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Market Reports

Tourism and Hospitality Industry in India

UJA Market Reports - Tourism and Hospitality Industry in India

Quick Facts: Tourism and Hospitality Industry

  • India covers an area of 3.2 million sq. km, stretching from the snowy Himalayas in the north to tropical rainforests in the south.
  • International Tourist Arrivals (ITAs) in India during 2023 were 18.8 million.
  • Foreign Tourist Arrivals (FTAs) in India during 2023 were 9.5 million.
  • Foreign Exchange Earnings (FEEs) through tourism during 2023 were INR 2,319 billion.
  • Domestic Tourist Visits (DTVs) in India during 2023 were 2.5 billion.
  • India’s Travel and Tourism GDP contribution increased by 5.9% as per WTTC’s Economic Impact 2023 report.
  • India is ranked 39th in the global Travel and Tourism Development Index (TTDI) in 2024.
  • India’s travel market is expected to hit INR 10,776 billion by FY27.
  • The Indian airline travel market was valued at around INR 1,724 billion and is expected to double by FY27.
  • The travel and tourism industry’s contribution to India’s GDP is expected to reach INR 43 trillion by 2028.
  • International tourist arrivals are expected to reach 30.5 million by 2028 and generate revenue of over INR 5,086 billion.
  • The cumulative FDI equity inflow in the Hotel and Tourism industry amounted to INR 1,487 billion from April 2000 to June 2024, accounting for 2.4% of the total FDI inflow across all sectors.
  • The Indian hotel market, including domestic, inbound, and outbound segments is projected to reach around INR 4,482 billion by FY27.
  • By 2029 the travel & tourism industry is expected to account for about 53 million jobs.
  • By 2030, India is expected to become the 4th largest global spender on tourism, with an estimated expenditure of INR 35.3 trillion.

Overview: Tourism and Hospitality Industry

  • India has a rich cultural and historical heritage, variety in ecology, terrains, and places of natural beauty spread across the country. India’s rich and exquisite history, culture, and diversity are showcased through tourism while providing significant economic benefits. This provides a significant opportunity to fully exploit the potential of the tourism sector. India being one the most popular travel destinations across the globe has resulted in the Indian tourism and hospitality industry emerging as one of the key drivers of growth among the services sector in India. The tourism industry in India has significant potential considering that Tourism is an important source of foreign exchange in India similar to many other countries. The industry also generates millions of jobs, with direct and indirect employment standing at over 42 million, making it a key driver of job creation in India.
  • India has a rich heritage, shaped by the achievements of ancient dynasties, civilizations, and diverse cultures. This remarkable legacy is showcased through its architectural marvels, monuments, artistic expressions, and well-preserved history in museums and galleries, with 42 UNESCO World Heritage sites standing as a testament to its global significance. The country’s diversity is further reflected in its 10 biogeographic zones, 80 national parks, and 441 wildlife sanctuaries, offering vast opportunities for investments in cultural, wildlife, eco, medical, and adventure tourism.

Tourism Segments

  • The hospitality sector plays a crucial role in supporting and enhancing the tourism industry. As travellers explore diverse regions, the quality of accommodations, food services, and overall guest experiences significantly influences their trip. The seamless connection between tourism and hospitality helps in attracting tourists and ensuring they have a positive, enriching experience throughout their journey.

  • Medical Tourism:
    The country offers advanced medical procedures, from cardiac surgeries to cosmetic treatments, at a fraction of the cost compared to Western countries. Popular cities like New Delhi, Mumbai, and Chennai attract international patients seeking high-quality care. 

  • Adventure Tourism:
    The Himalayan range is a hotspot for trekking and mountaineering, while Kerala’s backwaters offer kayaking and canoeing experiences. Adventure enthusiasts flock to places like Rishikesh for river rafting and Ladakh for motorbiking and mountain biking, making India a thrilling destination for outdoor activities.

  • Eco-Tourism:

    India’s eco-tourism sector focuses on sustainable travel, protecting natural resources, and promoting environmental conservation. The country’s vast biodiversity and protected forests, such as those in Kerala, Rajasthan, and Madhya Pradesh, offer eco-friendly experiences like wildlife safaris, bird watching, and jungle trekking.

  • Cultural Tourism:
    Visitors can explore grand temples, ancient forts, historical monuments, and take part in local festivals. Cultural tourism also offers a chance to experience India’s unique music, dance, and diverse food traditions.

  • Wellness Tourism:
    India is globally recognized as the birthplace of Ayurveda and Yoga, both of which have become integral parts of wellness tourism. Visitors flock to wellness retreats in destinations like Kerala, Rishikesh, and Goa to experience holistic healing through Ayurvedic treatments, yoga, meditation, and wellness therapies.

  • Spiritual Tourism:
    Pilgrims and spiritual seekers visit sacred sites such as the holy city of Varanasi, the Golden Temple in Amritsar, and the temples of Tamil Nadu. The country offers a unique blend of religious experiences, where people can engage in meditation, attend religious ceremonies, and experience inner growth.

  • MICE (Meetings, Incentives, Conferences, and Exhibitions) Tourism:
    India has rapidly developed into a prime destination for MICE tourism, attracting International business events, conferences, exhibitions, and corporate meetings. Cities like New Delhi, Bangalore, and Mumbai provide modern infrastructure, state-of-the-art convention centers, and world-class hotels, making them attractive hubs for International business tourism.

