The depreciating of the Indian rupee is ringing alarm bells across sectors in the country, but for the tourism industry this is a great opportunity.
Together with visa on arrival a weak Rupee may exactly safe a tourism industry that was under attack.
In the 1970s, the hippies who returned to the United States from Goa, wrote in travel magazines, gushing of the tropical haven where they could live for less than a dollar a day. Today, the scene is far different in Goa, but tourists can still look forward to stretching their holiday experience towards king-size.
Tourism stakeholders in Goa are licking their lips in prospect of a bumper harvest this tourism season. The depreciated rupee will offer foreign tourists more ?bang-for-the-buck? and this is what the tourism industry in Goa hopes, will bring in the numbers.
Striking when ?the iron is hot?
?It will be a great initiative to strike in the foreign market now in order to capitalize on the opportunity of overseas customer influx,? Panaji?s Goa Marriott general manager Ranju Alex said.
Travel company Sita-India chief operating officer Ernest Dias said Goa may see a surge in numbers of free-of-itinerary (FIT) or independent foreign travelers. ?I wouldn?t say that the number of charter tourists will increase as they pay their agents in dollars. The packages are sold in dollars and are not pegged with the Indian rupee. Agents who conduct the charter business fix the exchange rate at the beginning of the season. So, any fluctuation does not affect this part of the industry. We could look at a rise in the numbers of independent travelers,? Dias said.
Travel and tourism association of Goa president Francisco de Braganca, a hotel owner, himself, said charter operators must make the change. ?Devaluation of the rupee will have a positive effect on tourism. The charter pricing of hotels to European charter operators are fixed one year in advance and is mostly in rupees. The devaluation of the rupee against the euro and the pound has made holidays cheaper for European tourists. This benefit needs to be passed on by the charter companies to their customers. Up to now, they have not done so. Most probably they will give discounts closer to the beginning of the season. Overall, the devaluation of the rupee will see an upsurge in tourism in Goa from the international market,? Braganca said.
Majorda hotel Alila Diwa general manager Siddharth Savkur said international inbound travelers will now get higher returns in forex conversion terms and hence will find Goa more attractive. ?The key will be to translate the higher purchasing power into more incremental spends by the tourists around the hotel-at restaurants, spas, etc. Hotels would be looking at marketing strategies around this,? he added.
Confederation of India Industry, Goa Chapter, vice-chairman and Magsons Retail Stores managing partner Kirit Maganlal said the tourism industry must note that the discerning international traveler will weigh a number of options before making a choice to holiday in Goa.
?The weakening of the rupee has an adverse effect on outbound tourism making it beyond the average traveler?s reach to afford a reasonable holiday abroad. Inbound foreign tourists stand to gain more ?bang for their buck?. It is also pertinent to note here, that when international currencies gain strength, the discerning traveler weighs a number of country destinations and hence the winner is one that can position itself at the optimum experience value and price point.?
Inflation demon and costlier imports
Even as inflation has hit India, tourism stakeholders feel that the depreciated rupee will cancel out the effect for foreign tourists.
?Inbound tourism is going to be bolstered in a big way. Even if the prices here will increase by 5%, the 20% depreciation of the rupee will make Goa a destination that will be 15% cheaper,? Nilesh Shah of PBA Holidays said. ?As for charter flights, I feel their numbers will increase. Charter operators can negotiate with the hotels now that the rupee has depreciated,? Shah said.
While all talk has been centered on lower prices that the Indian hospitality industry will offer now, Shah pointed out that tourists will have to shell out more if they want to indulge in an imported beverage.
So, are hotels going to adjust pricing for imported food and beverage as imports will become costlier? ?Yes, this will be necessary,? Alex said. ?Business has to run and profit has to be made. Unfortunately, this is a knee-jerk reaction to the sudden inflation in order to protect bottom lines. We do not believe in being impulsive and would wait and watch if the trend continues and then react accordingly,? she said.
?We have to consider the fact that hotels will have an increase in costs on account of import of expensive liquor, amenities and food items resulting in higher food and beverage cost. Food and beverage pricing will have to be raised on account of increased import costs as well as increase in domestic prices,? Braganca, who is also owner/director of the Riviera de Goa resort at Arpora, said.
