India’s Tourism & Hospitality Sector Set to Reach USD 60 Bn by 2028: IDBI Report
India’s tourism and hospitality sector is on track for record expansion, with industry size projected to reach nearly USD 60 billion by 2028, according to IDBI Capital. Domestic tourism will be the key driver, with visitor numbers expected to double from 2.5 billion in 2024 to 5.2 billion by 2030, reflecting a CAGR of 13.4%.
By SOH Edit Team
Market Tailwinds
The report highlighted several structural drivers of growth:
- A demand-supply mismatch in branded hotels
- Rising foreign tourist arrivals
- Strong momentum in corporate travel and MICE activity
Together, these factors are expected to support sustained improvement in revenue per available room (RevPAR).
Rising Visitor Spend and Connectivity
Visitor spending is projected to triple, reaching INR 33.95 trillion by 2034, aided by investments in air, rail, and road connectivity. Domestic air passengers are expected to increase from 307 million in FY24 to 693 million by FY30, fuelling demand for quality hospitality infrastructure.
Supply-Side Constraints
As of March 2024, India had 3.4 million hotel rooms, but only 375,000 keys—around 11%—fall within the organised sector. The luxury category remains underpenetrated, with just 29,000 keys across 230 hotels, accounting for 17% of organised inventory. Rising incomes and evolving consumer preferences are driving demand for premium stays, yet high land costs, heavy capital requirements, and long gestation periods continue to slow supply expansion.
Strong Luxury Performance
Despite supply challenges, luxury hotels are recording healthy performance, with occupancy levels averaging 60–70% and steady growth in Average Room Rates (ARR). Analysts note that the widening demand-supply gap will sustain momentum across India’s hospitality sector in the years ahead.