Holiday goers are opting for budget rather premium packages this summer owing to the revision in service tax.
Tour operators are witnessing an increase in bookings for overseas tours and expect this summer season to be better than last year but companies are also seeing a growing customer trend to book value tours rather than more expensive tours.
Rajeev Kale, President and country head of leisure travel, Thomas Cook said overall tour costs have increased by around 5 per cent as a result of service tax revision. "Customers are taking more of value tours than premium ones," he said.
Typically, bookings for summer season begin in October-November of the previous year and demand was muted in the initial months due to demonetisation. But that has not dented the demand.
"We are expecting 20 per cent growth in volume for overseas tours in summer. We are seeing a positive sentiment and we have seen a good traction with the launch of our holiday sale," Kale said. He added that the company is adapting to changed customer sentiment and creating packages for both value and premium segments.
"We are in the midst of our peak booking season and there is no indication of any slowdown. Families are booking their summer vacations to Europe, USA, Far East and other destinations such as Australia, New Zealand and also South Africa," said Karan Anand, head-relationships, Cox & Kings.
To put it in perspective, in 2016, tour companies had seen a muted growth in overseas tours especially to Europe. The terror attack in Paris and introduction of biometrics for Schengen visa had impacted bookings last year.
Now to win customers, operators are offering discounts and cash-back schemes, and absorbing the service tax component in the package cost. "The marketing focus is more on price rather than the product," said Madhav Pai, managing director of WoW Holidays."There is a clear move to more frequent shorter breaks as new age Indian travellers want to experience a wide variety of destinations and different experiences. Inevitably this leads to them economising by choosing to travel on budget packages rather than luxury ones, " said Sharat Dhall, President of Yatra.com.
According to Hanneli Slabber, country manager of South Africa Tourism, Indian travellers especially the youth are looking for value for money and more adventure activities and experiences. " Overall I think now Indian customers are looking for smarter travel options and want every rupee to count. They are not scared to work their own budgets," she said.