India preparing for the big ‘What If?’

Dollars appreciating, profits depreciating, airfares increasing, profits declining and the Indian travel industry dreading to face the ‘What if’ question.

A Jain talks about strategies adopted by Indian travel pundits to survive any slowdown faced by the Indian economy.

The Indian media is flooded with reports about the Indian economy slowing down and its impact on business.

Indian travellers are facing high airfares (due to a rise in ATF prices), increased dollar rates and an overall increase of 20-25% in outbound travel packages.

Thus, they are either cutting short their holiday duration, adjusting their accommodation price or opting for an Asian country (like Macau, Philippines, Thailand, Hong Kong, Sri Lanka, Cambodia, Laos, Vietnam, etc) instead of Europe or USA, or even opting for a luxurious domestic vacation.

On the other hand, Indian tour operators are buckling up to face this possible slowdown by adopting strategies to ensure sustainable business during rough times.

Tour companies are now pitching certain destinations to their clients where the local currency’s fall is comparable to that of the rupee, so that the impact is not felt by the traveller.

For instance, apart from South Asian destinations which have a low exchange rate as compared to Europe and US, companies are also promoting destinations like Australia, South Africa, Brazil, Turkey and Mexico, which have seen almost rupee-like devaluations in their currencies..

For instance, Kuoni SOTC recently announced the launch of its holiday packages at ‘fixed exchange rate’ to destinations like Malaysia and Singapore.

The interesting aspect of these packages are: first,  for South East Asian countries, it means air fares are lower and currency exchange rates are better than a Euro or dollar and secondly, the fixed rate currency exchange allows travellers to book without bothering about the fluctuating currency rate.

According to Rajeev Wagle, MD, Kuoni India: "India is a very interesting market with unique customer behaviour. We haven’t seen any kind of changes/cancellations as of now as it’s too early to predict anything."

Asked about what kind of strategies a travel company can adopt during such challenging times, Wagle said: "Travel companies should work on more budget packages for the booming middle class travellers as this is the segment in India which is growing at the fastest rate in tourism.

"Also, try to build in more transparent pricing and never compromise on quality and service. These are the challenging times when you can build a lifelong loyal customer base with your service, pricing model and knowledge."

Three rules to survive recession
Avoid pricing wars
Focus on creative pricing power
Offer both high and budget value offerings

Indians willing to make lifestyle sacrifices for holidays

According to the latest study by TripAdvisor on the Indian market, fewer Indian travellers are planning to increase their travel budget next year, compared to 2013, despite more than half (57%) stating that they are optimistic about the economy in 2014.

While 59% of Indians are planning to increase their travel budget next year (globally: 39%), the figure is down from 76% in 2013.

To fund their vacation, 90% of Indians would be willing to forego luxuries, which is in line with global consumers’ willingness to make sacrifices in order to go on holiday (88%).