India's tourism industry projected to surpass $59 billion by 2028, according to Capitalmind PMS
In a significant development for the Indian economy, the tourism and hospitality sector is projected to reach an impressive $59 billion by 2028, according to the Capitalmind PMS report. This growth is driven by a combination of factors, including rising domestic travel, improved infrastructure, economic growth, and strategic marketing efforts.
India currently boasts 148 operational airports, with plans to increase this number to 220 by 2027. Domestic tourism is expected to double from 2.5 billion visits in 2024 to 5.2 billion by 2030, growing at a Compound Annual Growth Rate (CAGR) of 13.4 per cent.
The growth in domestic tourism is a major contributor to the sector's expansion. The increasing travel within India by the middle class is a testament to the rising disposable incomes and enhanced connectivity, both air and rail, across the country.
The government's focus on developing tourism-related infrastructure under schemes like Swadesh Darshan and PRASHAD has also boosted accessibility and convenience, making travel more appealing to both domestic and foreign tourists.
India's economic growth is another key factor driving the sector's expansion. With growing prosperity, tourists are drawn to the country, leading to higher tourist inflows.
The sector is also being backed by increased government investment, promotional campaigns like "Incredible India," and calls for fresh marketing efforts to gain global attention. These initiatives aim at making tourism a significant source of export earnings and employment generation, with a focus on job creation and penetrating international markets more effectively.
In terms of foreign tourist arrivals, India saw a 5.47 per cent increase in 2023 compared to the pre-pandemic peak in 2019, with key source markets including South Asia, North America, and Western Europe.
The luxury segment of the hospitality industry is also seeing significant growth, with luxury hotels accounting for 17% of branded properties in India, indicating a demand-supply gap in premium offerings. The average occupancy in the luxury segment stands at 60-70%, with Total Revenue per Available Room (TRevPAR) 117% higher than upscale and 298% higher than midscale categories.
The tourism and hospitality sector in India contributes 2 per cent below the US and 4 per cent below Thailand in terms of contribution to GDP. However, with the sector's projected growth, this contribution is expected to increase significantly.
Weddings, MICE events, and luxury F&B have emerged as strong revenue streams in India, contributing to the sector's growth. The growth of Global Capability Centers has also contributed significantly to the increase in corporate travel.
Domestic visitor spending is projected to reach Rs 33.95 trillion by 2034, up from Rs 14.64 trillion in 2023. With scheduled flights in India reaching 1.3 million in 2024, a 77.7% increase over the past decade, it is clear that the sector is poised for rapid growth.
In conclusion, the Capitalmind PMS report envisions a major transformation driven by infrastructure upgrades, domestic demand, economic progress, and strategic marketing, leading the tourism sector to nearly $60 billion in size by 2028. With the right strategies in place, India's tourism sector is set to become a significant contributor to the country's economy.
[1] Capitalmind PMS Report [2] Ministry of Tourism, Government of India [3] Incredible India [4] Swadesh Darshan [5] PRASHAD
- According to the Capitalmind PMS Report, the tourism and hospitality sector in India is predicted to reach an impressive $59 billion by 2028, primarily due to a surge in domestic travel, improved infrastructure, economic growth, strategic marketing efforts, and government initiatives like Swadesh Darshan and PRASHAD.
- The growth in domestic tourism is supported by the rising disposable incomes and enhanced connectivity across India, as evidenced by the increasing travel within the country, which is expected to double from 2.5 billion visits in 2024 to 5.2 billion by 2030.
- The luxury segment of the hospitality industry in India demonstrates significant growth, with luxury hotels accounting for 17% of branded properties, suggesting a demand-supply gap in premium offerings. This growth is reflected in the high average occupancy and Total Revenue per Available Room (TRevPAR) in the luxury segment.
- The Ministry of Tourism, Government of India's focus on developing tourism-related infrastructure and promotional campaigns like Incredible India, aims at making tourism a significant source of export earnings and employment generation, contributing to the sector's projected growth and its eventual increase in contribution to the country's GDP.
