India’s Hospitality Sector Faces Demand-Supply Gap Despite Rising Tourism

India’s Tourism Sector on Track to Cross $59 Billion by 2028: Capitalmind PMS Report

Rapid Growth in India’s Tourism Industry

India’s tourism sector is witnessing a significant growth surge, with projections suggesting that it will generate over ₹5,12,356 crore (USD 59 billion) by 2028, according to a new report released by Capitalmind PMS. This expansion is being driven by rising disposable incomes, better connectivity, and large-scale infrastructure development across the country.

Domestic Tourism to Double by 2030

The report highlights that domestic tourism is expected to double from 2.5 billion visits in 2024 to 5.2 billion visits by 2030, recording a CAGR of 13.4%. However, despite being a key driver of India’s GDP, the sector still trails behind global peers — contributing 2% less than the US and 4% less than Thailand.

Spending Patterns and Economic Impact

According to the World Travel and Tourism Council’s (WTTC) Economic Impact Research 2024, domestic visitor spending is projected to rise from ₹14.64 trillion in 2023 to ₹33.95 trillion by 2034, reflecting a CAGR of 7.9%.
In parallel, domestic air passenger traffic is expected to more than double — from 307 million in FY24 to 693 million by FY30.

Surge in Domestic and Foreign Tourist Arrivals

In 2023, Domestic Tourist Visits (DTVs) grew by 44.98% year-on-year to reach 2.5 billion. Uttar Pradesh led with 478.53 million visits, followed by Tamil Nadu with 286.01 million. On the foreign front, Maharashtra (3.39 million) and Gujarat (2.81 million) received the highest number of Foreign Tourist Arrivals (FTAs).
Overall, FTAs touched 18.89 million in 2023, surpassing the pre-pandemic peak of 2019 by 5.47%. Key source markets included South Asia (29.02%), North America (21.82%), and Western Europe (20.40%).

Hospitality Sector Growth and Challenges

India’s hospitality sector currently has 3.4 million hotel keys, but only 11% belong to the organized sector. Luxury hotels form just 17% of branded properties, highlighting a significant supply gap in premium accommodations. Average occupancy in the luxury segment stands at 60–70%, with Total Revenue per Available Room (TRevPAR) being 117% higher than upscale and 298% higher than midscale categories.

Aviation Expansion Fueling Tourism

India’s aviation market has expanded rapidly, with 148 operational airports in 2024, and plans to reach 220 airports by 2027. Scheduled flights hit 1.3 million in 2024, a rise of 77.7% over the past decade, showcasing the role of aviation in boosting connectivity and travel demand.

Weddings, Events, and Corporate Travel as Key Drivers

The tourism economy is also benefitting from weddings, luxury F&B, and MICE events (Meetings, Incentives, Conferences, and Exhibitions). In 2023 alone, 3.8 million weddings generated ₹4.74 lakh crore. With around 10 million weddings annually, India stands as the second-largest wedding industry in the world.
Corporate travel is another major driver, with gross office leasing touching a record 89 million sq. ft. in 2024. The expansion of Global Capability Centers (GCCs) has further accelerated this growth.

Mumbai to Host ‘Waterways to Wonder’ Cruise Tourism Conference on August 18

Objective of the Cruise Tourism Conference

The Mumbai Port Trust, in partnership with the Inland Waterways Authority of India (IWAI) and the Indian Ports Association (IPA), will host a key conference titled ‘Waterways to Wonder: Unlocking Cruise Tourism’ on August 18, 2025, in Mumbai. The event aims to explore India’s cruise tourism potential, deliberate on policy reforms, and identify growth strategies.

Policy Focus and Strategic Goals

The half-day conference will bring together senior dignitaries from the Ministry of Tourism, Maharashtra Tourism Development Corporation, and other stakeholders in the cruise and maritime industries.
Key focus areas include:

  • Strategic policy frameworks for cruise tourism

  • Regulatory mechanisms and reforms

  • Cultural and coastal cruise itineraries

  • Sustainable port strategies and smart operations

NAVIC Cell 4’s Role in Cruise Tourism

A keynote address will be delivered by Vijay Kumar, Chairman of IWAI and Nodal Officer of NAVIC Cell 4. The NAVIC Cell, set up by the Ministry of Ports, Shipping, and Waterways, focuses on promoting tourism across ocean, river, and lighthouse sectors, while also advancing ferry services. Its mission is to position India as a global cruise tourism hub by developing integrated ocean and river circuits.

Panel Discussions and Industry Engagement

The conference will include a panel discussion with industry leaders and policymakers, including:

  • Vikas Narwal, IAS, MD of IPA

  • AK Bansal, Chief Engineer, IWAI

  • Opesh Sharma, Director (Cruise), MoPSW

  • Vikas Malviya, Director, Nordic Cruiseline Pvt. Ltd.

  • Representatives from Antara Cruises/Heritage River Journeys Pvt. Ltd.

The discussion will emphasize operational and commercial aspects of cruise tourism, passenger experience, and infrastructure modernization.

Looking Ahead: India Maritime Week 2025

The event will conclude with a preview of India Maritime Week (IMW) 2025, scheduled for October. The focus will be on investment opportunities, international collaborations, and maritime infrastructure development to bolster both domestic and global tourism growth.

Location: Pune, Maharashtra, India

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