Ayurveda, palaces, yoga: India's tourism market to add ₹5.1 lakh cr by 2028

According to Capitalmind PMS's new report, India's travel boom is picking up fast. More money in people's pockets and better transport are leading to record trips within the country

India’s tourism and hospitality sector is set for a record expansion, with revenues projected to cross $59 billion (₹5.1 lakh crore) by 2028, according to a new report by Capitalmind PMS. The boom is being fuelled by rising disposable incomes, infrastructure upgrades, and a renewed surge in both domestic and international travel.

 

Domestic tourism is emerging as the key driver, expected to double to 5.2 billion visits by 2030 from 2.5 billion in 2024, translating into a compound annual growth rate (CAGR) of 13.4%. Visitor spending is forecast to nearly triple to ₹33.95 trillion by 2034, per WTTC data.

 

 

"Domestic tourism is on fire, expected to double to 5.2 billion visits by 2030 from 2.5 billion in 2024 (13.4% CAGR). Domestic visitor spending grew from Rs 12.74 trillion in 2019 to Rs 14.64 trillion in 2023 and is projected to hit Rs 33.95 trillion by 2034 (7.9% CAGR), per WTTC’s Economic Impact Research, 2024. Improved connectivity—air, road, and rail—plus tourism infrastructure investments are supercharging this growth. Domestic air passenger traffic is set to more than double to 693 million by FY30 from 307 million in FY24," noted the report.  

Hospitality Landscape (Supply and Demand): Scarcity

 

India’s hospitality industry boasts 3.4 million keys as of March 31, 2024, but the organized sector (branded, aggregators, quality independents) is just 11% (375,000 keys). Branded hotels make up 45% of this (170,000 keys), with luxury hotels a mere 17% (29,000 keys across 230 hotels).  The sector operates through owner, manager, and franchiser models, with owner-manager setups optimizing profitability and brand growth. The demand-supply gap, especially in luxury, is widening due to rising incomes, premium preferences, and limited inventory. Barriers like scarce land, high capital costs, and long gestation periods keep supply constrained, driving ARR growth and occupancy (60–70% in luxury). The luxury segment’s Total Revenue per Available Room (TRevPAR) is 117% higher than upscale and 298% higher than midscale. 

Weddings, MICE, and F&B: The Party Never Stops

 

Food and Beverage (F&B) is a cash cow for hotels, with luxury segment F&B revenue per occupied room 1.9 times the industry average in 2023. Weddings and MICE (Meetings, Incentives, Conferences, Exhibitions) are major growth drivers. The Confederation of All India Traders (CAIT) reported 3.8 million weddings between November 23 and December 15, 2023, generating Rs 4.74 lakh crore (26% YoY growth). India’s 600 million-strong 18–35 age group, the world’s largest millennial and GenZ cohort, drives this surge, fueled by rising incomes and changing consumption patterns. 

 

India hosts around 10 million weddings annually. The Indian wedding industry ranks second globally. 

 

According to a report published by the Economist, the wedding industry is the fourth-largest industry in India, recording a huge spending of US$ 130 billion per year.

 

High Net Worth Individuals (HNWIs) are set to grow 107% to 1.65 million by FY27, and Ultra HNWIs (net worth ≥US$30 million) will rise 50.1% from 13,263 in 2023 to 19,908 in 2028, per Knight Frank’s The Wealth Report 2023 & 2024. Destination weddings in Jaipur, Udaipur, Goa, and Delhi are booming, with buyouts and large-format weddings generating Rs 25–30 million (US$300,000–360,000) per event for luxury hotels. Hotel expenses account for 50% of destination wedding spend.

 

Here are the key points from the report: 

 

Tourism & Travel Growth

 

India’s travel market to soar from US$75B in FY20 to US$125B by FY27.

 

Domestic Tourist Visits (DTVs) jumped 45% YoY from 1.73B (2022) to 2.51B (2023).

 

Top domestic destinations: Uttar Pradesh (478.5M visits) & Tamil Nadu (286M).

 

Top foreign tourist states: Maharashtra (3.39M) & Gujarat (2.81M).

 

Foreign Tourist Arrivals (FTAs) hit 18.9M in 2023, surpassing pre-COVID peak of 17.9M.

