The primary drivers: Geopolitical disruptions inflating fuel and operational costs, and a surge in travel demand.
Summer holidays are 25 to 30 per cent more expensive for Indian travellers this year versus last year, as airfares and hotel rates have risen sharply across both domestic and international destinations.
Airfares have risen by 15 to 25 per cent over the May-June period, while hotel tariffs have increased by at least 20 per cent year-on-year, according to industry executives, online travel platforms, and tour operators.
The primary drivers: Geopolitical disruptions inflating fuel and operational costs, and a surge in travel demand.
"This summer has seen a notable increase in airfares on popular routes. Hotel tariffs, especially in domestic leisure destinations of Himachal Pradesh, Uttarakhand, and southern India, have surged nearly 20 per cent, driven by strong demand and inflationary pressures," said Ravi Gosain, president, Indian Association of Tour Operators (IATO).
International airfares have soared even higher. Westbound flights, in particular, have seen spikes of up to 100 per cent due to recent airspace closures over Iran, Israel, Jordan, Syria, and parts of Central Asia.
These detours have extended flight times, raised fuel usage, and increased crew duty hours.
"On top of that, airports such as Mumbai have revised upwards their user development fees, adding further to the cost of flying," said Karan Agarwal, director at Cox & Kings.
Mumbai International Airport Limited recently increased its user development fee from Rs 187 per flyer to Rs 615 for each departing international economy passenger and Rs 695 for business class.
Arriving passengers now pay Rs 260 (economy) and Rs 304 (business), while domestic travellers pay Rs 175 per departure and Rs 75 per arrival since May.
There's a clear upward trend in travel costs compared to last year, said Agarwal, adding, "domestic airfares have gone up depending on the route, while international fares have seen increases in the range of 25 to 45 per cent.
"These figures are higher for last-minute bookings or during event-led travel peaks."
The prices of package tours, both domestic and international, have also gone up by roughly 10 per cent because of "higher demand and limited inventory", according to Bharatt Malik, senior vice president-flights and hotels at Yatra Online.
The travel portal has seen a 14 per cent rise in advance summer bookings to European destinations like France, Germany, the Netherlands, Switzerland, Italy, and Spain, he noted.
There's also strong demand for religious travel, particularly to Chardham and Ayodhya.
Rajeev Kale, president and country head-holidays, MICE (meetings, incentives, conferences, and exhibitions), and visa at Thomas Cook (India), reported price increases of 10 to 15 per cent to Thailand, Malaysia, Singapore, Dubai, and Abu Dhabi, and 5 to 10 per cent to Japan and South Korea.
"This has clearly not been a deterrent to customer demand," he said.
Manjari Singhal, chief growth and business officer at Cleartrip said, "We've seen a 10% drop in air bookings this summer, while hotel bookings are up by 40%."
"This could be driven by travellers choosing shorter, more local trips that don't require flying."
She noted that some airlines raised prices sharply where capacity was limited and demand high.
Hotel tariffs, experts said, have also risen, reflecting broader market formalisation, as more investments flow into the hospitality sector in anticipation of long-term returns, and a wave of premiumisation as consumers seek high-end, luxury experiences.
"Hotel tariffs have also moved upward, especially in high-demand leisure destinations, with average room rates climbing by 20 to 30 per cent. These changes are reflective of strong demand across segments," Agarwal added.
According to a report by HVS Anarock on the Indian hospitality industry, the average room rate had climbed to Rs 7,800 to Rs 8,000 in 2024, up nearly 10 per cent over 2023, resulting in revenue per available room rising by 10-12 per cent to Rs 5,000-5,200.
Sector watchers noted that since travellers were seeking more personalised and immersive experiences, hotels and airlines were offering upgraded offerings that were being factored into the pricing.
"While pricing has gone up, many operators have to absorb some cost fluctuations due to competition and customer sensitivity, especially in fixed-departure group tours.
"This has added pressure on margins for tour operators and small hotel properties, particularly where input costs like transportation and staffing have risen more sharply than prices can be passed on," Gosain said.
However, S D Nandakumar, president and country head-holidays and corporate tours at SOTC Travel, said that since summer holiday plans and bookings are typically made well in advance, particularly due to visa processing timelines, customers have benefitted from air-inclusive products and pre-purchased, bulk-booked inventory across flights and hotels.
Feature Presentation: Ashish Narsale/Rediff
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