Indian rupee spoils holidays abroad for Indians, but not for all
Wednesday, 17 July 2013 00:01
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With the rupee hovering near a record low, Indian tourists would be tempted to give foreign shores a miss this year. But staying home is not an option for Harsh Chadha, a multinational executive just back from a three-week family vacation in the UK.
Chadha, 35, is part of India’s growing elite, whose trips abroad are not affected by the vagaries of the currency market. “[If I’m planning] a trip to a place like London [and] already spending enough money… a 10-15% increase in the dollar will not be pinching me a lot,” says Chadha, an IT director who bought pounds for Rs. 92 ($ 1.5) each before going on vacation.
The Indian rupee has fallen around 10% since March and reached a low of 61 to the dollar in June, hurt by the US Federal Reserve’s plans to taper stimulus measures and India’s ballooning import bill. And it’s not just the dollar. The rupee hit 93 to the pound, compared to about 80 in March, while the euro jumped to 78 rupees from 70 in recent months.
Despite a weakening rupee, travel website MakeMyTrip has not seen a slowdown in foreign travel among passengers they classify as ‘royal’ or ‘elite’ based on past purchases. “We’ve seen a very robust growth in our international bookings,” said Mohit Gupta, chief business officer (holidays) for MakeMyTrip.com, comparing bookings in May-June 2013 to the same period last year.
Though home to 122 billionaires, India is a country of contrasts with a widening wealth gap and over two-thirds of its population lives on less than $ 2 a day. At the same time, people spend thousands of rupees at Charles & Keith, Tommy Hilfiger and Zara showrooms in plush malls.
India’s liberalisation drive in the 1990s opened up the economy, with improving lifestyles and rising disposable incomes changing the way many Indians think. The country is predicted to be among the world’s fastest growing markets with consumer spending hitting $ 13 trillion by 2030, boosted by rapid expansion of its middle class and income levels, global consultancy Deloitte said in March.
While a rising dollar has hit Indians’ purchasing power for plane tickets and hotel stays, travelling abroad has never been off the table for some.
Bhanu Sood, who exports jewellery from New Delhi, had to change holiday plans with friends because they were still adjusting to the new reality of a weak rupee. But her vacation plans with family are still happening.
“If it was just me, it really didn’t matter because Rs. 50,000 up and down doesn’t make a difference,” said the 40-year-old, who is travelling to Thailand and Singapore in the coming months, and plans to visit Europe and the United States next year. “It’s a done deal no matter where the rupee would be.” Despite her optimism, there’s little doubt other Indian tourists are cutting back on expenses.
Sood’s sister Nupur spent around Rs. 800,000 (around $ 13,300) on a trip to the US last year, much more than she had planned. This year, it’s a case of once bitten, twice shy for the 35-year-old banker. Nupur is settling for Goa’s beaches, preferring the coastal state to her dream destination Italy.
“I’ve cancelled my Italy, doing Goa and I am gonna watch the euro… if I don’t see any improvement then mentally I’ll prepare myself for a bigger budget,” she says.
Some Indian tourists are also sacrificing long-haul trips to the US and Europe, opting for Asian holidays in countries such as Thailand. Others are travelling within India or taking shorter trips.
“Travellers are changing their preferred destinations but are not thankfully cancelling their plans altogether,” Sharat Dhall, president of Yatra.com, said in an e-mailed reply.