 

Inbound tourism up 64% YoY in 2023, led by South Asia (29%), North America (22%), and Western Europe (20%).

 

Luxury & Wellness Boom

 

Foreign tourists skipping Europe for India’s luxury wellness stays.

 

Ayurveda resorts, palace stays, yoga retreats booked out.

 

Luxury perception rising globally, positioning India as a value-for-money high-end destination.

 

India’s Economic Tailwinds

 

GDP grew 7.4% in 2024, forecast at 7.1% in 2025 (IMF).

 

India to become a US$6.8T economy by 2030 (up from US$3.6T in 2022–23).

 

Per capita income: $2,711 (2024) → projected $4,469 by 2030.

 

Urban population: 40% (~518M people) by 2036 vs 31% in 2011.

 

Consumption economy: US$5T by 2031; incremental potential of US$3T between FY21–FY31.

 

Aviation Expansion

 

India = 3rd largest domestic aviation market, set to be 3rd largest overall by 2026 (IATA).

 

Airports: 50 (2000) → 148 (2024) → 220 (2027 target).

 

Flights up 78% in last decade; IndiGo dominates with 53% share.

 

Still only 4.2% of global aviation market → massive growth potential.

 

 Hospitality Landscape

 

3.4M hotel keys in India; organized sector just 11% (375,000 keys).

 

Luxury hotels = 17% (29,000 keys across 230 hotels).

 

Demand-supply gap in luxury → pushing occupancy (60–70%) & room rates.

 

Luxury TRevPAR = 117% higher than upscale, 298% higher than midscale.

 

 Weddings, MICE & F&B

 

10 million weddings annually; industry worth US$130B/year (world’s 2nd largest).

 

3.8Million weddings in Dec 2023 alone generated ₹4.74 lakh crore (26% YoY growth).

 

Destination weddings booming in Jaipur, Udaipur, Goa, Delhi.

 

Luxury hotel buyouts generating ₹25–30 million ($300K–360K) per event.

 

F&B revenue per room in luxury hotels = 1.9x industry average.

 

 Corporate Travel & Office Leasing

 

Office leasing in 2024 hit record 89 MSF, up 19% YoY.

 

Bengaluru (29%), Mumbai (20%), NCR (15%) led the pack.

 

Global Capability Centers (GCCs) employed 1.9M in FY24, projected 2.2M by 2030.

 

Corporate travel demand boosting business hotels & retreats. 

The office boom: 

 

India’s office sector is buzzing, with 2024 gross leasing volume (GLV) hitting a record 89 million square feet (MSF) across eight cities, up 19% from 2023, per Cushman & Wakefield. Bengaluru led with 25.93 MSF (29%), followed by Mumbai (17.84 MSF, 20%) and Delhi-NCR (13.14 MSF, 15%). Net absorption reached 50 MSF, surpassing 2019’s pre-COVID peak by 7 MSF. Global Capability Centers (GCCs) drove 27% of this growth, with 1,700 GCCs employing 1.9 million in FY24, projected to hit 2,100–2,200 by 2030 with export revenues of US$99–105 billion. This office boom fuels corporate travel, boosting demand for business hotels and business retreats, especially in tech hubs like Bengaluru and Hyderabad. 

India is still cheaper than Thailand, its closest peer in T&T, noted the report. 

 

 Here are a few developments in the space of capacity addition:

 

220 New Airports by 2025: This ambitious plan enhances connectivity to remote and tier-2 destinations, cutting travel costs and boosting tourism-related businesses. It’s a transformative move for accessibility.

 

Mahindra Holidays’ Rs 4,500 Crore Bet: MHRIL’s US$541.6 million investment will double its room capacity to 10,000 in 3–4 years, targeting leisure travelers. It’s a big win for domestic tourism, though narrower than religious or infrastructure initiatives.

 

EasemyTrip’s INR 1,000 Crore in Uttarakhand: This US$120.16 million investment for 4–5 marquee resorts strengthens Uttarakhand’s spiritual and leisure tourism appeal, creating jobs and aligning with sustainable goals.

 

Hotel Expansions: IHCL (85 hotels, 2,000–2,500 jobs in FY25), Lemon Tree (30 properties, 2,000+ rooms in 2024), Radisson (21 hotels in 2023), Oberoi, Accor, and ITC are expanding, catering to diverse segments and boosting capacity.