Inbound from US to see slump in coming season

The impact of the recession in the US is being felt on inbound arrivals to India. While business travel has taken a hit, bookings in the leisure segment are also lower.
The mounting recession in the US and European economies has forced travellers to relegate travel and holidays to the back pages. According to Subhash Goyal, chairman, STIC Group, “Inbound arrivals from US will see a decline of 15–20 percent in 2008 as compared to 2007.” Currently, the US contributes 20 percent of our total inbound arrivals and of the 5 million tourists into India, nearly one million come from the US. The slump in arrivals is mainly due to the reduction in business travel by the IT/ITeS sectors which constitute a substantial part of US inbound into India. It has been estimated that 60 percent of IT business comes from the US which has been witnessing a rapid slowdown since their economy started crumbling. Industry experts opine that the impact on inbound arrivals from the US might be doubled if the ongoing crisis persists for another six months. Tour operators have been reporting lower bookings from the US market and, in some cases, bookings have also been cancelled.
Deep Kalra, founder & CEO, MakeMyTrip, says that the financial meltdown in global markets will definitely lead to a softening in the inbound leisure travel market. “The mood will be sombre in the coming season as people have lost money in stock markets across the world therefore discretionary travel will be impacted in the short-term,” he said. However, in the long-term, the situation is expected to rationalize, he feels. According to Sunit Suri, COO & head (inbound), Thomas Cook India, “We are expecting a downturn and business will be affected but it will be primarily because of terrorism and not just the economic downturn.”
The impact of the fall in inbound arrivals is already being felt by the hotel industry in the country. Hotel occupancy in cities like Bangalore, Pune, Hyderabad and Mumbai is expected to drop by atleast 4-5 percent in the next three months. Unlike in previous years when ARRs used to see an increment during the peak season, average room rates in the luxury segment in cities like Mumbai, Delhi and Bangalore have remained stable this year or witnessed only marginal growth owing to the fear of recession. The hotels in these cities had earlier announced increases of 10–15 percent, however, the decrease in business travel as well as higher airfares have forced them to increase rates by only 4–5 percent.
Dhruv Shringi, CEO and co-founder of Yatra.com, also agrees that there will be a decrease in arrivals from the US and European markets. “While inbound tourists from the US and Europe will get affected with the downturn, Asian economies like China, Korea, Japan etc., will not be,” he avers.
The Indian travel industry is looking at alternative plans. Suri feels that it is important to explore newer markets and he also advises the media to play a more responsible role in projecting the country’s image.
To negate the adverse impact on inbound arrivals, Kalra feels that we must identify gaps in terms of perception and address them in a targeted, time-bound manner.