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Rupee hits outbound travel

business Updated: May 13, 2012 23:39 IST
Sachin Dave

Debashish Ray, 29, a software professional working in a Mumbai based start-up, who had decided to go backpacking to Spain with three other friends — inspired by a Bollywood flick — has all but shelved his plans for the trip.

“I and three other friends had decided to go to Spain for about 10 days in May last year and we saved for the trip for about a year. Now, when it is time to make bookings, it turns out the trip is simply out of our budget,” said a dejected Ray.

Blame it on the Indian Rupee, which was trading at Rs 44 against the US dollar in 2011 when Ray and his friends hatched their plan — and is now about Rs 53.5.

“There is going to be around 20% rise in one’s travel plans due to the rupee depreciation since 2011,” said Gurcharan Bhatura, director general, Federation for Aviation and Sustainable Tourism (FAST), a civil aviation and travel consultancy. “It is affecting outbound tours, but inbound travel becomes more affordable.”

For Ray and his friends, a return ticket to Madrid that cost around Rs 40,000 a year ago is now priced at Rs 50,000 now.

Add to it the hotel tariff, and the total expenditure per person has risen by Rs 36,000 for the trip.

So while the room rates in European hotels, especially in Greece and Spain, have come down since 2009, the depreciating rupee neutralises its effect.

“The prices had bottomed out in 2011, so tariffs of hotels are almost the same since then,” Ray said. The rupee was trading at an average of around 42 against the US dollar in 2008, 48 in 2009, 45 in 2010 and around 44.5 in mid-2011. Since then, it has slid to touch crossed R53 by May amidst reports that the Reserve Bank of India (RBI) did sell off some dollars to curtail the rupee’s fall.

Travel agents, however, claim that there is no fall in outbound tours. “At Cox & Kings we have not seen any reduction. Summer is the traditional high season and holidays are booked much in advance,” said Karan Anand, head, relationships, Cox and Kings. The company is offering some discounts, however. “You can travel to Europe within a budget of Rs 1 lakh or the Far East for under Rs 80,000,” said Anand.

Travellers seem to be changing their destinations, to countries that are closer home. “Popular destinations for Indian travellers now include the Far-East and Mauritius. Our Far East tours are very attractively priced and despite the rupee depreciation are seeing extremely strong growth,” said Madhav Pai, chief operating officer, Leisure Travel (outbound), Thomas Cook.

A case of neighbour’s pride, perhaps.