The Indian rupee's crash against the US dollar has swept away banker Nupur Sood's dream of a holiday in Venice, Italy: instead the 35-year-old will settle for cold beers on the beaches of Goa on India's west coast.
"We are pampering ourselves with a leisurely holiday but it will be domestic. I guess it is the only way to compensate," said Sood, who plans to stay next month at the plush Grand Hyatt hotel in Goa, managed by Hyatt Hotels Corp, as a consolation for missing her holiday of a lifetime in Italy.
Sood is among India's growing urban middle class, whose rising incomes over the past decade made holidays abroad affordable. However, the currency crisis in Asia's third-largest economy is taking foreign travel beyond their reach and many are planning vacations in their home country.
While this will be a blow for domestic tour operators promoting overseas travel it will be a shot in the arm for India's stagnant hospitality sector, which is reeling as high inflation and rising import costs eat away at profit margins.
Hotel groups, including Starwood Hotels & Resorts Worldwide Inc, Marriott International Inc and Hotel Leelaventure Ltd are seeing a spike in bookings for the winter season from domestic tourists and from foreign travellers, who importantly bring in foreign exchange.
"There is a lot of optimism in the hotel industry that, for both these reasons - it being cheaper for inbound travellers and a substitute for outbound travellers - we expect to have a good winter," said Dilip Puri, managing director, India at Starwood Hotels.
The Indian rupee hit a record low of 68.85 against the dollar on Wednesday - down about 20 percent for the year - despite multiple attempts by the government to calm investors' concerns. Emerging markets more broadly are being hit by capital outflows in anticipation of a reduction in U.S. monetary stimulus. The rupee recovered some ground on Thursday.
Its slide has contributed to a 35 percent surge in domestic tourism between January and June and a 15 to 20 percent fall in outbound tourism over the same period, the Associated Chamber