India’s Travel Boom To Grow Unabated As Middle Class Joins The Bandwagon

Eleven years after he started working, Mumbai-based Ramesh Rajguru took his first family vacation ever with his mother, two children and wife to Kerala. This was in 2022, two years after the pandemic hit, and a year after the lockdown ended. 

“When we were stuck at home, I realised that I hadn’t taken a family vacation, except visiting temples or weekend trips to Alibaug. When we were children, summer vacations were trips to granny’s home in the village, or uncle’s home in Nasik. But now I want to travel and explore,” he said.

He kept up with his promise. They covered the east as they visited West Bengal in 2023. He is now busy making plans to head to Rajasthan this year for their annual holiday. “It’s not just a post-pandemic thing. I want to make it an annual affair and it’s a great time to relax and enjoy,” he said. 

While most post-pandemic consumption trends have wound out, Indians’ love for holidaying is the only trend that’s chugging along unabated. According to the World Travel & Tourism Council, domestic tourism has picked up very well since the pandemic. 

“The sector’s contribution to India’s GDP reached just over Rs 19.13 trillion in 2023—almost 10% ahead of 2019 levels,” WTTC said. It also predicts that as of 2024, travel and tourism will contribute almost Rs 21.15 trillion to the Indian economy in 2024, an increase of 21% from 2019. 

Not just agencies, a lot of experts on the ground also see a gradual growth in the number of people stepping out for vacations. Chiranjit Das, a Kolkata-based travel advisor at startup Travel Amor is chuffed to see that the travel boom is being driven by middle class customers. 

“Even a few lower middle class people are gearing up for vacations. I am seeing a surge in enquiries from school teachers, clerks etc. Earlier people who used to take only domestic vacations are now enquiring about international travel,” Das said. 

Even those people who dislike travelling or change let go of their misgivings to join the bandwagon. “A lot of students, homemakers and even bloggers—anyone with any form of monetary inflow is now looking to travel,” said Piya Bose, founder, Mumbai-based Girls On The Go Travel Club.  

Newer sections of Indians are packing up their bags, looking to explore. “The travel boom is expected to last for at least another five years. The pandemic has shifted the mindset of domestic travellers, leading Indians to explore their own country more than they did before,” said Rajesh Namby, an executive at Raffles Udaipur.  

The travel and tourism industry, which was almost destroyed due to the Covid-19 pandemic, has gained as much from it too. “Thanks to the lockdowns, travel is not just a luxury anymore, it has become a necessity for mental health reasons. The primal need for exploration was taken away and it will keep growing for the next few years,” Bose said.

Not all urges to travel to exotic locations can be attributed to the pandemic. Social media, too, played a very big role as well, along with the government. 

“Due to the effect of social media, Indians are now keen on international destinations as well. A lot of young people are now looking at Bhutan, Indonesia, Malaysia, Kazakhstan etc.,” said Das. Namby, too, added that most people are ditching familiar international destinations like Thailand which was earlier very popular.

Thanks to the Indian government’s diplomatic efforts, Indians can choose from a wide variety of countries for effortless, visa-free travel like Fiji, Iran, Kazakhstan, Trinidad and Tobago, Montserrat, Seychelles, Macao, Bhutan, Nepal, Mauritius and Kenya. 

This is apart from the usual suspects like Thailand, Indonesia, Malaysia, Sri Lanka and Qatar. As per GlobalData projections, international departures from India are expected to grow at 5.7% compounded annual growth rate between 2024-28.

Domestically, too, Indians are taking the country roads. The government has been adding infrastructure with new airports and roads—opening up many destinations. The government’s Udaan programme helped develop new airports in places like Pakyong in Sikkim, Tezu in Arunachal Pradesh, and Kurnool in Andhra Pradesh. The route development has made it easy to head to unchartered waters.

“Thanks to information overload, we now have vlogs and other sources of information on newer destinations. Knowing more about a place reduces the risk factor of travel,” Bose said. 

A lot of post-pandemic surge in spending has ebbed in most cases—be it buying clothes, shoes or heading to restaurants etc. The boom effects went away due to many reasons, including rise in inflation after the Russia-Ukraine war that has pinched many Indians. While most people tightened belts in 2023, they chose to keep funding their travel kitty.

“There has been phenomenal growth in the hospitality industry during the pandemic and beyond. Resorts and secluded destinations were the first to generate significant revenue. The most affordable destinations experienced over a 200% increase in ADR (average daily rate) and occupancy,” Namby said.  

The demand for hotel rooms has outpaced supply by a large margin since the pandemic. As an effect, the average room rent zoomed to Rs 7,200-7,400 per night in fiscal 2023, way ahead of fiscal 2020’s Rs 6,600, as per data by rating agency ICRA. Occupancies, too, are at a healthy rate of 70-72% in fiscal 2024—as much as they were in fiscal 2007, before the sub-prime crisis.  

At this rate, ICRA not only expects occupancies to remain over 70%, but ARRs, too, are expected to breach the Rs 8,000 mark in fiscal 2025 and fiscal 2026—ahead of fiscal 2008’s upcycle. 

“Sustenance of domestic leisure travel, demand from meetings, incentives, conferences and exhibitions, including weddings, and business travel (despite a temporary lull during the general elections) are likely to drive demand in FY25. Spiritual tourism and tier-II cities are expected to contribute meaningfully in FY25,” ICRA said.

The hotel industry has also been catering to the growing set of new-gen travellers. As per ICRA, the sector has been adding as much supply in the mid-scale segment as much as it’s in the premium segment—thanks to the growing diversification in Indian travellers. 

Moreover, for Indian travel lovers, more and more new options are cropping up as well. “A large number of homeowners are opening up their properties for homestays and staycations. There has been a surge in opening up of homes in small towns,” informs Bose. 

For Indians, there is a strong will to travel and there is no shortage of ways for backpackers too. 

Katya Naidu is a senior business journalist who writes about equity markets, startups, energy, infrastructure, real estate and healthcare.

Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.