The second quarter of the current fiscal has been a challenging one for sectors which have huge revenue generation in dollar terms. With rupee depreciating below Rs 68 per dollar, performance of many sectors went for a toss. This currency crisis has brought mixed results for the tourism sector as with rupee becoming considerably cheaper compared to the dollar, industry leaders are expecting more foreign tourists, while at the same time they are concerned about the dip in the numbers of Indians going abroad.
While the volumes of foreign tourists are expected to go up, foreign exchange earnings (FEE) for the tourism sector would take a hit. During August 2013 the FEE fell to $1.29 billion as compared to $1.31 billion in the same month last year.
Talking about the impact the rupee depreciation would have, Vikram Malhi, GM (South and Southeast Asia), Expedia said, “owing to a rise in the overall cost of travel and the rupee dip, there has been a dip in Indians travelling to foreign destinations. But while the fall in the value of the rupee has impacted the overall cost of travel, it has also opened up huge opportunities in the domestic and (South East Asia) SEA markets.”
He felt that while there will be a considerable impact of currency depreciation, there is a silver lining to it for the SEA countries. “People who were planning to visit Europe or USA are now looking at South East Asian destinations like Thailand, Malaysia, Hong Kong, Vietnam, Philippines, Indonesia and Singapore. Also we have seen a surge in inbound traffic to India, given the weakening rupee has made India all the more attractive to foreigners, especially tourists heading to Goa, Rajasthan and Kerala for Christmas holidays.”
The rupee has dented the outbound part but has also created an opportunity in domestic tourism. Overalltravel.com is a fast growing company which aims to tab this domestic and inbound tourism market of the country. Bhupender Mehta, CEO of Overalltravel.com said, “Market has become quite price sensitive and with rupee falling, we are expecting a significant rise in the inbound tourism. We already have tie ups in South East Asia, Middle East, New Zealand and Australia and are expecting good volumes from there.”
Citing that now more Indians would prefer a vacation in the country than abroad, he added, “The net costs have gone up which has added pressure on Indians looking to travel abroad. Domestic travel would be benefited the most by this and we already have started working on weekend getaways and adventure trips in the country as their demand is expected to rise.”
Aiming to attract more and more foreign travelers to the country, Federation of Indian Chambers of Commerce and Industry (FICCI) recently organised ‘The Great Domestic Tourism Bazaar’. Talking on the sidelines of the event, Jyotsna Suri, Chairperson, FICCI Tourism Committee and Chairperson & Managing Director of the lalit Suri Hospitality Group said, “Foreign travelers won’t be affected by the currency depreciation as their trips are planned well in advance. As far as domestic tourism is concerned, we are expecting the numbers to increase this year as more people would now avoid going abroad.”
As per the data by the Ministry of Tourism for 2012, Andhra Pradesh was the most visited state contributing 20 per cent of the total share followed by Tamil Nadu and Uttar Pradesh which held 18 per cent and 16 per cent share respectively.
Unlike Bangkok, Indian tourism is still growing and from mere 310 million domestic visitors in 2003, it has grown to 1,036 million visitors in 2012. With currency crashing so much, the industry would face a crunch when it comes to foreign exchange fee and outbound travelers but it also has made India a perfect vacation destination for foreign tourists as well as domestic.