How to plan your foreign holiday this new year with weak rupee?

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Christmas in Europe. New Year in the Big Apple. Some people are busy redrawing their annual holiday plans at the moment thanks to the depreciating value of the rupee vis-Ã -vis the dollar and some other foreign currencies.

According to travel planners, many people – mainly first-time travellers going to far off destinations like Europe, Australia and New Zealand – are approaching them for ideas about how they can still go ahead with their travel plan without overshooting their budget.

For the seasoned luxury travellers, however, it is business as usual, as stretching the budget by a "mere 15-20%" doesn't make much difference to them, say travel agents.

"Most people are definitely feeling the pinch of a weaker rupee, as everything has become very expensive – be it travelling or accommodation or shopping," says Ajay Prakash, president, Travel Agents Federation of India (TAFI). "After Diwali, New Year is another occasion when many people plan their annual breaks

This time, we think there will be a drop of around 20% in outbound traffic. Because of the problems in Europe, even inbound traffic will be affected. In short, it is not going to be a great year for travel business," he says.

"There is a dramatic fall in the number of people travelling to Europe, though business is as usual for some destinations in the far east. The rupee's depreciation is forcing people to relook at their travel plans and the budget," says Pradip Lulla, director, Cupid Travels & Tours.

"More than the expenses, it's the thought that everything is going to be very expensive that is making me nervous. Since I am going on a Europe trip for the first time, I really don't have any clue of what to expect," says Rajesh Shetty (name changed), an HRD professional, who is going on a 10-day Europe trip. Since he booked the trip a few months ago, he is not considering changing the plan. Though he is not very happy about breaking a few fixed deposits to meet the extra expenses, he says.

Travel agents also say first-timers like Shetty are the one who are getting nervous and altering plans to make sure that they don't overshoot the budget. "The first-timers obviously get nervous as they don't want to face any problems when they are abroad. However, the seasoned travellers are fine as they know where to cut down on expenses if they have to," says Lulla.

 

Rethinking the plan

"Yes, everything has become expensive because of the weak currency, but I don't think it has reached such an alarming proportion. A 15-20% jump in the budget may be manageable for most people," says Suresh Sadagopan, principal planner, Ladder7 Financial Advisories.

He says that's one reason why he won't ask anyone to drop their plans if there is a slight mismatch between what they had anticipated and the actual expenses. "I don't think anyone would mind spending an additional 50,000 if he is taking a holiday abroad with his family. Since this is a discretionary expense, people are always game for it," he says. He is, however, quick to add that he wants everyone to stick to their budget and overshoot it only if they can manage it well.

Kartik Jhaveri, director, Transcend, also says none of his clients has called him with the problem of travel budget getting strained. "In fact, they won't be worried as we always have a cushion of 10-20% built into every financial plan," he says. "One can always make some adjustments and take corrective action after sometime, say, after six months," he says.

 

Cutting corners

"You could be in a spot if you have already committed money in a non-refundable plan," says Prakash. "Otherwise, you have the choice of reconsidering your travel plan. For example, instead of a far off destination, you can choose one that is nearer. Or you can opt for a cheaper plan while sticking to the same destination. You can even consider shortening your trip as it will help you save money," he says.

"Only if the budget is likely to go beyond 25% or more should one redraw the holiday plan. Even then, one should remember that you have many options available for still going ahead with the holiday. All you have to do is to scale down your plans," says Sadagopan. In fact, according to travel agents, that is exactly what many people are doing at the moment. According to them, many people are opting for far eastern destinations like Thailand, Hong Kong and Indonesia as a holiday in these places is still very much within the budget of Indian holiday-seekers.

"Hotel accommodation has become very expensive. For example, even in Dubai, a decent accommodation in a two- or three-star would cost around $350-$400, but you can get a much cheaper room in a five-star hotel in the Far East destinations like Thailand," says Lulla. In fact, that is one reason why many travel planners are suggesting destinations like Bangkok, Hong Kong, and Singapore to their clients to usher in their New Year. Travel agents are also suggesting travellers to cut down on the days abroad as a compromise solution.

Suresh Sadagopan says that is a commonsensical thing to do: "For example, you have Europe packages starting from seven days to 21 days. If you think your budget is going to be stretched, you can always opt for the shorter duration travel plan. This will ensure that you still enjoy your holiday without making any other compromises."

 

Never compromise on holiday

However, many travel agents say most people are reluctant to compromise when they are on a holiday. "We can advise them to opt for a cheaper accommodation, or for a shorter vacation. But the fact is that most people don't want to do that. It is understandable. They might have planned for it over the last few years or would have waited for it for a long time," says a travel agent, who doesn't want to be named.

This attitude obviously may have serious financial consequences if not handled properly. According to financial planners, such travellers should figure out how they can make up for any the shortfall by making some temporary adjustments. If your holiday is going to cause any serious disruption to your financial health, come back from the holiday and redraw your financial plan completely.

"If it is a one-off thing, we can always fill up the shortfall or bridge the gap whenever we review the financial plan. If there is a significant impact, then you have to redraw the entire plan," says Kartik Jhaveri. Here is one invaluable advice from financial advisors to travellers: Don't shop till you drop while holidaying. You don't have to pay through your nose for everything abroad, as all such products are available in India these days.

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