Tourism hit by weak rupee, petrol price hike

Chandni Luthra, former vice president of Indian Tourism Development Corporation, feels that the tourism sector has been hit badly by the dollor rupee conversion rate and recent steep hike of Rs 7.54 per liter of petrol.

"Indian tourism industry consisting of hotels and travel desk has been hit adversely due to the above mentioned factors. The hotel industry in particular is the worst sufferer. While Indians wanting to go abroad and enjoy holidays would have to rework their budgets and cut down their stay period by a couple of days to meet the extra expenses they would have to incur due to the falling rupee, foreigners travelling to India would, however, enjoy extra benefits. Hotels who have accepted the money in advance booking will have to bear the extra cost," Luthra told rediff.com.

Gopal Verma, who runs a travel agency in Delhi, said that petrol price hike is bound to hit the tourism industry. Travel to various destinations in the country is going to become costlier. "If the present state of affairs continues, the tourism industry is likely to lose business worth Rs 10-20 crore (Rs 100-200 million) per week which is huge considering the fact the industry has been reeling under severe economic crunch since 2008," he said.

Revenue per available room is an important hotel industry financial metric. It is calculated by multiplying the average daily rate by the percentage of occupancy.

The success the hotel is having at earning revenue from room inventory will vary from location to location.

Hotel occupancy rates are the per cent of rooms that are occupied at any given time. A higher percentage generally correlates with healthier hotel chains. A senior executive of hotel industry denied that the industry has been affected by large scale cancellations by foreign tourists.

"In fact the foreign tourists stand to gain by the sharp decline of rupee against dollor. There has been, according to economists, six per cent decline in the value of the Indian currency against the dollar. Eight time increase in passenger charges recently levied has also hit the hotel industry.

Leading hoteliers expect occupancy to increase as they see leading foreign airlines to bring in more tourists on their flight especially the Virgin Airlines. Till that happens hotels are likely to suffer lower occupancy rates.

Foreign tourist visiting India has increased from 682 millions in 2001 to 933 millions in 2010. The main tourism destinations include Jammu and Kashmir, Rajasthan, Madhya Pradesh, Kerala, Bhuddist temples in Bihar, Dharamshala in Himachal Pradesh where Dalai Lama has been staying since his arrival in India.

Finance Minister Pranab Mukherjee while presenting the 2012-2013 Budget allocated Rs 1,282 crore (Rs 12.81 billion) for the current financial year which amounts to a hike of 9 per cent in the budgetary allocation of 2011-2012.

Air India pilot's strike also hit the tourism sector badly particularly. Ai cancelled flights on key sectors in Europe, USA, Canada, Singapore, Australia and many other profitable routes.