By Aditi Shah
MUMBAI, Aug 30 The Indian rupee's crash has
swept away banker Nupur Sood's dream of a holiday in Venice:
instead the 35-year-old will settle for cold beers on the
beaches of Goa on India's west coast.
"We are pampering ourselves with a leisurely holiday but it
will be domestic. I guess it is the only way to compensate,"
said Sood, who plans to stay next month at the plush Grand Hyatt
hotel in Goa, managed by Hyatt Hotels Corp, as a
consolation for missing her holiday of a lifetime in Italy.
Sood is among India's growing urban middle class, whose
rising incomes over the past decade made holidays abroad
affordable. However, the currency crisis in Asia's third-largest
economy is taking foreign travel beyond their reach and many are
planning vacations in their home country.
While this will be a blow for domestic tour operators
promoting overseas travel it will be a shot in the arm for
India's stagnant hospitality sector, which is reeling as high
inflation and rising import costs eat away at profit margins.
Hotel groups, including Starwood Hotels & Resorts Worldwide
Inc, Marriott International Inc and Hotel
Leelaventure Ltd are seeing a spike in bookings for
the winter season from domestic tourists and from foreign
travellers, who importantly bring in foreign exchange.
"There is a lot of optimism in the hotel industry that, for
both these reasons - it being cheaper for inbound travellers and
a substitute for outbound travellers - we expect to have a good
winter," said Dilip Puri, managing director, India at Starwood
The Indian rupee hit a record low of 68.85 against the
dollar on Wednesday - down about 20 percent for the year -
despite multiple attempts by the government to calm investors'
concerns. Emerging markets more broadly are being hit by capital
outflows in anticipation of a reduction in U.S. monetary
stimulus. The rupee recovered some ground on Thursday.
Its slide has contributed to a 35 percent surge in domestic
tourism between January and June and a 15 to 20 percent fall in
outbound tourism over the same period, the Associated Chamber of
Commerce and Industry of India says.
About 15 million Indians normally take vacations overseas
each year, so the shift is keeping millions of them and their
spending at home. It also means they will not be selling rupee
for foreign currency, offering small relief for the beleaguered
Meanwhile, the number of foreign tourists arriving in India
between January and June also rose, 2.6 percent over the same
period of last year, figures from the Ministry of Tourism show,
and is expected to rise further over the holiday season starting
For The Leela hotel in India's beach state of Goa, it has
been one of the busiest summers in several years and it is
gearing up for an even busier winter season, which attracts
Indian holidaymakers during festivals and foreign tourists drawn
by a relatively warm climate.
"India has become a lot cheaper," said Shridhar Nair,
general manager at the Leelaventure group hotel in Goa, which
saw a 10-12 percent rise in revenues between April and June from
domestic tourists, and foreign travellers are expected to push
up its winter bookings by 12-14 percent over last year, which
would be one of the best seasons in years.
Nair said the highest demand in the summer was for 'The
Club' rooms, which sell for 60,000 rupees a night ($890) and
have plunge pools and butlers.
The most popular tourist destinations of Goa, Agra, Jaipur
and Pune stand to benefit the most from the surge in domestic
and foreign tourism.
They were the only major hotel markets in the country to
report growth in revenue per available room (RevPAR), a measure
of profitability, in the year ended March 31, a report by hotel
consultant HVS says.
The Leela also hosted two weddings initially planned for
Greece and Thailand and a corporate event scheduled in Kuala
Lumpur - events that were forced to move because of the rupee.
"Our currency has fallen much more than the Thai baht and
Maldivian rupee so from the currency devaluation point we stand
to gain the most," said Nair, who has seen a rise in enquiries
from Russia, Europe and especially Britain, where travellers are
taking advantage of the rupee breaching 100 against the pound.
Hoteliers believe that for the government this is a good
opportunity to attract foreign currency from tourists, which
would help close a record current account deficit that is much
to blame for the rupee's slump.
In 2012, the 6.6 million foreign tourists visiting India
contributed about $18 billion in foreign exchange earnings, the
highest since 1997. That amount is expected to rise more than 8
percent in 2013, the Ministry of Tourism forecasts.
For Carlson Rezidor Hotel Group, which operates the Radisson
and Park Inn hotels among others in India, a rise in occupancy
in winter will be a boon because - like several other chains -
it has been hit by high inflation and import price rises.
"These are challenging times," said K.B. Kachru, executive
vice president, South Asia, at Carlson. "Operating costs have
increased more than the revenue possibilities. It is becoming
difficult to maintain margins. If the winter season is busy it
will help keep margins in check," he said.
Thomas Cook, India's second-largest tour operator,
has been hit hard by the increase in 'staycations'.
Its outbound business grew just 15 percent in the April-June
quarter compared with 44 percent a year ago. To tap demand for
holidays at home, it has ramped up its domestic portfolio by
offering more than 800 tours within India, boosting domestic
enquiries for the winter season by 15 percent.
Other operators like Cox & Kings Ltd, TUI and
Kuoni and online travel portals Yatra.com and MakeMyTrip Ltd
are also introducing more domestic tours and offering
discounts on places like Southeast Asia, South Africa and
Australia, where the rupee has been comparatively more stable.
Banker Sood, who abandoned her 10-day trip to Italy just as
the rupee crossed the 60-per-dollar mark, threatening to push
her expenses up by 10-12 percent, is happy with her decision.
"I am glad I did it because look at the rupee now. When I
went to the U.S. last year the currency did a similar thing and
I overshot my budget," she said. "From a planning perspective it
completely throws your budget out, so this time it was a case of
once bitten, twice shy."