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Rediff.com  » Business » Your foreign travel is COSTLIER now! Here's why

Your foreign travel is COSTLIER now! Here's why

Last updated on: November 22, 2011 17:34 IST

Your foreign travel is COSTLIER now! Here's why

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The depreciating rupee against dollar is burning a bigger hole in the pockets of Indians travelling abroad with travel firms hiking charges to offset the impact.

Inbound travel, however, is likely to go up as foreigners will have to shell out less in dollar terms to experience India's hospitality, industry observers pointed out.

"There is no scope for travel companies, including ours, to absorb the impact as margins are already low. We have increased prices of our travel packages by about 10-12 per cent only to subvent the rupee pressure," Pearl International Tours and Travel executive director Arjun Seth told PTI.

According to Yatra.com co-founder Sabina Chopra, there has not been any decline in demand for outbound travel though.

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Photographs: Reuters
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"Due to the falling rupee, travelling to the United States, Europe and Australia has become costlier. However, there is no impact on the demand yet. We have seen an increase of 20 per cent in demand for outbound travel compared to last year."

She said the land charges (hotel, food and travel) in the US, Europe and Australia are more than 60 per cent of the total package cost.

"So when rupee weakens these land charges go up automatically. However, impact is felt less in travel to Dubai and other Asian countries as land charges are lesser compared to the West," she added.

According to Chopra, in the budget segment, a tour package spread across seven to nine days starts from Rs 1 lakh (Rs 100,000) per person in the case of Europe, while in case of Asian destinations a package starts at around Rs 20,000.

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Photographs: Reuters
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Analysts, however, said the trend of rupee weakening continues, volumes of outbound travels could be impacted.

"As the rupee weakens, travel outside India automatically becomes more expensive. We will see reduction in outbound travel due to this," SMC Global Securities strategist and head of research Jagannadham Thunuguntla said.

According to estimates of SMC Global Securities, January 2011 and till date, the rupee has depreciated by about 18 per cent.

"While, travelling abroad has become expensive, coming to India has become 18 per cent cheaper for international tourists," he added.

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Photographs: Reuters
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However, the news is not bad for international tourists.

"A weak rupee makes India a cheaper destination...we are getting a lot of bookings from tourists coming into India as this is the peak season," Starwood India managing director Dilip Puri said.

"Weaker rupee does make India a cheaper destination but most of the travel firms hedge their dollars and make advance bookings, so this kind of volatility is not good for any tourism destination," Kuoni official Dipak Deva said.

The Indian rupee that has been losing ground to the US dollar touched a lifetime low of Rs 52.50 per US dollar this morning on the Interbank Foreign Exchange today on sustained demand for the American currency.


Photographs: Reuters
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