India hospitality outlook for 2026
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India’s hospitality sector is entering 2026 on a clear expansion trajectory, but its growth mechanics look distinct from many other large markets. In an interview with Travel And Tour World, FHRAI President Surendra Kumar Jaiswal argues that India’s post-Covid recovery is now structurally anchored in domestic demand, while inbound tourism is returning as a powerful upside driver rather than the core foundation.
Domestic travel remains the industry’s backbone
The scale of domestic mobility is the defining feature of India’s hotel demand. Official tourism statistics show 2,509 million domestic tourist visits in 2023, underscoring why local travelers provide year-round occupancy resilience.
The market is also benefiting from changing travel behavior, with more short-duration trips, weddings, religious travel and business movement sustaining demand beyond narrow peak seasons.
Tier-II and Tier-III cities are increasingly central to this story. Connectivity improvements and regional infrastructure upgrades are translating into more consistent hotel performance outside traditional metros, creating a broader, more diversified demand base.
Inbound tourism rebounds and strengthens pricing power
Inbound travel is recovering with visible momentum. India’s Ministry of Tourism reports 18.89 million International Tourist Arrivals (ITAs) and 9.52 million Foreign Tourist Arrivals (FTAs) in 2023.
India’s competitiveness narrative is also improving, with the World Economic Forum’s TTDI 2024 ranking India 39th out of 119 countries.
This rebound aligns with the broader global recovery: UN Tourism data indicates international arrivals reached 1.5 billion in 2024, and exceeded 1.1 billion in the first nine months of 2025.
For India, that means a stronger platform to convert inbound growth into higher-value demand, especially in gateway cities and destination clusters.
Infrastructure status is still the binding constraint
A key structural bottleneck highlighted by FHRAI is the absence of infrastructure status for hospitality. The issue is fundamentally financial: hotel projects are capital-intensive with long gestation cycles, yet funding often follows real-estate lending norms, raising borrowing costs and tightening access to long-tenor capital. This mismatch slows capacity creation, particularly for mid-scale hotels and regional projects in emerging and pilgrimage destinations where demand is already rising.
How operators plan to expand in 2026
The expansion playbook described in the interview is increasingly disciplined. Brands and developers are leaning toward asset-light models, alongside targeted growth in mid-scale supply, experiential formats, wellness-driven destinations and MICE-linked corridors. Technology adoption, sustainability initiatives and workforce skilling are becoming integral to competitiveness, especially as corporate and international segments raise expectations on efficiency and service standards.
What 2026 will reward
India’s hospitality market enters 2026 with a rare combination of scale, demand stability and inbound upside, but capacity constraints remain real. The winners are likely to be operators who can expand without excessive balance-sheet risk while delivering stronger product consistency in regional markets.
As International Investment experts report, India’s 2026 hospitality growth is structurally supported by domestic travel, insulating the sector from global volatility. However, sustained expansion will depend on unlocking long-term financing conditions and accelerating quality mid-scale capacity in Tier-II and Tier-III cities where demand is already outpacing supply.