India’s tourism and hospitality sectors are showing resilience driven by strong domestic demand despite disruptions in international travel due to the West Asia conflict. The hospitality industry is stable, experiencing a ‘V-shaped’ recovery and robust domestic demand, as per a report by PHD Chamber of Commerce and Industry (PHDCCI). The restaurant and food services segment, however, face challenges with input cost inflation and reduced international footfall affecting margins.
Domestic tourism continues to be a key growth driver, fueled by emerging travel trends like “revenge travel,” staycations, bizcations, and experiential dining. In contrast, inbound tourism has declined by 15–20%, especially in the leisure segment, as travelers remain cautious amidst geopolitical uncertainties. The tourism, aviation, and hospitality sectors in India, contributing nearly 8% to GDP and supporting over 40 million jobs, are grappling with external pressures due to geopolitical tensions.
The report notes a shift in outbound travel preferences, with Indian travelers favoring short-haul destinations like Thailand, Singapore, and Vietnam over long-haul routes. Despite disruptions, the industry has witnessed a strong recovery, with branded hotel inventory expanding and domestic aviation traffic surpassing 5 lakh passengers daily, indicating a sustained demand rebound. However, disruptions in key Middle East air corridors have led to longer flight times and increased airfares.
To enhance resilience, the PHDCCI suggests diversifying international air routes, improving bilateral connectivity, and rationalizing taxes on aviation turbine fuel, hospitality, and food services. The report underscores the importance of digital travel facilitation, visa process streamlining, and destination marketing in alternative global markets. While the West Asia conflict poses short-term challenges, it also presents an opportunity for India to build a more resilient and self-reliant tourism ecosystem.
