Is India’s Tourism Boom Strong Enough To Withstand Global Travel Disruptions?

India’s tourism and hospitality sectors are demonstrating resilience, supported by strong domestic demand even as geopolitical tensions in West Asia disrupt international travel.

According to a report by the PHD Chamber of Commerce and Industry, the hospitality sector remains stable, backed by a sharp recovery and sustained local demand. While global uncertainties persist, domestic tourism continues to anchor growth across the industry.

Domestic tourism has emerged as the primary growth engine, fuelled by evolving trends such as revenge travel, staycations, bizcations and experiential dining.

The strong rebound seen in 2025 has further reinforced the sector’s stability, with branded hotel inventory expanding to nearly 2,00,000 rooms and daily domestic aviation traffic crossing 5 lakh passengers.

The restaurant and food services segment, however, is witnessing mixed trends.

While domestic consumption and food delivery contribute up to 30 per cent of organised players’ revenues, rising input costs of 10–15 per cent and reduced international footfall are impacting margins.

Inbound tourism has declined by 15–20 per cent, particularly in the leisure segment, as travellers remain cautious amid geopolitical uncertainty.

At the same time, outbound travel preferences are shifting towards short-haul destinations like Thailand, Singapore and Vietnam, while long-haul travel demand has moderated.

Disruptions in key Middle East air corridors have increased flying times by 2–4 hours on major routes, reducing connectivity efficiency and driving up airfares.

The sector, which contributes nearly 8 per cent to India’s GDP and supports over 40 million jobs, continues to face external pressures.

To strengthen resilience, the report recommends diversifying international air routes, improving bilateral connectivity and rationalising taxes across aviation turbine fuel, hospitality and food services. It also highlights the importance of enhancing digital travel facilitation, streamlining visa processes and expanding destination marketing to alternative global markets.