Planning a vacation abroad or going for a luxurious meal at a speciality restaurant has got dearer, with the hospitality and tourism industry feeling the pinch of a depreciating rupee.
The travel industry is witnessing a surge in the cost of travel packages, while hotels are dealing with rising input costs in the food and beverage business.
Hotels import items such as cheese, cold cuts, meat, fish, poultry, liquor and wines. The speciality restaurants of various chains source exotic vegetables and non-vegetarian items from Southeast Asia, the cost of which has gone up by 10-15 per cent, according to those in the sector.
A senior executive of a luxury hotel said even flour was imported for the bakeries. “Today, customers are well travelled and they can tell if a product compares globally or not, so we cannot compromise on quality,” he said.
“The fall in the rupee is having a direct impact on the costing of ingredients like vegetables and fruits, which most five-star hotels import these days,” said Manju Sharma, director, Jaypee Hotels.
The hospitality companies said the increase in cost would affect profit margins, but claimed the burden would not be transferred to customers. However, industry experts say hotels would try to balance it in their overall revenue streams like room rates and other charges. The new hotel buildings coming up, buying furnishing and kitchen equipment, would also feel the jolt of the dipping rupee.
“We have the advantage of working with the company’s global purchase department in securing the best suppliers and rates. We also benefit from the company’s global, regional and cluster deals in being able to procure and offer to our guests the best quality of products available,” said a spokesperson of Hilton Worldwide India.
Travel companies are also witnessing the impact, especially in the outbound sector. “The real impact would be felt by summer next year. We have received requests and enquiries for cancellations, but these are well within the normal range, given that cancellations are also expensive and this is a super-peak season for travel and holidays,” said Deep Kalra, chief executive officer and founder, MakeMyTrip.com.
Several companies which hedged their currencies say they did not expect such a sharp decline. “The situation is so volatile that we are not sure about pricing. In inbound, we are trying to diversify from the European market,” said Arjun Sharma, managing director, Le Passage to India.
As a result, travellers are opting for shorter holidays; also, destinations like Sri Lanka, Dubai, Bali and Phuket are getting preference over American and European options. Travellers are also planning to go for a domestic holiday instead to destinations like Kashmir, Kerala and Goa. “Outbound (travel) has shown about 30-40 per cent growth this year, so a slight setback can be endured. The demand is sustainable and the December-January pipeline looks solid,” Sharma added.
