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With the rupee trading at a record low level of 71.53 against the dollar today, prepare to spend big if you are planning a foreign trip. Because everything from airfares to holiday shopping is now more expensive than it was a year ago. Here's why:
Several international airlines have already hiked fares on account of spiralling jet fuel costs. Back in May, international airfares had already gone up by 5-10%. While Indian airlines have so far held off on account of the cut-throat competition coupled with the ongoing lean season, things are likely to change soon.
Given that all the domestic players have taken a huge hit from the falling rupee too - apart from fuel, almost 70% of an airline's costs are reportedly dollar-denominated - airfare hikes are likely to be announced for the upcoming festive season. "You need to have at least 10-15% increase (in airfares) to cover existing costs," Ajay Singh, chairman, SpiceJet, told The Hindu, last week.
Foreign stay is also more expensive than a year ago given that the rupee has slid 11% against the greenback so far in 2018. Apart from inflated dollar-denominated hotel bills, travellers will have to spend more in rupee terms for expenses like sightseeing, attraction tickets, food, shopping, et al, at the destination. Overall, travellers are looking at hiking their holiday budgets by 7-10%.
Interestingly, leading tour operators say that the depreciating rupee has not impacted outbound travel plans of Indians yet. "The weakness in the rupee against the dollar has not had any impact on the travel plans of Indians," Cox & Kings Relationships Head Karan Anand told PTI recently.
According to him, Indian travellers are very calculative and factor in currency fluctuations and keep a significant buffer while making their travel budgets. "Indian travellers will not cancel their vacation. They may trade down like reducing the duration of travel, stay in four-star accommodation and cut down on shopping to reduce expenses while on the trip [if the rupee weakens further]," he added.
There is also a growing focus on short-haul destinations as well as countries where the rupee goes further. The buzz is that Indian travellers are increasingly switching attention from the US, UK and Europe to Australia, New Zealand, Turkey, Indonesia, Cambodia, Vietnam and Sri Lanka.
(Edited by Sushmita Choudhury Agarwal)