India’s Hospitality Sector in 2026

India’s hospitality sector is entering 2026 with strong growth momentum, anchored primarily by domestic demand and supported by a gradual recovery in international travel. In the post-pandemic landscape, the industry’s structure has evolved, positioning domestic tourism as the backbone of hotel performance and long-term stability. According to industry bodies and government data, this demand pattern is expected to remain the defining feature of the sector.

Domestic demand as the industry’s foundation

Domestic travellers account for more than 85–90% of total tourism volumes in India, making local demand a structural pillar rather than a cyclical trend. Rising disposable incomes, improved road and air connectivity, and the growing popularity of short-duration trips have expanded travel across the country. Leisure, religious tourism, weddings, and business travel now support hotel occupancies throughout the year, particularly in Tier-II and Tier-III cities benefiting from infrastructure upgrades.

Inbound tourism recovery gains traction

India is steadily regaining ground in international tourism as global travel rebounds. In 2023, the country recorded 18.89 million international tourist arrivals, exceeding pre-pandemic levels from 2019. While foreign tourist arrivals continue to normalize, year-on-year growth remains strong, driven by improved visa facilitation, expanded connectivity, and targeted destination marketing across key source markets.

Infrastructure status remains a critical constraint

Despite positive demand trends, the absence of infrastructure status for hospitality continues to limit expansion. Hotels remain subject to real estate financing norms, resulting in higher borrowing costs and restricted access to long-term capital. This mismatch has slowed capacity creation, particularly in mid-scale hotels and emerging destinations, even where demand fundamentals are robust.

Expansion strategies shaping 2026

Hospitality players are approaching expansion in 2026 with measured optimism. Asset-light models such as management contracts and franchising are gaining prominence, enabling brands to scale efficiently while managing financial risk. Growth is increasingly focused on mid-scale properties, wellness tourism, MICE destinations, and experiential formats aligned with domestic travel patterns. Sustainability initiatives, technology adoption, and workforce development are becoming central to long-term growth plans.

India’s position in global tourism growth

India continues to strengthen its standing in the global tourism ecosystem, increasing its share of international arrivals and tourism receipts. Improved rankings in global competitiveness indices, combined with price advantages and transport infrastructure development, position the country for sustained hospitality sector growth amid global economic uncertainty.

As reported by International Investment experts, India’s hospitality sector in 2026 benefits from a rare combination of resilient domestic demand and accelerating inbound recovery. With supportive policy reforms and improved access to long-term financing, the sector has the potential to become a major engine of investment-led growth and regional development.