per cent increase in tourist arrivals from India and this year we are expecting a significant increase in visitors with the introduction of new 10-day visa for 5 rials (around Rs 940),” said Lubaina Sheerazi, country representative of Oman Tourism.

FOOTLOOSE
 

| Travel companies are not passing on the full cost increase to keep prices competitive

| A comprehensive 15-day Europe tour, which was being sold for Rs 200,000 a person last year, is now priced at Rs 215,000

| Reduction in visa fees in Oman and currency depreciation in some countries are attracting Indian tourists 

| Sri Lanka has seen a 40 per cent increase in bookings as the floods in Kerala have affected tourism in the state