Niti Aayog's recommendations aim to streamline homestay regulations

Niti Aayog proposes a model policy framework to make homestays and BNBs more accessible and to promote tourism growth through simplified registration processes and incentives.

A single-window digital platform to integrate approvals across departments, capping application disposal timelines to just 30 days and destination-focused incentives were among the key recommendations that Niti Aayog gave on Friday to give a boost to homestays in the country.

 

The model policy framework allows easier registrations and license renewals to unlock the potential of homestays and bed-and-breakfasts (BNBs) in the country.

 

The government think tank recommended that states adopt the model policy framework, under which a unified, digital platform may be established to integrate approvals across key departments, including tourism, panchayats, revenue, and utilities. Additionally, the framework will also include capping application disposal timelines at 30 days.

   

“This will help to streamline processes and minimise delays,” the report stated.

 

The framework also pointed towards the financial assistance by way of destination focused incentives, based on promoting tourism at the destination level rather than focusing solely on individual homestay amenities.

 

“A tiered incentive approach could be used, wherein for Tier I destinations, areas with immediate tourism potential should receive top priority for development and promotional support, while in secondary areas (Tier II destinations) with long-term potential should receive phased incentives and marketing support,” the report added.

 

With many states simplifying registration processes and introducing policy incentives to drive homestay growth, the report also recommended adoption of best practices from across India.

 

For instance, Kerala follows a structured verification process through a quorum-based assessment, wherein a team of designated officials, including the District Tourism Officer, inspects the property and issues the necessary NOC, while Delhi, under the National Capital Territory (Incredible India) Bed and Breakfast Establishments (Registration and Regulation) Act of 2007, classifies BNBs as residential units, allowing operators to benefit from lower power, water, and property tax rates.

 

The World Travel & Tourism Council’s (WTTC) 2024 Economic Impact Research reiterated India’s strong post-pandemic recovery.

 

The sector’s contribution to the economy has surged.

 

In 2024, the travel and tourism sector contributed ₹21.15 trillion to the economy, reflecting a 21 per cent increase from 2019. Over the next decade, this figure is expected to reach ₹43.25 trillion, constituting 7.6 per cent of the country’s GDP.

 

“Despite their increasing popularity, homestays and BNBs operate within an evolving regulatory framework that lacks uniformity across different states. While some states have introduced policies and incentive programs, others have yet to develop a structured regulatory approach,” the report stated.

 

According to a report by Cognitive Market Research, the size of the homestay market in India in terms of sales revenue was ₹4,722 crore in 2024, with a projected CAGR of 11 per cent between 2024-2031.

 

This is reflected in the move towards homestays by large hospitality players too. The Indian Hotels Company limited (IHCL) houses the premium homestay brand amã Stays & Trails in its portfolio, which includes over 300 villas, comprising over 1,050 keys.

 

Online travel giant MakeMyTrip has also identified homestays as an avenue of growth, with the segment now accounting for more than 10 per cent of hotel room night sales.

 

Moreover, in an earlier interaction with Business Standard, vacation rental company, Airbnb’s global Chief Financial Officer, Ellie Mertz, said India is one of its key target expansion markets and its fastest-growing markets globally, with a considerable opportunity to accelerate the rate of growth to reach a $29 billion origin-adjusted total addressable market by 2029.

 

“The sector remains nascent, requiring policy support, formal recognition, and streamlined regulation to ensure growth without excessive compliance burdens,” the report stated.