Outbound travel gets more expensive as the rupee falls

But domestic tourism makes gains from fluctuating rupee

Published - May 25, 2022 09:08 pm IST - Bengaluru

After international flights resumed earlier this year, outbound tourism looked set to take off from the two-year slumber. 

After international flights resumed earlier this year, outbound tourism looked set to take off from the two-year slumber.  | Photo Credit: file photo

For many, tourism is a luxury. But after two pandemic-and-lockdown-hit years, “revenge tourism” — as it has come to be known — has made its presence felt.

After international flights resumed earlier this year, outbound tourism looked set to take off from the two-year slumber. However, with the free fall of the rupee, travel has gotten more expensive and in some cases, pushed up demand for domestic travel.

Prahlad Krishnamurthy, CBO, Cleartrip, said while the rupee’s fall definitely has impacted outbound tourism to some extent in the short term, as holidaying outside India has become expensive, the pent-up demand owing to revenge travel and the easing of COVID-19 restrictions by countries are acting as a strong tailwind for outbound tourism.

Long-haul destinations like Europe, Australia, the United States of America, and south-east Asia have become more expensive, but this will ease out once more capacity is introduced by airlines, after a correction in the oil prices, and stability in the rupee, he added.

“Domestic tourism has done relatively well, but there has been a steep rise in domestic airfares too due to high oil prices. Inbound tourism has been steady and there is good demand across destinations like Goa, Srinagar, Jaipur,” said Mr. Krishnamurthy.

Rajeev Kale, president and country head, Holidays, MICE, Visa-Thomas Cook (India) Limited, said the rupee movement is not a new phenomenon, and despite depreciation against the U.S. dollar, travel is clearly non-negotiable for Indians, more so, with strong pent-up demand this year. 

“Indians are smart travellers, and managing their travel budget involves a mere readjustment: curtailing expenses on shopping and dining in favour of must-do experiences/sightseeing. In addition, customers are also open to a shift in destinations to those that are easier on the wallet or countries where the rupee shows appreciation. Payment for cruises and international rail travel can be made in Indian rupees and are great value savers; also travel passes, like the Swiss Pass, offer great all-included transport options to stretch a traveller’s budget,” he explained. 

The upside

The upside of a depreciating rupee, he said, is the strong fillip to domestic tourism, and having already surpassed pre-pandemic levels in March, there is significant uptick with week-on-week growth, he added.

Travellers who had bought international holidays well in advance with special discounts and offers are also not impacted by the current fluctuation in the rupee, said Daniel D’Souza, president and country head - Holidays, SOTC Travel.  

“We continue to witness a significant uptick in demand for Europe and reopened short-haul destinations with increased relaxation in restrictions like Thailand, Malaysia, and Indonesia, and also South Africa,” he said, also agreeing that a fluctuating rupee is putting India back into the spotlight, with Kashmir, Himachal Pradesh, Uttarakhand, Ladakh, the north-east, Goa, and the Andaman and Nicobar Islands driving demand.

Sanjar Imam, from the Karnataka Tourism Forum, said overall, inflation and the fall of the rupee have not made a major dent in tourism because of two reasons: one, it is not a significant amount as far as international travel is concerned — a traveller will not mind paying 5% more for a trip worth ₹5 lakh, and second, because of the pent-up demand towards travel.

Different packages

“There are different price packages for Asia, Europe etc., so people choose based on their budget. Domestic travel has been picking up since last year. If you look at the percentage change of rupee devalued, it is not huge from last year. Once people make up their mind to travel, they won’t change for a little extra. They will check the price today and then take a call, not use a benchmark from two years ago,” he added.

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