India’s Hospitality Boom: The Surge in Domestic Travel and Rising Global Demand for 2026

Published on December 26, 2025

By: Tuhin Sarkar

India’s hospitality sector is on track to continue its impressive growth in 2025 and 2026, as both domestic demand and foreign tourist arrivals surge. With over 85-90% of the country’s tourism volumes coming from domestic travellers, the industry is experiencing rapid transformation, making India one of the top destinations for both leisure and business travel. As the demand for luxury stays, cultural experiences, and unique getaways skyrockets, India is solidifying its place on the global travel map. From domestic travel preferences to the rise of eco-tourism and luxury resorts, the future of Indian hospitality looks brighter than ever.

India’s Domestic Travel Boom: The Backbone of Hospitality

India’s hospitality industry has been fuelled by the rising domestic demand, which is expected to continue to drive growth in 2025 and 2026. According to the Ministry of Tourism, domestic tourist visits account for over 85-90% of total tourism volumes. This trend is not just a passing phase, but a structural shift in the market. The growing middle class, increased disposable income, improved highway and air connectivity, and the changing preference for short-duration travel have expanded India’s domestic travel footprint significantly. As a result, cities across the country—from Tier-1 metropolises to Tier-2 and Tier-3 cities—are witnessing a steady flow of domestic tourists throughout the year.

This shift from traditional holiday patterns to shorter, more frequent breaks has made local destinations even more attractive. Now, more than ever, tourists are choosing to inhabit the destination, rather than merely “see” it. The focus has shifted towards experiential travel that prioritises culture, nature, and personalised services, allowing guests to connect with the place in a way that was previously unimaginable. As the domestic tourism market matures, India’s hospitality sector is well-positioned to continue capitalising on this growing trend, providing tourists with a wide range of options from luxury escapes to eco-tourism retreats.

The Surge in Foreign Tourist Arrivals: India’s Global Recovery

While domestic demand remains the backbone of India’s hospitality sector, foreign tourist arrivals are also on the rise, with India experiencing a significant recovery in international tourism. According to recent reports, India’s International Tourist Arrivals (ITAs) reached 18.89 million in 2023, surpassing the previous pre-pandemic peak of 17.91 million in 2019. This represents a 5.47% growth over pre-Covid levels. The recovery of global tourism has been driven by strong economic growth and a growing interest in India’s diverse cultural and heritage offerings.

As global tourism rebounds, India’s position in the international market strengthens, contributing to its goal of capturing a greater share of global arrivals. In fact, India now accounts for 1.45% of global international arrivals and 2.1% of worldwide tourism receipts. The country’s ability to attract international visitors is further enhanced by improvements in visa facilitation, connectivity, and destination promotion, ensuring that foreign tourists continue to flock to India in increasing numbers. By 2026, India is poised to surpass pre-pandemic levels in both foreign tourist arrivals and tourism receipts.

The Impact of Infrastructure: The Need for Infrastructure Status

While India’s hospitality sector is flourishing, it faces a major hurdle—the lack of infrastructure status for the hospitality industry. Without this classification, mid-scale and regional hotel developers continue to face financial challenges, including higher borrowing costs, limited access to long-term capital, and tight credit conditions. As the sector is heavily capital-intensive with long gestation periods, this financing mismatch has slowed the development of new hotels in emerging destinations and Tier-2 and Tier-3 cities.

If India’s hospitality sector were granted infrastructure status, it would align hotel financing with its economic role and reduce the cost of capital, allowing developers to create quality properties in emerging regions. This would unlock institutional funding, enable the creation of sustainable capacity, and encourage the growth of tourism-led regional economies. Without this reform, India’s expansion will remain cautious and uneven, limiting the country’s ability to meet growing demand and unlock its full potential in hospitality.

Strategic Expansion: India’s 2026 Hospitality Plans

India’s hospitality sector is gearing up for a measured expansion in 2026. As both domestic and international tourism continue to rise, hospitality players are focusing on asset-light models, such as management contracts and franchising. These models offer a way for brands to scale quickly while controlling balance-sheet risks. Operators are also increasingly turning to mid-scale hotels and experiential properties to cater to the growing demand for wellness tourism, MICE-driven destinations, and unique travel experiences.

Sustainability and technology adoption will play a crucial role in this expansion. As guests demand personalised services and seamless digital interactions, hotels are investing in AI and smart technologies to enhance the guest experience while staying true to the essence of Indian hospitality—warmth, personal connection, and cultural immersion. Workforce skilling and training are also becoming integral to expansion plans, ensuring that the growing hospitality sector has a skilled and capable workforce to meet the increasing demands of international and domestic travellers alike.

The Role of Sustainability in India’s Luxury Travel Boom

Sustainability has become a central theme in luxury travel, with eco-friendly practices now expected by discerning travellers. Guests are no longer satisfied with luxury alone—they want to know how their chosen destinations impact the environment and local communities. In response, India’s hospitality sector is prioritising sustainable design, resource management, and community engagement in order to meet the demands of the modern traveller.

Luxury resorts across India are adopting eco-conscious measures, including solar energy, water conservation, and waste reduction, while focusing on providing guests with sustainable, authentic experiences. Whether it’s wellness retreats in Kerala, heritage hotels in Rajasthan, or eco-tourism escapes in the Andaman Islands, India’s luxury sector is aligning with global sustainability trends, ensuring that luxury and eco-consciousness go hand in hand.

2026: India’s Luxury Travel Future Looks Bright

As India prepares for 2026, the outlook for the luxury travel market is incredibly promising. Domestic tourism will continue to drive the majority of bookings, but international demand is expected to increase significantly, especially in the wake of global tourism recovery. With improving infrastructure, a focus on sustainable practices, and innovative expansion strategies, India is set to capture a larger share of the international tourism market, particularly in the luxury sector.

With Tier-2 and Tier-3 cities emerging as key players, new destinations such as Himachal Pradesh, Kerala’s eco-luxury resorts, and Maharashtra’s vineyard estates are expected to experience a surge in demand from both domestic and international tourists. As long as the sector continues to prioritise experiential travel, sustainability, and technological innovation, India’s luxury hospitality industry will remain at the forefront of the global tourism landscape.