Indian rupee crashes: Indian vacationers ditch Italy for stay-cations (+video)
Indian rupee: As the Indian rupee declines against foreign currencies, many Indians are electing to trade distant travel for activities closer to home.
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"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.
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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 travelers and a substitute for outbound travelers – we expect to have a good winter," said Dilip Puri, managing director, India at Starwood Hotels.
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 rupee.
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 in November.
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.