India’s tourism and hospitality sector is on track for record growth, with industry size projected to reach nearly USD 60 billion by 2028, according to IDBI Capital. The surge will be driven primarily by domestic tourism, with visitor numbers expected to double from 2.5 billion in 2024 to 5.2 billion by 2030, reflecting a CAGR of 13.4%.
The report highlighted robust tailwinds, including a demand-supply mismatch in branded hotels, growth in foreign tourist arrivals, corporate travel, and MICE activity, which together will aid revenue per available room (RevPAR).
Visitor spending is also expected to triple, reaching INR 33.95 trillion by 2034, supported by improved air, rail, and road connectivity. Domestic air passengers are projected to rise from 307 million in FY24 to 693 million by FY30, fueling demand for quality hospitality infrastructure.
As of March 2024, India had 3.4 million hotel rooms, but only 375,000 keys—about 11%—fall in the organized sector. The luxury segment remains underpenetrated, with 29,000 keys across 230 hotels, just 17% of the organized inventory. Rising incomes and shifting preferences are intensifying demand for premium stays, even as high land costs, heavy capital requirements, and long gestation periods slow supply growth.
Despite these constraints, luxury hotels are performing strongly, with occupancy levels averaging 60–70% alongside robust growth in Average Room Rates (ARR). Analysts say the widening demand-supply gap will ensure sustained momentum across India’s hospitality sector in the coming years.
