As global travel stabilises after years of disruption, India’s hospitality sector is charting a growth path that is increasingly driven from within. Domestic travel demand, policy gaps around financing, and a gradual rebound in inbound tourism are shaping how hotel companies plan capacity, investment and expansion over the next two years.
Sharing his perspective with TravTalk, Surendra Kumar Jaiswal, President, Federation of Hotel and Restaurant Associations of India, outlines why domestic travellers will remain the backbone of the sector, how inbound tourism is regaining momentum, and what structural reforms are needed to unlock the next phase of hotel development across India.
Domestic travel provides stability and scale
Jaiswal says India’s hospitality sector will continue to be predominantly domestic demand driven, calling the trend structural rather than cyclical. “As per the Ministry of Tourism, domestic tourist visits account for over 85–90% of total tourism volumes, making domestic travellers the industry’s most reliable and resilient demand base,” he says.
He points to rising disposable incomes, improved highway and regional air connectivity, and a growing preference for short-duration travel as key drivers. “Demand from leisure travel, religious tourism, weddings and business movement now sustains hotel occupancies across most months of the year,” he adds, noting that Tier-II and Tier-III cities are seeing steady performance as infrastructure improves.
Inbound tourism regains momentum
While domestic demand provides predictability, Jaiswal says inbound tourism is moving steadily towards recovery. “India can reasonably expect foreign tourist arrivals to not only reach but sustainably move beyond pre-Covid levels,” he says, citing the strong global tourism rebound and improving domestic fundamentals.
He notes that India’s International Tourist Arrivals have surpassed pre-pandemic levels, while Foreign Tourist Arrivals reached 87.09% of 2019 volumes in 2023, marking sharp year-on-year growth. “The recovery is being reinforced by robust NRI arrivals and diversified source markets led by South Asia, North America and Western Europe,” he says, adding that India’s improved ranking in the Travel and Tourism Development Index strengthens the outlook.
Financing remains a structural constraint
Despite demand strength, Jaiswal flags the absence of infrastructure status as a key bottleneck. “Hospitality projects are capital-intensive and operate with long gestation periods, yet they continue to be financed under real estate lending norms,” he says. This, he adds, results in higher borrowing costs and limited access to long-term capital.
He warns that the financing mismatch has slowed hotel development in emerging destinations and pilgrimage circuits, particularly in Tier-II and Tier-III markets. “Granting infrastructure status would align hospitality financing with its economic role and enable sustainable capacity creation,” he says.
How hotel expansion is shaping up for 2026
Looking ahead, Jaiswal says expansion plans for 2026 are measured rather than aggressive. “Hospitality players are planning strategic expansion shaped by strong domestic demand and visible recovery in global travel,” he says.
He notes a growing preference for asset-light models such as management contracts and franchising, along with increased focus on mid-scale hotels, experiential properties, wellness tourism and MICE-driven destinations. Sustainability, technology adoption and workforce skilling, he adds, are becoming integral to expansion strategies.
What this signals for the trade
For the travel trade, the outlook points to steady, geographically diversified growth rather than short-term spikes. Domestic demand will continue to anchor occupancies, while inbound recovery and policy support will determine the pace at which new capacity comes on stream. The next phase of hospitality growth, Jaiswal suggests, will depend as much on financing reform as on travel demand itself.
Rahul Bhadana is a digital editor at TravTalk with experience spanning multiple content niches, with a strong focus on travel trade journalism and digital publishing. A graduate of Delhi University, his work covers editorial writing, content strategy and platform-led storytelling, supporting TravTalk’s digital growth and industry engagement. A technology enthusiast, he enjoys films, poetry and exploring new ideas across media and culture.
