Domestic Demand Shields India’s Tourism, Hospitality Sectors Amid Global Uncertainty
NEW DELHI — India’s tourism and hospitality sectors are holding steady despite global disruptions, buoyed by strong domestic demand even as international travel takes a hit due to the ongoing West Asia conflict, an industry report said Thursday.
According to the PHD Chamber of Commerce and Industry, the hospitality sector has remained relatively stable, supported by a sharp “V-shaped” recovery and continued strength in domestic travel.
Domestic tourism has emerged as the primary driver of growth, fueled by trends such as revenge travel, staycations, bizcations, and experiential dining.
However, inbound tourism has weakened, with foreign tourist arrivals falling 15 percent to 20 percent, particularly in the leisure segment, as global travelers adopt a more cautious approach amid geopolitical uncertainty.
The report said India’s tourism, aviation, and hospitality sectors — which account for nearly 8 percent of GDP and support more than 40 million jobs — are once again facing external pressures tied to geopolitical tensions.
The restaurant and food services segment is seeing mixed performance. While domestic demand and food delivery — which contribute up to 30 percent of revenues for organized players — continue to support the sector, rising input costs of 10 percent to 15 percent and lower international footfall are putting pressure on margins.
Outbound travel trends are also shifting. Indian travelers are increasingly favoring short-haul destinations such as Thailand, Singapore, and Vietnam, while demand for long-haul and transit-dependent routes has softened.
The industry’s recovery in 2025 has helped cushion the current impact. Branded hotel inventory has expanded to nearly 200,000 rooms, while domestic aviation traffic has surpassed 500,000 passengers per day, signaling sustained demand.
Still, disruptions to key Middle East air corridors have increased flight times by two to four hours on major routes, reducing connectivity efficiency and pushing up airfares.
To strengthen resilience, the industry body recommended diversifying international air routes, improving bilateral connectivity, and rationalizing taxes across aviation turbine fuel, hospitality, and food services.
It also called for enhanced digital travel systems, streamlined visa processes, and expanded destination marketing in alternative global markets.
The report said that while the West Asia conflict presents short-term challenges, it also offers India an opportunity to build a more resilient, diversified, and self-reliant tourism ecosystem. (Source: IANS)
