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According to Capitalmind PMS’s new report, India’s travel boom is gathering pace. With more money in people’s pockets and improved transport, trips within the country are hitting record highs and foreign visitors are increasing for luxury and cultural stays. India’s tourism and hospitality sector remains a key GDP driver but still trails global peers— two per cent below the US and four per cent below Thailand in GDP contribution. Yet there is enormous potential for growth. The sector is forecast to generate over Rs 5,12,356 crore ($59 billion) by 2028, with Foreign Tourist Arrivals (FTAs) reaching 30.5 million, according to the Ministry of Tourism.
Tourism’s Contribution
Domestic tourism is booming, expected to double to 5.2 billion visits by 2030 from 2.5 billion in 2024 (13.4 per cent CAGR). Domestic visitor expenditure rose from Rs 12.74 trillion in 2019 to Rs 14.64 trillion in 2023 and is projected to reach Rs 33.95 trillion by 2034 (7.9 per cent CAGR), per WTTC’s Economic Impact Research, 2024. Improved connectivity—air, road, and rail—plus investments in tourism infrastructure are accelerating this growth. Domestic air passenger traffic is set to more than double to 693 million by FY30 from 307 million in FY24.
The travel market is expected to rise from $75 billion in FY20 to $125 billion by FY27. Domestic tourism remains the real MVP, with Domestic Tourist Visits (DTVs) jumping 44.98 per cent from 1,731.01 million in 2022 to 2,509.63 million in 2023. Uttar Pradesh (478.53 million) and Tamil Nadu (286.01 million) led the pack, while Maharashtra (3.39 million) and Gujarat (2.81 million) topped foreign tourist visits. FTAs reached 18.89 million in 2023, surpassing the 2019 peak of 17.91 million by 5.47 per cent. South Asia (29.02 per cent), North America (21.82 per cent), and Western Europe (20.40 per cent) were the top sources, with leisure travel (46.2 per cent), diaspora visits (26.9 per cent), and business travel (10.3 per cent) driving arrivals. Inbound tourism grew 64 per cent YoY in 2023. The trend shows foreigners increasingly favouring India’s luxury wellness retreats. Ayurveda resorts, palace stays, and yoga spas are in high demand, with India’s value in luxury gradually gaining attention.
India’s Economic Boom
According to IMF’s World Economic Outlook, April 2025, India’s GDP grew by a robust 7.4 per cent in 2024 and is set to rise by 7.1 per cent in 2025. From a $3.6 trillion economy in 2022–23, it is projected to reach $5.1 trillion by 2026–27 and a substantial $6.8 trillion by 2030. In 2023, India contributed 16 per cent to global growth, per the WEF.
Per capita income is surging, growing at a 5.4 per cent CAGR from 2018 to 2024 to reach $2,711. By 2030, it is expected to hit $4,469, an 8.7 per cent CAGR. Urbanisation is another tailwind—40 per cent of India’s population (around 518 million people in 2023, per the World Bank) will live in urban areas by 2036, up from 31 per cent in 2011.
Growing affluence, a rise in high and upper-middle-income households, a young median age, and increasing urbanisation are expected to drive higher consumption, particularly in the luxury segment. Between FY21 and FY31, India’s incremental consumption potential is pegged at US$3 trillion—2.4 times higher than FY21 levels—with a nine per cent CAGR, making it a $5 trillion consumption economy by 2031. Private Final Consumption Expenditure (PFCE) rose 7.2 per cent to Rs 106 lakh crore from Rs 99 lakh crore, while CPI has been declining for nine straight months. Translation? More money in pockets, ready to be spent on experiences like travel and hospitality.
Aviation: Taking Flight
India’s aviation sector is soaring and is the third-largest domestic aviation market globally. It is on track to be the third-largest overall by 2026, according to IATA. From 50 operational airports in 2000, India now has 148, aiming for 220 by 2027. Scheduled flights increased 77.7 per cent over the past decade to 1.3 million in 2024 (6.9 per cent YoY growth), with domestic flights rising from 613,000 in 2014 to 1.1 million in 2024. IndiGo dominates with a 53 per cent share of departing flights. Despite this, India accounts for just 4.2 per cent of global aviation, signalling substantial growth potential.
Hospitality Landscape (Supply and Demand): Scarcity
India’s hospitality industry comprises 3.4 million rooms as of March 31, 2024, but the organised sector (branded, aggregators, quality independents) accounts for only 11 per cent (375,000 rooms). Branded hotels make up 45 per cent of this (170,000 rooms), with luxury hotels a mere 17 per cent (29,000 rooms across 230 hotels). The sector operates through owner, manager, and franchiser models, with owner‑manager arrangements optimising profitability and brand growth. The demand–supply gap, particularly in luxury, is widening due to rising incomes, premium preferences, and limited inventory. Barriers such as scarce land, high capital costs, and long gestation periods keep supply constrained, driving ARR growth and occupancy (60–70 per cent in luxury). The luxury segment’s Total Revenue per Available Room (TRevPAR) is 117 per cent higher than upscale and 298 per cent higher than midscale.
Weddings, MICE, and F&B: The Party Never Stops
Food and Beverage (F&B) is a cash cow for hotels, with luxury-segment F&B revenue per occupied room 1.9 times the industry average in 2023. Weddings and MICE (Meetings, Incentives, Conferences, Exhibitions) are major growth drivers. The Confederation of All India Traders (CAIT) reported 3.8 million weddings between November 2023 and December 2023, generating Rs 4.74 lakh crore (26 per cent YoY growth). India’s 600 million‑strong 18–35 age group, the world’s largest millennial and Gen Z cohort, fuels this surge, supported by rising incomes and changing consumption patterns. India hosts around 10 million weddings annually. The Indian wedding industry ranks second globally. A report by the Economist places the wedding industry as the fourth-largest industry in India, with annual spending of $130 billion.
High Net Worth Individuals (HNWIs) are set to grow 107 per cent to 1.65 million by FY27, and Ultra HNWIs (net worth ≥$30 million) will rise 50.1 per cent from 13,263 in 2023 to 19,908 in 2028, per Knight Frank’s The Wealth Report 2023 & 2024. Destination weddings in Jaipur, Udaipur, Goa, and Delhi are booming, with buyouts and large-format weddings generating Rs 25–30 million ($300,000–360,000) per event for luxury hotels. Hotel expenses account for 50 per cent of destination wedding spend.
Corporate Travel: The Office Boom
India’s office sector is buzzing, with 2024 gross leasing volume (GLV) reaching a record 89 million square feet (MSF) across eight cities, up 19 per cent from 2023, per Cushman & Wakefield. Bengaluru led with 25.93 MSF (29 per cent), followed by Mumbai (17.84 MSF, 20 per cent) and Delhi-NCR (13.14 MSF, 15 per cent). Net absorption reached 50 MSF, surpassing 2019’s pre‑COVID peak by 7 MSF. Global Capability Centres (GCCs) drove 27 per cent of this growth, with 1,700 GCCs employing 1.9 million in FY24, projected to hit 2,100–2,200 by 2030 with export revenues of $99–105 billion. This office boom fuels corporate travel, boosting demand for business hotels and retreats, especially in tech hubs like Bengaluru and Hyderabad.
India’s hospitality and tourism sector stands on the cusp of a remarkable transformation, and it is hard not to be optimistic about its trajectory. Driven by a rapidly growing economy, rising disposable incomes, and a young, urban population eager to travel, the industry is gaining momentum. By streamlining visa processes, improving infrastructure, and balancing affordability with premium offerings, India's hospitality industry has the potential to establish itself as a global leader in tourism.