A Rs 1.5 lakh eurotrip now costs over Rs 2 lakh — here's how exchange rates have singed travel budgets

Foreign travel resumed with a bang after two years of COVID-induced restrictions. Global foreign tourism registered a 182 percent year-on-year rise in the January to March period, according to a recent UNWTO World Tourism Barometer.

The sector is still trying to come out of pandemic losses but has faced added turbulence in the form of the Russia-Ukraine war, the rising inflation, and the crazy exchange rates. However, this hasn’t stopped Indians from taking off, according to tour operators CNBC-TV18.com spoke to.

“As a result of an increase in airfare and in-destination costs, together with appreciation in the dollar, costs of tour packages have increased by 10-20 percent on an average for international travel,” said Rajeev Kale, president and country head of leisure travel and MICE segment at Thomas Cook India. MICE stands for meetings, incentives, conferences and exhibitions.

Giving an example of a 9-10 day Europe tour, Himanshu Patil, director of Kesari Tours, said: "Before the pandemic, it would cost around Rs 1.5 lakh, including airfares. Now, a customer will spend around Rs 2 lakh for the same package."

Manish Jeloka, co-head of products and solutions, Sanctum Wealth, said the Indian rupee "is a victim of fears of the global recession" in the rapidly rising rate environment. Sticky crude oil prices despite deteriorating macros also aren’t helping, he said.

Jeloka said the rupee shall continue to be under pressure vis-à-vis other developed market currencies including Euro, Pound, Yen, and the Australian Dollar, “but should fare better than many emerging market currencies due to the inherent strength of the economy”.

Apart from costlier hotels and airfares, a weakening rupee also makes travellers spend more on visas. "While most visa fees remain similar to pre-pandemic levels, the overall cost in INR has increased," said Daniel D’Souza, president and country head of holidays at SOTC Travel.

There has also been an overall cost increase with the inclusion of a mandatory courier charge for each visa application, Kale said. “The requirement of applicants being personally present for Switzerland and France visas have increased travel costs, too, primarily for outstation customers,” he said.

With the COVID-19 pandemic persisting, every country keeps changing regulations on visitors and testing requirements. “These costs are borne by travellers, either in terms of money or time, which effectively means money,” said Puru Chattre, a frequent traveller based out of Australia.

ATF, or jet fuel price, reached a record high after a hike of 16.3 percent on June 16. The cost of aviation fuel has risen by 91 percent in the last six months and almost doubled in 2022.

In order for airlines to make up for the losses during the pandemic and with the rising ATF prices, the cost of air travel has also gone up.

D’Souza said that with strong pent-up demand, supply-side constraints and an increase in jet fuel prices, SOTC has seen an uptick in airfares. "But we expect that this should stabilise with airlines upping capacity and routes albeit in a phased manner,” he said.

Indiver Rastogi, president and group head of global business travel at Thomas Cook (India) and SOTC, said despite capacity constraints and increased ATF pricing resulting in a 25-30 percent rise in airfares, travel sentiment is at an all-time high.

"We are witnessing a strong continuum in demand from our corporate and leisure segments,” he said, adding that there has been an unprecedented demand for leisure travel and “airfares from Mumbai/Delhi/Bengaluru to holiday favourites like Europe (Switzerland, France, Italy and Austria) have seen a 30-40 percent surge”.

According to D’Souza short-haul favourites are seeing a growing demand. "Holiday costs have risen 15-20 percent for Singapore, Indonesia, Maldives, Mauritius and 10-15 percent for Dubai, Abu-Dhabi–Yas Island, Malaysia, Thailand, and Vietnam,” he said.

Holiday costs have also risen by around 10 percent for mid-haul destinations such as Turkey and Egypt and over 25 percent for long-haul destinations such as Europe, USA and Australia, according to D’Souza.

Kale said Thomas Cook witnessed an unprecedented demand for destinations such as Europe in summer, primarily led by the family segment. “We continue to witness a significant continuum with a healthy demand of 30-40 percent of our pre-pandemic levels driven not merely by families, but increasingly from young professionals, millennials, and couples as well as from our corporate MICE groups,” he said.

Kale said that with the steady reopening of destinations such as Australia and New Zealand, and Bhutan closer home, they are seeing a robust pipeline for the Dussehra-Puja-Diwali festive holidays.

“Increased air capacity and introduction of new routes like Bengaluru-Sydney is also serving to boost business,” Kale said.

To add to it, sports events such as the World Cup in Qatar, F1 in Singapore, and Australia’s T20 bonanza later this year are already seeing strong interest from the company’s leisure and corporate MICE segments.