Indians flock to US... to buy Louis Vuitton handbags

Okay, yawn, just another "shocking" story about globalization and the rise of Asia. But still... it is a bit startling, no?

Vacationers head to US as rupee appreciates

(LiveMint.com)

The drop in the cost of travel has led to an increase in the traffic headed to the US

Priyanka Mehra

With the rupee clocking a nine-year high against the US dollar, Indians will soon be skipping London, their favourite overseas travel destination, to visit the US.

“With the steep appreciation in the rupee against the dollar, the US has become a prime tourist destination for Indians looking to travel West,” said Subhash Goyal, president of the Indian Association of Tour Operators (Iato) and chairman of Stic Travels Pvt. Ltd.

Interestingly, it is not only the discounted airfare that is likely to prompt people to choose the US. Cheaper board and lodging, along with bargains on apparel as well as high-end products such as luxury watches and cosmetics, could be other attractions.

Assessing parity : LVMH group president, South Asia and Middle East, Ravi Thakran.

“Prices of cosmetics and watches in the Louis Vuitton Moet Hennessy (LVMH) portfolio will be cheaper in the US than in India by about 10% (thanks to the rising rupee),” said Ravi Thakran, group president, South Asia and Middle East, LVMH—the French company that owns brands such as Christian Dior, Fendi, TAG Heuer and Dom Perignon. “The cost of handbags, however, is likely to be the same.”

There has been a decline of 20-30% in airfare to the US in the past two years. A return ticket to New York cost passengers Rs45,000 in 2005. Currently, it is ruling at around Rs35,000-38,000.

The drop in the cost of travel has led to an increase in the traffic headed to the US. According to Iato estimates, 263,000 Indians visited the US in 2005, the number rose to 350,000 in 2006, whereas some 400,000 had already hit the US shores till June this year. The association expects a further 10% increase in the number by the year-end.

According to Pawan Kumar, senior travel consultant, Uniglobe Air Travel Bureau Ltd, other factors such as more air carriers operating in India and availability of direct flights have also contributed to more people travelling to the US.

“In the next few months we are expecting a 10% increase in passenger traffic to the US. Because of the rupee ruling high, a lot of people have already started booking tickets for their travel next summer, which is the peak travelling time for Indians,” added S. Venkat, executive director, Air India.

Air India started non-stop flights to New York in August.

Expecting a further boom in the business, some players are making hurried changes in their operations to cater to the anticipated demand.

Makemytrip.com, a travel portal, for instance, is adding more goodies to the packages it was offering so far.

“In the first eight months of 2007, Makemytrip has seen a 100% increase in the number of passengers travelling to the US over the same period in 2006,” said Keyur Joshi, chief operating officer, Makemytrip.com Pvt. Ltd. “To make our packages more attractive, we are upgrading the stay options for our passengers. For instance, if a passenger had booked a three-star hotel, we are upgrading her to a five-star,” he added.

To cash in on the boom in the business, Cleartrip.com, an online travel portal that so far operated only domestically, now plans to go international. “With the rupee appreciating against dollar, we are looking at expanding our services, which include tickets and travel packages, to overseas destinations,” said Sandeep Murthy, chief executive, Cleartrip Travel Services Pvt. Ltd.

And while travelling has gotten more affordable, so has the shopping and personal spends. Iato’s Goyal estimates travellers are expected to spend $400-500 (about Rs16,000-20,000) more in addition to their average budget of $3,000 for a 10-day visit.

“The appreciation in rupee allows travellers a more flexible budget,” said Kumar.