Travel And Tourism: From Rapid Growth To Transformation

India's travel & tourism industry is projected to generate nearly USD 24 billion in revenue in 2024, according to the India Brand Equity Foundation. With an impressive estimated annual growth rate of 9.6 per cent from 2024 to 2028, the industry is expected to reach a market volume of USD 34.25 billion by 2028. 

This growth projection underscores the sector's resilience and potential, driven by factors such as increasing domestic travel, the revival of international tourism, and enhanced infrastructure. The revenue trend indicates a significant shift, with package holidays expected to become the primary revenue generator in 2024, potentially reaching 65 million travellers by 2028.

The travel and tourism sector in India is not only a key contributor to the economy but also a dynamic and evolving industry. In 2023, the tourism industry recorded approximately USD 20 billion in revenue, with hotels accounting for the largest share. However, 2024 is expected to see package holidays take the lead. 

The industry's growth is fuelled by a resurgence in domestic and international tourism, rising interest in adventure and spiritual travel, and continuous advancements in infrastructure. These factors collectively highlight the sector's robust growth trajectory and its vital role in India's economic landscape.

India is poised for a significant boost in travel this summer, driven by rising disposable incomes and a strong desire for vacations post-pandemic. Industry experts predict a 30 per cent increase in domestic travel compared to last year, with popular destinations such as Goa, Kerala, and Himachal Pradesh witnessing a surge in bookings. Additionally, international travel is expected to see a 20 per cent rise, particularly to Southeast Asian and European countries. This uptick is set to propel the travel and hospitality sectors towards record growth, solidifying their recovery trajectory.

Emerging Trends: Adventure, Spiritual and Eco-tourism

India's diverse landscapes and rich cultural heritage make it an ideal destination for various types of tourism. Adventure tourism is gaining traction, with destinations like Rishikesh for river rafting, Himachal Pradesh for trekking, and Goa for water sports becoming increasingly popular.

Rama Mahendru, Country General Manager - India, Intrepid Travel, an adventure tourism provider, highlights several trends shaping international travel preferences. “Adventure and wellness tourism are gaining popularity as tourists seek outdoor activities, wellness retreats, and immersive experiences. Companies are responding by offering adventure sports, wellness resorts, yoga retreats, and holistic wellness programmes. 

Additionally, culinary tourism is on the rise, with travellers eager to explore local cuisines and culinary traditions. Businesses are capitalising on this by organising culinary tours, cooking classes, food festivals, and farm-to-table experiences, providing travellers with unforgettable gastronomic adventures. Spiritual tourism continues to draw both domestic and international tourists. Cities like Varanasi, Rishikesh, and Bodh Gaya are perennial favourites for those seeking spiritual enlightenment and cultural immersion.”

As Rajeev Kale, President & Country Head, Holidays, MICE, Visa - Thomas Cook (India) puts it, “Indian consumers are increasingly prioritising experiential and sustainable travel, seeking authentic experiences that immerse them in local culture, cuisine, and traditions. Adventure tourism, wellness retreats, and eco-friendly accommodations are becoming popular choices. Partnerships with local artisans, homestays, and conservation initiatives help create memorable and responsible travel experiences. Additionally, there is a significant appetite for premium travel among Indian consumers, with a 100 per cent surge in demand for luxury options. The industry caters to this by offering luxury accommodations, exclusive experiences, and VIP services that elevate the travel experience.”

"Eco-tourism in India is experiencing significant growth, creating new business opportunities for the tourism industry," says Akash Bhatia, CEO of Eco Hotels. "Increasing awareness of sustainability is prompting hotels and resorts to adopt eco-friendly practices, such as utilising solar, wind, and geothermal energy to reduce their carbon footprint. According to the Federation of Hotel and Restaurant Associations of India (FHRAI), eco-tourism is projected to grow by 15.7 per cent from 2019 to 2027, reaching a value of $4.55 billion. This trend is expected to extend beyond major hotel chains to smaller, individual establishments."

The Backpacker Hostel Industry: A Rising Star

One of the fastest-growing segments within India’s travel and tourism industry is the backpacker hostel market. This sector caters primarily to young travellers looking for affordable and social accommodation options. Hostels like Zostel and The Hosteller have become popular choices, offering budget-friendly stays and fostering a community atmosphere.

A MakeMyTrip report highlights that 10 per cent of youth travellers prefer accommodations costing less than Rs 1,000 per night. This budget-conscious approach is significant, given the estimated 182 million Indian youth expected to travel annually within the sub-Rs 800 price range. Catering to this demographic is crucial for the continued growth of the backpacker hostel industry.

As Pranav Dangi, CEO of The Hosteller says, “India's travel market has seen remarkable growth, especially post-Covid. With over 600 million people aged 18 to 40, the sector has expanded rapidly. The backpacker hostel industry, in particular, has thrived by opening properties in offbeat and prime locations, drawing travellers away from traditional hotels. Before the pandemic, there were around 250 hostels; now, there are over 1,000. This growth reflects a shift towards exploring smaller, lesser-known destinations and alternative accommodations like villas and homestays. The demand for budget travel has surged, even outpacing luxury travel. Technological innovations have also enhanced the booking process, making it easier for travellers to find and book unique accommodations. The sector's evolution over the last few years has created numerous opportunities and is poised for continued growth.”