Government Initiatives for Tourism Industry

  • Incredible India

    launched in 2002, has evolved to promote the country’s tourism. In 2017, Incredible India 2.0 focused on digital promotion and niche tourism like adventure, medical, and wellness. By 2024, efforts expanded to promote niche tourism year-round. Additionally, India hosted the 46th World Heritage Committee session and announced an INR 86.3 million grant to UNESCO for conservation and capacity-building, reinforcing its commitment to global tourism leadership.

  • Vibrant Villages Programme

    The government has allocated INR 48 billion for the period from FY 2022-23 to 2025-26 to support the development of 2,963 selected villages across 19 districts in northern border states such as Himachal Pradesh, Uttarakhand, Arunachal Pradesh, Sikkim, and Ladakh. The program aims to promote tourism and culture by improving tourism-related infrastructure. In the initial phase, 25 vibrant villages were chosen for tourism and development promotion, alongside the creation of a Model Tourism Route, which will link 27 vibrant villages along the Bomdilla-Tawang route in Arunachal Pradesh.

  • National Mission on Pilgrimage Rejuvenation and Spiritual, Heritage Augmentation Drive (PRASHAD)

    The National Mission on Pilgrimage Rejuvenation and Spiritual Heritage Augmentation Drive (PRASHAD), launched in 2014-2015, aims to develop pilgrimage destinations in a planned, sustainable, and prioritized manner to enhance the religious tourism experience. Recognizing the significant role of pilgrimage tourism in boosting domestic tourism, the scheme has approved 46 projects, with a total funding of INR 16.2 billion as of December 2023.

Megatrends in the Indian Hospitality & Tourism Industry?

Digital Transformation and Technology Integration

  • Contactless Services: The demand for contactless solutions in hospitality has surged, with 75% of consumers preferring contactless interactions post-COVID. This includes online check-ins, digital room keys, and mobile payments, improving guest experience and safety.
  • AI and Data Analytics: By 2026, the global hospitality industry is expected to invest INR 260 billion in AI technology. Indian hospitality is following suit, with hotels leveraging AI for personalized guest experiences, dynamic pricing models, and predictive maintenance, creating operational efficiencies.

Sustainability and Eco-Tourism

  • Green Hotels and Sustainable Practices: The Indian hotel industry’s focus on sustainability is growing, with over 250 hotels certified under the Green Globe certification as of 2023.
  • Carbon Footprint Reduction: The Indian airline industry has also embraced sustainability, with Air India pledging to reduce its carbon emissions by 30% by 2030. Eco-conscious travel options are rising in demand, including electric buses for tourist transport and solar-powered hotels.

Domestic Tourism Surge

  • Preference for Local Destinations: In 2023, India saw a 24% increase in domestic travel compared to pre-pandemic levels. This shift has been driven by safety concerns and restrictions on international travel, resulting in increased interest in regional destinations.
  • Weekend and Short-Term Getaways: Research by OYO reveals that 68% of Indian travellers prefer weekend getaways, often within a 5-hour radius from their home, driving the popularity of nearby destinations and staycations.

Recent Investment in Hospitality & Tourism Industry

  • In February 2024, Mahindra Holidays & Resorts India Ltd (MHRIL) plans to invest up to INR 45 Bn over the next three to four years to double its room capacity to 10,000 by FY30. The company is working on partnerships with state governments and focusing on new resorts, expansions, and acquisitions. Currently, INR 8.3 Bn is being invested in five projects, including greenfield and brownfield developments.
  • In February 2024, Oberoi Realty partnered with Marriott International to develop two Marriott properties in Mumbai: JW Marriott Hotel Thane Garden City and Mumbai Marriott Hotel Sky City in Borivali. Both hotels are expected to be completed by 2027-28.
  • In 2023, Radisson Hotel Group made a major move to grow in India, signing 21 hotels across its nine top brands

Why India for Investment in Hospitality & Tourism

Infrastructure Development and Connectivity

  • Expansion of Airports and Air Connectivity:
    India is expected to become the third-largest aviation market globally by 2025, with the number of airports rising from 100 to over 200 in the coming years. This growth is expected to boost both domestic and international tourist arrivals, thus benefiting investments in the hospitality sector.
  • Expansion of Railways and Road Networks:
    India’s railway infrastructure is undergoing massive modernization with the Dedicated Freight Corridors (DFC) and Smart Cities projects, enhancing connectivity to tourist destinations across the country. The road network, including the Bharatmala Project, is also improving access to remote tourist locations, boosting investment potential. 

Tourism Diversification and Niche Markets

  • Adventure and Ecotourism:
    The Indian government has recognized adventure tourism as a key growth segment, allocating funds to boost destinations like Ladakh, Himachal Pradesh, and Kerala.
  • Cultural and Heritage Tourism:
    India is home to 40 UNESCO World Heritage Sites and boasts diverse cultural and religious attractions. With India’s rich history, increasing global interest in cultural tourism offers ample opportunities for investors in heritage sites, historical tours, and religious tourism circuits. 
  • Wellness Tourism:
    India’s wellness market is expected to grow at a CAGR of 16% until 2030. With India’s global reputation for Ayurveda, yoga, and wellness, there’s an increasing demand for luxury wellness resorts, spas, and holistic wellness centers.

Tourism Startups

  • India is home to over 1,300 DPIIT-recognized startups in the tourism sector, providing exciting partnership opportunities. These innovative companies are leveraging new technologies to improve travel experience. With the tourism industry evolving rapidly, startups offer fresh perspectives and creative solutions that can enhance tourism in India.

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