The downturn in the tourism industry may cast a gloom for hotels and travel related industry, but it augurs well for tourists.
Cost of travel and tourism is expected to drop as much as by 20 per cent in 2009 on fear of terrorist attacks, shrinking pay packets, job cuts and declining overseas tourist arrivals, industry experts reveal.
The economies of the US and the European countries have been the worst affected in this downturn and tourists from these destinations account for 35 per cent of inbound traffic to India. “We expect cost of travel and holiday packages to come down by 15-20 per cent in the coming months,’’ said Dhruv Shringi, founder and CEO, yatra.com. “Occupancy levels of airlines and hotels have come down substantially and companies will have to further reduce their fares to be in the business.”
While domestic airfares have dropped by 25 per cent, international ticket prices have come down by 10-15 per cent in the last four months. Passenger load factor for aviation industry, during the winter season, has dropped 60 per cent as compared with 70-75 per cent last year.
“Hotel tariffs for domestic as well as international destinations have come down by 30 per cent and they will come down further,” Shringi added.
The drop in the hotel tariff comes nearly a year after the government announced a special five-year tax holiday for setting up of two, three and four-star hotels. As many as 25 companies, including hotel groups and real estate companies, have invested Rs 34,000 crore, since the announcement, indicating an oversupply.
“Our clients are getting hotel tariffs at Rs 6,000-8,000 per night as compared with Rs 12,000-13,000 per night last year. The customers are getting more value for their money now,” said Sachin Bhatia, CEO & co-founder, Makemytrip. The fall in hotel rates have been accentuated by a decline in overseas tourist arrivals. Forex earnings from tourism fell 12.5 per cent to $1 billion in November, the first significant decline in several years. Foreign tourist arrivals fell by 2.1 per cent in November to 521,000, according to government data.
For Indians who wish to travel overseas packages are available at bargain rates. Cost of tourism has dropped by about 35 per cent for tourist destinations such as Thailand, Malaysia and other South-East Asian countries, according to Sunil Gupta, COO, SOTC.
“Decline in tourist traffic from Europe, the UK and Japan has forced the tourism boards of these countries to make their tourism package competitive,” Gupta said.
Taking advantage of the downward spiral, several domestic tourists may opt for overseas tours. “Many of the domestic tourists who could not afford international trips earlier are likely to go abroad this year. We are already seeing an increased number of tourists who are finding international travel within their budget”, Gupta added.
