For Indian millennials, travel is a way of life – and they’re even taking loans to fund it

Aakash Malhotra has spent the better part of July and August travelling solo in Indonesia. His experiences were varied, from sighting Komodo dragons to scuba diving across some of the most challenging sites in Indonesia. He swam with manta rays and trekked up an active volcano, Mount Batur, to catch the spectacular sunrise from the peak. Travel brings with the the most unexpected experiences and, as Malhotra discovered, not all of them are pleasant. When he was in Bali, an earthquake hit neighbouring Lombok. Malhotra and other panicked shoppers had to flee from a mall as debris fell all around them.

For the 26-year-old travel junkie, the Indonesian sojourn was not an annual holiday or a sabbatical. Over the last few years, this has been Malhotra’s life – he alternates between two months back home in India and roughly four months exploring the world. He has been to 34 countries in a short span of four years, devoting much of his financial resources to travel. Malhotra says he is “hunting for happiness”. “This comes to me by exploring foreign lands, running my own business, mentoring people,” he said. “All this adds to my lifestyle and hence gives me happiness.”

Though most Indian millennials may not spend as much time on travelling as Malhotra, the desire to see the world and make time and money to do so is an integral part of life for many young people. They don’t always share their parents’ desire to invest in traditional markers of status , such as homes or cars. For many Indian millennials, rented accommodation and shared transportation work better: they say that they place greater value on acquiring experiences rather than commodities.

The Millennial Travel Survey 2017, conducted by Skyscanner India, showed that 62% of Indian millennials (those between the ages of 18 and 35) typically vacation two to five times a year. Another 10% said that they travel six to 10 times a year, in a combination of shorter breaks to domestic destinations and longer international holidays. Many of them structure their work schedules and finances to ensure that they can plan frequent getaways. If necessary, these men and women are even willing to fund their wanderlust by taking loans. Taking advantage of the fact that young people without collateral often find it difficult to take loans from banks, a number of financial-technology firms have stepped into the field in India, offering personal and retail loans. Other online firm facilitate peer-to-peer lending.

For companies in this space such as Qbera, Finzy, Faircent and Rubique, the travel loan category has been growing significantly over the last couple of years – accounting for 12% to 20% of their total lending portfolio. According to statistics released by Qbera, a technology company that provides salaried employees access to personal loans, out of 1,700 people who applied for travel loans last year, 728 applicants were below 28 years.

Different options

It was the desire to have a flexible schedule that motivated Malhotra to start his own business instead of finding a job in a company. As the owner of a digital marketing consultancy, he returns to India every few months to meet with his clients and to drum up new businesses. The rest of the time, he works remotely as he travels.

Malhotra says he was inspired by American entrepreneur Tim Ferriss’ book, The 4-hour Work Week, which promises to liberate the reader “from the shackles of a corporate job” and “fund the lifestyle of their dream”. Though he is yet to assimilate all of Ferriss’ advice, Malhotra does manage with four hours of work a day. This gives him time to explore new destinations and update his Wander with Sky website and Instagram account, which describe him as having “a crush on the world”. He uses his website to offer tips and information, and elaborate on how he manages his careful spending to save up for his trips. Malhotra also mentors 12 other young people from different walks of life to help them achieve their passion – whether it’s travel or anything else.

Surveys suggest that millennials are financing trips in a variety of ways – using loyalty programmes and a gradually growing trend of taking personal loans from fin-tech companies and peer-to-peer lending platforms.Anubhav Jain, co-founder and head of Risk at Qbera, says travel is one of the top five reasons why customers seek loans from them. His company has witnessed a gradual rise in the share of travel loans – from 5% to 6% in early 2017 to around 15-16% now.

“We have disbursed nearly Rs 50 crore of loans so far and around 16% of the total volume has been loans for travel,” said Jain. “That would also mean, we disbursed around Rs 6 crore of travel loans [during the] last financial year and are expecting to do around Rs 15 crore of travel loans (800 to 1,000 loans) in this financial year.” Clients tend to be in the 25-35 years age bracket, borrowing between Rs 1 lakh and Rs 5 lakh to fund honeymoon or holiday expenses.

The ease, speed and minimal paperwork required to be approved for a personal loan has been the attraction, according to Abhinandan Samgam, chief technical officer and co-founder of Finzy, a peer-to-peer lending platform. Over 12% of personal loans facilitated through them have been for travel. With no prepayment charges or lock-in periods, Finzy has seen a growing interest in this option through partnerships they share with travel companies. When they are made aware of a loan option, some customers have even changed their minds, choosing a more expensive destination than originally planned.

“This enhanced budget allows travellers to stay in better hotels and have an overall upgraded experience,” said Sangam. “On our platform, we have seen the salaried segment of borrowers vacationing at international destinations and more than 80% of our customers belong to this salaried class.”

Rajat Gandhi, chief executive officer and founder of Faircent, a P2P web-based lender, says that about 6% of personal loans from Faircent are used for travel and weddings, which includes honeymoons. “Over the last two years, the number has been steadily showing a spurt,” said Gandhi. “Millennials are not willing to postpone consumption, especially if they are confident that they can fund it over time. They are savvier in terms of using technology and planning their finances.”

Rubique, an online financial matchmaking platform, has a similar experience with travel accounting for approximately 5% to 7% of loans availed through them. “With a young working population and potential growth in disposable income for travel, preference is given to exciting overseas destinations by opting for personal loans,” said Manav Jeet, chief executive officer and managing director of Rubique.

The Expedia Millennial Survey 2017 found that 56% of those surveyed register with online travel agencies to receive information on discounts and personalised packages. The survey also confirmed interest in flexible payment options, with 85% of respondents wanting a service that allowed them to split the cost of a holiday between different payment options online. Travel operators such as Thomas Cook India have also seen a shift in mindset with their younger clients. Abraham Alapatt, president and group head of Marketing, Service Quality, Value Added Services and Innovation, says their Holiday Savings Account Scheme launched in January 2016 is targeted at a millennial audience. It allows consumers to save and earn via a 12-month recurring deposit scheme with seven banks, at interest rates of approximately 6%.

Digital marketing consultant Deeksha Jhalani, 27, finds that she learns the most “about the place and about myself” when travelling. With many millennials branching out as entrepreneurs and consultants, Jhalani feels this trend has helped travel planning. “Unconventional careers allow more than a fixed set of holidays per year, so more travel opportunities present themselves,” she said. Though word of mouth does play a role in influencing her travel choices, it is primarily self-care that motivates her holiday plans.

The fact that Indians – and not just the millennial segment – are travelling more is nothing new. Their reasons may be varied – from self-preservation to keeping up with the Joneses. But what stand out are the determination, passion and non-negotiable attitude with which these young people are integrating travel into their lives.