The number of people looking for loans to finance trips to far-flung locales is growing. As the worldwide tourism industry recovers from the Covid-19 outbreak, travel and finance companies are seeing a 20%-25% increase in travel loans. The rising cost of both air travel and vacation packages has encouraged many to take out loans specifically for their trips abroad.
Sources in the industry predict that the share of the travel loan market, currently at 5%, might quadruple by the end of the year. The Indian tourism industry is projected to expand by 20% this year, from a scale that stood at $60 billion in CY2022. Companies in the tourism industry are teaming up with banks, fintechs, and BNPL providers to provide customers with flexible EMI options.
SanKash, a fintech company specialising in the tourism industry, reports a 20% increase in the number of loans taken out to fund overseas vacations. It handled 180 crore in outbound tourism revenue for 1,000,000 travellers in FY23.
According to SanKash co-founder Akash Dahiya, the company’s clientele consists of 65% salaried workers and 35% freelancers. Despite the fact that “travel loan being a new segment as and when people getting aware of the facility, they are reaching out to avail this,” he said. Delhi NCR, Maharashtra, Tamil Nadu, Chandigarh, and Gujarat accounted for the majority of the 28 crore in loan processing volume for the organisation in April of 2023.
Customers typically range in age from 25 to 45 when they take out a travel loan, with the average ticket costing 1.5 lakh.
To quote Thomas Cook (India) and SOTC Travel’s Abraham Alapatt, “over 70% of the demand for travel loans is for international holidays to Europe, UAE, Singapore, Thailand, Indonesia, Malaysia, Turkey, Egypt, Maldives, and Mauritius.”
Cleartrip, an online travel technology business, introduced BNPL on its platform last year, and since then has seen a huge uptick in bookings from leisure visitors to destinations including Abu Dhabi, Singapore, Hong Kong, and London.
Madura Travel Service CEO Sriharan Balan claims that the company’s travel loans business is 50% larger in FY2022 than it was in FY2021. About 3,000 travellers utilised our 30 crore loan programme for international vacation packages last year. We expect the loan amount to reach 45 crore by the end of the year (CY2023), which would be reached by July of this year.
According to Subhash Goyal, the chairman of the aviation and tourism committee at the Indian Chamber of Commerce and STIC Travel Group, the cost of international tour packages has increased by at least 50% as a result of Covid-19, the Russia-Ukraine war, and the fact that commercial flights from India have not fully resumed following the pandemic. Thus, “several are left with no choice but to get loans to explore the exotic destinations,” he noted.
