Indians are picking quick loans to travel, while the tourism sector is a long way from pre-pandemic volumes

Travel agencies are either partnering with banks to finance domestic and foreign trips, or facilitating travel now pay later through their own fintech subsidiaries.

FPJ Web DeskUpdated: Monday, October 03, 2022, 01:50 PM IST
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Lenders are cashing in on young, Instagram-savvy travellers who are taking more frequent trips. |

In the post-pandemic boom as the world is adapting to life alongside covid, young professionals are probably planning solo trips, while families are booking tickets for the upcoming Diwali vacations. But this euphoria doesn’t reflect the overall sentiment in the tourism sector, which took a 93 per cent hit during the pandemic, and won’t be back to pre-pandemic levels till 2026 according to the National Council of Applied Economic Research (NCAER). Amidst this scenario, no one would miss out on the chance to upgrade their trip to the hills into a Maldivian voyage, by paying for it in EMIs.

Travel big on your regular paycheque

Travel now pay later is an option now available with agencies such as Thomas Cook as well as online platforms including MakeMyTrip, where loans for that foreign trip are approved in a day. This allows companies to cash in on the wanderlust of Instagram-savvy young professionals who respond to their calling from the hills or just want to chill on serene beaches. As pent up demand opens with pandemic restrictions being lifted, firms are either tying up with banks or simply bankrolling trips through their own fintech subsidiaries.

One such fintech firm Sankash, which offers travel loans, has experienced a boom from processing applications worth Rs 2 crore a month before the pandemic, to providing Rs 15 crore per month now. Its competitor TripMoney, which finances trips for MakeMyTrip, has witnessed a four-fold growth in demand. But while Indians are excited about travelling abroad on EMI, are arrivals in India going up as well?

The industry on a long road to recovery

Although it was natural for people to avoid foreign travel in 2020, during the peak of the pandemic, foreign arrivals in India went down by more than 44 per cent in 2021. This dip came at a time when the tourism sector has only recovered 10 per cent of its volumes in comparison to pre-pandemic levels, and 2.15 crore Indians have lost their job in the industry. The domestic tourist expenditure was $151 billion in 2021, which was higher than 2019. But that year, it had dropped to $140 billion after peaking to almost $200 billion in 2018, even before the pandemic.

Piling up debts and heavier EMIs

Another impact of people picking more loans is that personal debt has already surged past Rs 35 lakh crore, and this might create a problem in the longer run. In addition to that, the RBI’s recent interest rate hike of 50 basis points, is likely to increase EMIs by 15 per cent. So these are factors you might want to keep an eye on, while borrowing big for that grand outing.

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