Indian tourists visiting the UAE are finding their wallets are considerably lighter than they may have expected following the rupee's slump to an all-time low against the US dollar yesterday.
That could soon start costing the tourism and retail sectors if the currency's weakness persists over the coming months, with India one of the UAE's main source markets for tourists, industry insiders say.
"It's costlier because the Indian rupee is down," said Dr P Banerjee, a medic from Calcutta who is in Dubai on a three-day break. "I'm finding it pretty expensive."
His rupee went further three years ago during his last visit to the emirate.
The rupee reached more than 52.70 yesterday against the dollar, to which the dirham is pegged, amid slowing growth in the Asian country and uncertainty in the global economy.
In the first quarter of the year, more tourists came to Dubai from India than any other country, including the UK. There was a 10 per cent increase on the same period last year to 186,478 hotel guests from India, according to figures from Dubai's Department of Tourism and Commerce Marketing. But now that trade is being threatened by the country's currency slide.
"If this keeps on continuing the way it is, then maybe yes you could expect a fall down after February or March, it could slow down," said Ravinder Saini, the marketing manager at Lama Tours in Dubai, adding it would take three or four months for the impact to be felt. "All the people have already planned their travel and the groups are already in town. Maybe the shopping part of it is impacted."
Giordano, a fashion retailer, is one of the Dubai retailers that relies heavily on Indian tourists.
"We have seen no immediate impact yet, but India tourists are the majority," said Ishwar Chugani, the executive director for Giordano Middle East. "We will only really see the impact in the school holidays. Chinese and Indians are the biggest spenders."
The Dubai Shopping Festival this year was teeming with Indian visitors on package deals.
Ashish Panjabi, the chief operating officer for Jacky's Electronics said Dubai would have to look at offering "mouth-watering" package deals to Indians early next year if the rupee continued to be weak leading up to the Dubai Shopping Festival.
"It's too early to see an effect," he said. "Indians have been a major factor in sales this year, and so have the Saudis."
Others remain optimistic. "I've spoken to middle-class families in India and they're saying 'no, I don't think we will scale back on our vacations. We will still go. We've been doing it every year or sometimes twice a year, so we'll continue to go,'" said Sunil D'Souza, the regional travel director at Kanoo Travel. "People have money to spend. They already have a house, a car and some good savings. People are not compromising their lifestyles. The economy in India is still robust. I don't think they will put the brakes on their vacations just because of this rupee situation now."
A possible fall in spending could be offset by higher spending among Indian expatriates in the UAE, who might be better off as they would have to send fewer dirhams back to their home country, Mr Chugani said.
Hoteliers seemed unfazed, with many saying they would consider adjusting prices only slightly to accommodate the weakness of the rupee if demand declined substantially.
"Dubai is in demand," said Syed Zulfiqar Mehdi, a director of sales and marketing at the City Seasons hotel group in Dubai.