India’s tourism and hospitality sector can see record expansion and industry size projected to cross USD 60 billion by 2028, according to a report by IDBI Capital.
The study also noted that domestic tourism will be the primary growth engine and the number of domestic travelers is expected to rise from 2.5 billion in 2024 to 5.2 billion by 2030, with a CAGR of 13.4 per cent.It stated, “We remain positive on the domestic hospitality space led by demand-supply mismatch, FTA, increased corporate travel, and MICE will aid RevPAR growth… Tourism and Hospitality Sector Poised for Record Growth, Projecting Nearly Sixty Billion by 2028.”
Tourism Sector Growth In India
The report stated that the World Travel & Tourism Council’s (WTTC) estimate, predicted a major increase in visitor spending.
It is estimated that spending by both domestic and international travellers will almost triple to Rs 33.95 trillion by 2034. This strong growth will be supported by better connectivity across the country, with developments in air, road, and rail infrastructure playing a big role in travel growth
Domestic air travel is also projected to more than double, rising from 307 million passengers in FY24 to 693 million by FY30.
Hospitality Sector To Boom In India?
As of March 31, 2024, India had a total of 3.4 million hotel rooms. However, the organized sector, which includes branded hotels and high-quality independent properties, accounts for only 11 per cent of the total, amounting to 375,000 keys.
The luxury hotel segment remains particularly small, with just 29,000 keys across 230 hotels, representing only 17 per cent of the organized sector.
The report noted that the demand-supply gap is most visible in the luxury hotel space, as rising incomes and changing consumer preferences push demand for premium stays.
Despite these challenges, the luxury hotel segment is witnessing strong performance. The Average Room Rate (ARR) and occupancy levels in luxury hotels have shown remarkable growth, with occupancy averaging between 60-70 per cent.
