Tourism boom: India’s hospitality sector to touch $60 bn by 2028; domestic travel to drive surge, says report

India’s tourism and hospitality sector is projected to touch nearly $60 billion by 2028, driven by a sharp rise in domestic travel, according to a report by IDBI Capital.The study forecasts that domestic visitors will double from 2.5 billion in 2024 to 5.2 billion by 2030, clocking a compound annual growth rate (CAGR) of 13.4%. “We remain positive on domestic hospitality space led by demand-supply mismatch, FTA, increased corporate travel, and MICE will aid RevPAR growth,” the report said, quoted ANI.Citing estimates from the World Travel & Tourism Council (WTTC), it added that spending by domestic and international travellers is likely to nearly triple to Rs 33.95 trillion by 2034, aided by improvements in air, road and rail connectivity.Domestic air travel alone is expected to more than double, rising from 307 million passengers in FY24 to 693 million by FY30, which will further push demand for quality accommodation and hospitality services.As of March 2024, India had 3.4 million hotel rooms, of which only 11% belonged to the organised sector — around 375,000 branded keys. The luxury segment accounted for just 29,000 rooms across 230 hotels, or 17% of the organised share.The report pointed out that the demand-supply gap is stark in the luxury space, with rising incomes and evolving consumer choices driving demand for premium stays. However, high land costs, capital-intensive investments and long gestation periods are slowing supply growth.Despite constraints, the luxury hotel category is performing strongly, with average occupancy at 60-70% and average room rates (ARR) continuing to climb.With demand racing ahead of supply, India’s tourism and hospitality industry is expected to stay on a high growth path, the report said.