Innovative Hospitality: Heritage Hotels and Homestays

The hospitality sector in India is evolving to meet the diverse needs of travellers. Heritage hotels, homestays, and carbon-neutral properties are gaining popularity among tourists seeking unique and sustainable travel experiences. These accommodations offer a blend of luxury and local culture, providing guests with an immersive experience.

Smaller, lesser-known destinations are also benefiting from this trend. Heritage properties in places like Rajasthan and Kerala offer a glimpse into India’s royal past, while homestays and luxury properties in newer destinations like Andhra Pradesh and rural areas provide an authentic cultural experience.

Somesh Agarwal, Chairman and MD, Radisson Blu Palace Resort, Udaipur says that Indian consumers increasingly prefer personalised, immersive, and sustainable travel experiences. “To cater to this demand, hotels offer tailored packages for families, couples, groups, and business travellers. Emphasising digital convenience, they maintain a robust online presence with user-friendly websites and seamless booking processes. With eco-friendly travel on the rise, hotels adopt sustainable practices, such as using renewable energy and eliminating plastics. The wellness travel trend has led to expanded offerings, including advanced fitness centres, spa services, and healthy dining. To satisfy cultural immersion desires, hotels organise guided tours, cultural performances, and regional culinary experiences,” comments Agarwal. 

Lakshmi Sridhar, General Manager at Novotel Visakhapatnam Varun Beach & The Bheemli Resort, notes a shift in Indian travel preferences towards experiential travel, with a growing demand for cultural tours, adventure sports, culinary experiences, and wellness retreats. Additionally, there is a rising need for customised and specialised travel plans, offering flexibility and personalisation to suit individual interests and budgets. The influence of digital technology and social media has further personalised travel choices, aligning them with unique hobbies, interests, and lifestyles.

Workcations and Weekend Escapes 

Workcations and weekend escapes are rapidly becoming popular among professionals seeking a balance between work and relaxation. The rise of flexible work arrangements has enabled individuals to combine productivity with leisure in scenic locales. These short getaways allow employees to refresh and recharge, often enhancing creativity and focus. Destinations offering high-speed internet and comfortable workspaces cater to this growing trend, providing the perfect blend of work and play. 

Meanwhile, weekend escapes to nearby natural or cultural attractions offer a quick break from urban life, fostering mental well-being and reducing burnout. 

Vishal Tony, CEO and Founder of Aratt Hospitality and Ayatana Hospitalities, highlights the evolving travel trends among Indian consumers. With the rise of hybrid work structures, professionals are increasingly seeking scenic locations for workcations, particularly favouring weekend stays to escape urban monotony and embrace nature. “Today's travellers prioritise sustainable practices, and brands curate eco-friendly experiences. Solo travellers crave immersive experiences connecting with local culture, while families seek bonding activities in natural settings. Industry players focus on understanding these preferences to offer tailored activities like nature walks, rafting, and trekking, ensuring exceptional and memorable stays,” says Tony.

Supporting Local Communities

India's burgeoning prominence in international tourism expenditure underscores its position as a key player in the global travel landscape. With projections indicating a remarkable surge in revenue surpassing $59 billion by 2028, the country's travel and tourism market is poised for significant expansion.

Industry experts also say that despite geopolitical challenges, this resilient industry promotes domestic tourism and supports local communities by ensuring strict health protocols and leveraging digital platforms for seamless, safe travel experiences. Collaborating with local businesses, one can create travel packages that highlight regional offerings.

Dimitris Manikis, President EMEA, Wyndham Hotels & Resorts comments, “Despite geopolitical challenges, our industry has demonstrated resilience with minimal impact. We're focusing on promoting domestic tourism and supporting local communities while prioritising traveller safety and well-being. Our multi-faceted approach includes collaborating with local businesses to create travel packages that highlight regional offerings and ensuring strict adherence to health protocols. Additionally, we're leveraging digital platforms to raise awareness of local attractions and facilitate seamless bookings, emphasising safety throughout the traveller's journey.”

India’s travel and tourism sector is a dynamic and integral part of the country’s economy. With a diverse range of offerings, from adventure and spiritual tourism to medical and backpacker travel, the industry is poised for continued growth. The sector's contributions to GDP, employment, and foreign exchange earnings underscore its importance.
 

Economic Contributions & Market Projections

In 2022, the industry contributed about $122 billion to India’s GDP

This figure is expected to rise significantly, with projections suggesting the market will reach $23.72 billion in revenue by 2024 and $34.25 billion by 2028

The largest segment within this market is package holidays, projected to have a market volume of $10.48 billion in 2024

The sector generated $0.31 billion in foreign exchange earnings from January to December 2023, emphasising its importance in the country’s economic framework 

The annual growth rate of foreign tourist arrivals in 2022 was 0.3 per cent, a modest increase but one that signifies a positive trend moving forward

Global Standing

India's travel and tourism sector holds a significant position globally. In 2021, the country was ranked 6th in the world for travel and tourism’s contribution to GDP and 2nd for employment in the sector

In 2022, it was ranked 54th on the World Economic Forum Travel and Tourism Development Index, indicating areas for improvement, particularly in sustainability and infrastructure development