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Travel now, pay later: Vacation loan demand up

(This story originally appeared in on Aug 20, 2022)

CHENNAI: Indians are thronging foreign destinations with a vengeance as most countries have opened up for tourists after pandemic-induced curbs. A combination of pent-up demand and financial stress means that many of them are opting to pay for their international vacation with EMIs. Travel companies are witnessing a spike in demand for ‘buy now, pay later’ (BNPL) offers, with traction from working professionals, particularly the IT sector and honeymooners.

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Travel loans contribute just 1-2% of gross merchandise value (GMV) of travel agents. But these loans, as a payment option, are expected to grow to about 5% of total GMV next year. Leading tour operators are recording up to 40% of their customers exploring the EMI option for taking forward their travel, of late. For instance,

has seen an over 25% increase in consumers seeking viable options to fund holidays. While it has partnered with a fintech for the ‘travel now and pay on return’ initiative, Rajeev Kale, president & country head, holidays, Thomas Cook (India), said, “Additionally, we also offer credit facilities with multiple bank partners with repayment in 3-13 monthly instalments. ”

The average transaction size for an international travel loan is Rs 1. 5 lakh, said Daniel D’Souza, president & country head — holidays, SOTC Travel, Thomas Cook’s subsidiary.

Chennai-based travel company, Madura Travel Service, too has recorded a 30% rise between January and June this year, compared to a year ago, in the number of honeymooners and small families opting for external fund sources such as credit card with EMI option, personal and travel loans frombanks, NBFCs and fintechs for their travel purposes. “In the past, people used to save and pay for their trips. But post-Covid, it is easier for them to avail of loans and repay it later because they have become used to EMIs in recent times,” said Sriharan Balan MD of Madura Travel Service. From 10% in 2019, the number of people exploring EMI options through credit cards and loans for their foreign tours has increased to 40% in 2022, he added.

Travel fintech, SanKash, which has processed international travel loans of around Rs 70 crore between January and June, has recorded a seven-fold increase in queries post-Covid, when compared with the pre-pandemic year.


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