Sustained growth, more foreign tourists, infrastructure status: New Year's wish for hospitality sector

New Delhi: As yet another new year dawns, India's hospitality sector is gearing up for sustained growth momentum with a clear outlook of continued expansion, readying to welcome more foreign tourists than in pre-COVID days and hoping that their long-pending demand for infrastructure status will finally be granted by the government.

Ever grateful to 2025 – a "year of renewed optimism" – hospitality players said that in 2026, the sector will continue to be predominantly domestic demand-driven, a trend that is structural rather than cyclical, with India's robust macroeconomic environment continuing to provide a strong foundation for the industry's growth.

A harmonised infrastructure status for the hotel industry could unlock significant capital inflows for the sector, as it will facilitate easier financing, longer loan tenures, and lower interest rates, enabling smoother access to capital and reducing project delays caused by financial constraints.

The structural reform will also bolster India's position in the global tourism market in line with the government's vision to transform tourism into a sector generating millions of jobs by 2047, with a focus on achieving the 'Viksit Bharat' goal.

"India's robust macroeconomic environment continues to provide a strong foundation for the industry's growth," Hotel Association of India President KB Kachru told PTI.

A rising GDP trajectory, accelerated infrastructure development, including new airports, regional connectivity, and upgraded rail networks, with the government's sustained focus on tourism and destination development programmes, have strengthened the ecosystem for business and leisure travel, he noted.

Bullish on the road ahead, Federation of Hotel & Restaurant Associations of India (FHRAI) president Surendra Kumar Jaiswal observed that India's hospitality sector will continue to be predominantly domestic demand-driven, and this trend is structural rather than cyclical.

As per the Ministry of Tourism, domestic tourist visits account for over 85-90 per cent of total tourism volumes, making domestic travellers the industry's most reliable and resilient demand base, he noted.

"Over the past few years, rising disposable incomes, improved highway and regional air connectivity, and a growing preference for short-duration travel have significantly expanded the domestic travel footprint," Jaiswal shared.

Expressing similar views, Radisson Hotel Group Managing Director & COO, South Asia, Nikhil Sharma said India's hospitality sector will remain largely domestic-led in 2026, driven by travellers seeking premium and experience-rich stays.

"Occupancies are stable, but higher ADRs (average daily rates) continue to lift overall performance, with the strongest traction across NCR, Mumbai, Bengaluru, Pune, Udaipur, the wider Rajasthan circuit, Karjat, and Lonavala," he added.

Likewise, Chalet Hotels Ltd MD and CEO Sanjay Sethi said, "As we look ahead to 2026, the growth drivers for Indian hospitality are both clear and durable. Business travel has returned with depth and predictability, domestic leisure continues to broaden and mature, and MICE and weddings remain powerful demand engines".

Together, he said, "These segments are well positioned to sustain double-digit RevPAR growth for the industry".

Royal Orchid Hotels Ltd president Arjun Baljee noted that 2025's hospitality performance at about 6 per cent revenue growth fell short of the 7-9 per cent optimism, with aviation shocks erasing late-year momentum and exposing over-reliance on air travel.

"Yet, fundamentals remain solid: domestic demand resilience, supply-demand imbalance in premium segments, and digital booking booms," he added.

While domestic travel is driving the growth, hospitality players are confident that inbound tourists will also play a part in their journey in 2026.

Jaiswal of FHRAI opined that in 2026, India can reasonably expect foreign tourist arrivals to not only reach, but sustainably move beyond pre-COVID levels, supported by a strong global tourism recovery and improving domestic fundamentals.

While Foreign Tourist Arrivals (FTAs) stood at 9.52 million in 2023, reaching 87.09 per cent of 2019 levels, this still represents a sharp 47.89 per cent growth over 2022, indicating strong momentum, he stated.

The Leela Palaces, Hotels and Resorts, CEO Anuraag Bhatnagar also shared the optimism.

"Inbound travel to India is on a gradual recovery path, supported by improving air connectivity, easing visa regimes and renewed global interest in India as a cultural and experiential destination. While recovery trajectories vary by source market, the long-term outlook remains positive," he stated.

While the outlook looks rosy, the hospitality industry players noted that there are hindrances that need to be negotiated, and policy support would be most appreciated.

The absence of infrastructure status for hotels remains a structural hurdle, limiting access to affordable, long-tenure capital, particularly in high-potential Tier II and III markets, said Sharma of Radisson Hotel Group.

"Granting this status would meaningfully accelerate development and enable India to meet its tourism ambitions," he said, adding that in 2026, Radisson Hotel Group would continue a calibrated, experience-led expansion, deepening its presence in emerging leisure destinations, strengthening its resort portfolio, and tapping fast-growing secondary cities.

"Weddings, experiential travel, and regional leisure circuits will remain strong demand drivers guiding our strategy for the year ahead," Sharma stated.

Bhatnagar of The Leela Palaces also reiterated that while progress has been made in improving physical infrastructure, such as roads, airports and regional connectivity, the absence of formal infrastructure recognition for hospitality can impact access to long-term financing and increase the cost of capital for operators managing large-format and capital-intensive portfolios.

Similarly, Roseate Hotels and Resorts CEO Kush Kapoor said the lack of infrastructure status remains a long-standing challenge for the sector.

"Hospitality is a capital-intensive industry, yet without infrastructure classification, we face higher borrowing costs and limited access to long-tenure financing. For hotel companies, this impacts both the scale and the speed of expansion. Projects take longer to turn viable, and strategic investments require significantly more caution," he stated.

One aspect that has played a key role in driving growth in travel is the digital ecosystem, and the industry is likely to become ever more reliant on it.

"2025 has been a landmark year for India's travel industry, defined by smarter planning, digital maturity, and a renewed appetite for meaningful experiences. UPI has emerged as the fastest-growing payment mode, reflecting how Indian travellers are seamlessly blending technology with tradition," said Ankur Sharma, Chief Business Officer at Ebix Travel - Delphi World Money.

Looking ahead to 2026, Thomas Cook (India) Ltd, President & Country Head, Holidays, MICE, Visa, Rajeev Kale said that event-based travel is emerging as a significant trend, fuelled by the enthusiasm of Young India's millennials and GenZ for live concerts, global sporting events and cultural festivals.

Avis India Managing Director Aman Nagar said that in 2026, there is an expectation of continued growth of the sector because of further development of infrastructure and continued positive sentiment towards travel.

"There is a great opportunity for this sector to improve the service level of the business, implement smarter mobility options, and improve the overall travel experience in the travel & hospitality ecosystems," he noted.

Estimates suggest that employment in India's tourism sector is expected to grow significantly over the coming decade, rising from 48 million jobs in 2024–25 to nearly 63 million by 2034.