?The bigger brands will not resort to frequent price adjustments on their menus and prefer to absorb the rise in import costs in the short term,? Savkur said. ?Based on current trends, there will be a time soon when that is no longer feasible and some price increase would be inevitable. Anyway, most hotels review their menu pricing around this time of the year just before the season. The other, more practical option is to review all imported products used in the hotel and either take them off the menu or find local alternatives wherever possible. Most hotels are doing this already,? he added.
Indian flavor
Stakeholders? eyes are focused not just on the west, but at India too. Alex said, ?The Goa market has seen a surge in domestic tourism in the recent past and that will continue irrespective of the dollar value. In fact, there will be a boost in inward travel which will be a ripple effect of the fact that people will avoid travelling abroad. Goa should continue to focus on the domestic leisure market along with focusing on weddings and MICE (meetings, incentives, conferences, events) tourism.?
Shah said that the number of Indians booking for holidays abroad has decreased drastically. ?The middle-class Indian has been hit badly by the depreciated rupee. Holidays abroad are being cancelled. Packages for Thailand, which is the cheapest destination nearby for Indians, has seen an increase by Rs 8,000. A 5-day package which used to cost between Rs 35,000-40,000 now ranges between Rs 45,000-Rs 50,000,? the Panaji-based travel agent said.
?The other key segment for us are domestic tourists who were planning an international holiday. With the fall of the rupee, they would feel the pinch and instead opt for a vacation within India,? Savkr said.
Happy Hours
The beach shack operators on Goa?s famed coastline have a sense of optimism of good times ahead. ?We get a lot of tourists from the UK. The pound today converts to Rs 100. Goa has better prospects this year, not just from foreign tourists but from Indian tourists as well,? Shack Owners Welfare Society general secretary John Lobo said.
?In the UK, a quart of beer is sold for prices between 2.5 to 3.5 pounds. Here, a bottle of beer will be available for them at less than a pound. Though, we will have to hike up the price of imported liquor according to the respective currency, as imports have become expensive with the depreciated rupee, Indian-made foreign liquor should be available at the prevailing rate,? he said.
?After the last state budget in March, prices hiked up between 5-10% and we did not implement the new pricing then as it was the fag end of the tourist season. We will implement those prices in the coming tourist season. Inflation has also seen prices of commodities going up. With the depreciated rupee, I still foresee a good season ahead. The numbers will come,? Lobo said.
Bed-n-breakfast
Starred hotels, meanwhile, are also mulling over how to react to the depreciated rupee as far as pricing of rooms is concerned. ?Hotels will be forced to increase the prices of three or five day packages on account of inflationary pressures all around in India. They need to and rates will go up by about 10-15% as compared to last year. As it is domestic packages in the lean season are extremely cheap with very low margins or no margins at all to hotels. Profit margins of the hotels which are shrinking will further go down. Hotel gross operating profits are now down to 10-20% from the earlier 30-40%,? Braganca said.
?Hotel room packages are unlikely to be cheaper in rupee terms, though the overseas visitors might find them much more affordable at current conversion rates than last year,? Savkur said.
Alex said that the Marriott will not change its prices. ?Room packages will continue to be in the same range as before,? she said.
Warmer welcome
Braganca is quick to add that Goa has a lot of its work on its hands. ?The issue is of direct international flights. We have limited international flights as a result we are dependent on charter tourism. We need to have international airlines having a connecting flight landing in Goa, so that Goa can be reached from any part of the world without having to wait in metro airports. Visa on arrival is the other area which though announced, I have my doubts that our airport will be in a position to handle efficiently. We need to provide facilities of e-visas as provided by Vietnam, Cambodia and other eastern European countries,? the TTAG president said.
Airport director M Suresh said authorities are hoping that work on the new terminal at Dabolim airport will be complete before the start of the coming charter tourist season. While the peak-hour passenger-handling capacity of the existing 16,500 sq. meter terminal building is 700, the same figure for the new four-floor terminal building will be 2,750 passengers. Currently, there are 32 check-in counters which will be increased to 64 counters with the addition of the new terminal.
The current 12 immigration counters for departures will be increased to 16; while six immigration counters for arrival will be increased to nine. At present, the airport has eight security check booths, which will be increased to 12, so a dozen queues can move at a time.
Boosting local economy
In current times when the economy is slowing, the silver lining in the dark cloud is tourism. ?Spending by foreign tourists should increase. This will be a good sign for the local economy which survives on tourism. Operators who are paid or reimbursed in foreign currencies for local services would certainly stand to benefit. Hopefully, this would be passed down to other stakeholders,? Maganlal said.