New Delhi [India], September 8 : India's tourism and hospitality sector is set to witness record growth, with projections indicating the industry could reach nearly USD 60 billion by 2028, according to a report by IDBI Capital.
The report highlighted that domestic tourism will be the main driver of this growth. The number of domestic visitors is expected to double from 2.5 billion in 2024 to 5.2 billion by 2030, translating into a compound annual growth rate (CAGR) of 13.4 per cent.
It stated, "We remain positive on 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."
The report, mentioning the World Travel & Tourism Council's (WTTC) estimate, also predicted a significant 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 key role in boosting travel.
Domestic air travel is also projected to more than double, rising from 307 million passengers in FY24 to 693 million by FY30. This rise in mobility is expected to further strengthen the demand for quality accommodation and hospitality services.
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.
High land costs, capital-intensive investments, and long gestation periods are making it challenging for the industry to keep up with this rising demand, especially in the luxury category.
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.
With demand growing rapidly and supply struggling to keep pace, as per a report, India's tourism and hospitality sector is expected to remain on a strong growth trajectory.
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