 "Passengers gives 500 rupees for train ticket at a booking window")
Large tour operators are bracing for delays in bookings for summer holidays as consumers put off discretionary spending.
However the government's demonetisation move is expected to bring about changes in customer behaviour with more online purchases and EMI holidays and a shift in business from unorganised to organised sector in the travel space.
"Bookings for winter 2016 holidays have already happened and I am not losing sleep over it. Bookings for summer holidays will not stop. I just think bookings will take a little longer to happen, " said Thomas Cook India chairperson and managing director Madhavan Menon.
Thomas Cook's outbound travel business in the last season was impacted due to terror attacks in Europe. Earlier in June the company said it is expecting growth in outbound tours this year. Bookings were on an upswing till November 8 when the government announced its decision to demonetise Rs 500 and Rs 1,000 notes.
"Economy will undergo an adjustment (as a result of demonetisation) and this will result in people delaying their discretionary purchases. We will also get affected by it," Menon said. He however added it was too early to give an estimate of impact.
Over half of Thomas Cook's standalone revenue comes from "travel and related services" segment.
Cox & Kings said that its business has not seen a negative impact as most of its customers pay through bank transfers or credit card but smaller travel agents who rely on cash payments are seeing a downturn in air ticketing and tour business.
"We have not seen any significant change so far as most of the people who travel with us pay through bank transfer or card. We have significant meeting and incentive tours business which anyways makes cheque or bank transfer payments. A few of our retail customers who pay us by cash do so by furnishing their PAN card," said Anil Khandelwal, chief financial officer of Cox & Kings.
On a positive side Thomas Cook has seen an uptick in online bookings. Until November 8 about 15 per cent of its package tours were sold online and Menon sees an opportunity for an increase in that online purchases. He also sees more customers opting for products like EMI linked holidays and holiday savings accounts.
Slower GDP growth and lower overall consumption as a a result of demonetisation will impact travel sector too. Industry analysts feel that the effects of demonetisation could be seen for next two quarters. Travel sector stocks too are down following the government announcement. Thomas Cook and Cox & King's stocks are down 12 per cent and 17 per cent respectively since November 8.
Khandelwal feels that as a result of demonetization there will be a decisive shift of business from unorganised to organised sector in travel space. "Cox & Kings has always said that our business would have grown much faster if it wasn't for the unorganised sector which holds on to market share through various means. Having said that, if there is a broad shock in the economy as a result of this move for the next few months, then it is possible that our business may see some derivative impact.. The demonetization move is very positive overall in the long term for Cox & Kings," Khandelwal said.
READ OUR FULL COVERAGE ON THE MODI GOVT'S DEMONETISATION MOVE
