Go Back

Tourism & Hospitality Industry in India

February, 2017


The Indian tourism and hospitality industry has emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country.

The industry is expected to generate 13.45 million jobs! across sub-segments such as Restaurants (10.49 million jobs), Hotels (2.3 million jobs) and Travel Agents/Tour Operators (0.66 million). The Ministry of Tourism plans to help the industry meet the increasing demand of skilled and trained manpower by providing hospitality education to students as well as certifying and upgrading skills of existing service providers.

India has moved up 13 positions to 52nd rank from 65th in Tourism & Travel competitive index@.

Market Size

India’s rising middle class and increasing disposable incomes has continued to support the growth of domestic and outbound tourism. Total outbound trips increased by 8.7 per cent to 19.9 million in 2015. Inbound tourist volume grew at a Compound Annual Growth Rate (CAGR) of 6.8 per cent during 2010-15.

Foreign Tourist Arrivals (FTAs) in India increased 11.8 per cent year-on-year to 670,000 tourists in August 2016, while Foreign Exchange Earnings (FEEs) from tourism increased 13.1 per cent year-on-year to Rs 12,903 crore (US$ 1.92 billion), according to data from the Ministry of Tourism.

Tourist arrivals in India on e-Tourist Visa (e-TV) grew by 196.6 per cent year-on-year to 66,097 tourists in August 2016, attributable to the introduction of e-TV for 150 countries as against the earlier coverage of 113 countries, according to data from the Ministry of Tourism.

Online hotel bookings in India are expected to double by 2016 due to the increasing penetration of the internet and smart phones#.


The tourism and hospitality sector is among the top 10 sectors in India to attract the highest Foreign Direct Investment (FDI). During the period April 2000-March 2016, the hotel and tourism sector attracted around US$ 9.23 billion of FDI, according to the data released by Department of Industrial Policy and Promotion (DIPP).

With the rise in the number of global tourists and realising India’s potential, many companies have invested in the tourism and hospitality sector. Some of the recent investments in this sector are as follows:

  • The first Incredible India Tourism Investment Summit 2016, which was organised from September 21-23, 2016, witnessed signing of 86 Memoranda of Understanding (MoUs) worth around Rs 15,000 crore (US$ 2.24 billion), for the development of tourism and hospitality projects.
  • The Ministry of Tourism has approved projects worth Rs 450 crore (US$ 67.10 million) under the Swadesh Darshan scheme, for the improvement and creation of tourism infrastructure in Madhya Pradesh, Uttarakhand, Tamil Nadu, Uttar Pradesh and Sikkim.
  • AccorHotels, Australia's largest hotel operator has entered into an agreement with the Australia India Travel & Tourism Council (AITTC) with a view to strengthen and promote tourism between Australia and India.
  • Global hospitality major Carlson Rezidor Hotel Group, which is also the largest foreign hotel brand in India by number of hotels, plans to increase its total count to 120 hotels in India by 2020.
  • Marriott International Inc, the US-based hotel chain, is now looking for expanding its operations in North India, including prominent cities in Uttar Pradesh like Kanpur, Varanasi and Agra.
  • Steigenberger Hotels, a German luxury hotel company, and MBD Group, a Delhi-based firm which runs 5-star Radisson Hotels in Noida and Ludhiana, have formed a joint venture to build five luxury hotels and manage another 15 luxury hotels in India by 2030.
  • Keys Hotels, a premium brand of Berggruen Hotels, plans to launch three new hotels in India at Vishakhapatnam, Calicut and Jaipur, and further add up to 10 Keys Hotels in the country by the end of FY 2017.
  • Stayzilla, a budget hotels and homestays aggregator, has raised over US$ 13 million in Series C round of funding from Matrix Partners and Nexus Ventures, which will be used to improve product, technology and marketing initiatives for its alternate stay business.
  • Travel Tripper, a US-based hotel technology firm, has entered the Indian market by setting up its second global delivery centre outside the US in Hyderabad, which will serve as a development and client service centre for the company's worldwide operations.
  • Indian Railway Catering and Tourism Corporation (IRCTC) has partnered with OYO Rooms, India's largest branded network of hotels, to provide standardised accommodation options to train travellers through its convenient booking platform.
  • Ctrip.com, China's largest travel portal, has bought a stake in India's largest travel portal MakeMyTrip for US$ 180 million via convertible bonds, which allows Ctrip to increase its share in MakeMyTrip up to 26.6 per cent.
  • Global investment banking major Goldman Sachs has invested Rs 441 crore (US$ 65.76 million) to acquire an equity stake in Gurgaon-based hotel development and investment start-up SAMHI Hotels which will help fund SAMHI's expansion plans.
  • Thai firm Onyx Hospitality and Kingsbridge India hotel asset management firm have set up a joint venture (JV) to open seven hotels in the country by 2018 for which the JV will raise US$ 100 million.
  • Goldman Sachs, New-York based multinational investment banking fund, has invested Rs 255 crore (US$ 38.02 million) in Vatika Hotels.

Government Initiatives

The Indian government has realised the country’s potential in the tourism industry and has taken several steps to make India a global tourism hub. Some of the major initiatives taken by the Government of India to give a boost to the tourism and hospitality sector of India are as follows:

  • The Union Cabinet has approved a MoU between India and South Africa, aimed at expanding bilateral cooperation in the tourism sector through exchange of information and data, establishing exchange programmes and increasing investments in the tourism and hospitality sector.
  • The Ministry of Tourism plans to revise its guidelines to exempt homestays from service tax or commercial levies and make their licensing process online, which is expected to encourage people to offer homestays to tourists.
  • The Union Cabinet has approved the signing of Memorandum of Understanding between the Ministry of Tourism of India and the Ministry of Trade Industry and Tourism of Colombia in order to boost cooperation in the field of tourism between the two countries.
  • The Central Government has given its approval for signing of a MoU between India and Cambodia for cooperation in the field of tourism with a view to promote bilateral tourism between the two countries.
  • The Heritage City Development and Augmentation Yojana (HRIDAY) action plans for eight missions cities including Varanasi, Mathura, Ajmer, Dwaraka, Badami, Vellankini, Warangal and Amaravati have been approved by HRIDAY National Empowered Committee for a total cost of Rs 431 crore (US$ 64.27 million).
  • Government of India plans to cover 150 countries under e-visa scheme by the end of the year besides opening an airport in the NCR region in order to ease the pressure on Delhi airport.
  • Under ‘Project Mausam’ the Government of India has proposed to establish cross cultural linkages and to revive historic maritime cultural and economic ties with 39 Indian Ocean countries.

Road Ahead

India’s travel and tourism industry has huge growth potential. The tourism industry is also looking forward to the expansion of E-visa scheme which is expected to double the tourist inflow to India. Rating agency ICRA ltd estimates the revenue growth of Indian hotel industry strengthening to 9-11 per cent in 2015-16. India is projected to be the fastest growing nation in the wellness tourism sector in the next five years, clocking over 20 per cent gains annually through 2017, according to a study conducted by SRI International.

Exchange Rate Used: INR 1 = US$ 0.0149 as on September 21, 2016

References: Media Reports, Ministry of Tourism, Press Releases, Department of Industrial Policy and Promotion (DIPP), Press Information Bureau (PIB)

Note - ! - As per the report of National Skill Development Corporation on “Human Resource and Skill Requirements in the Travel, Tourism & Hospitality Sector (2013 -17, 2017 – 22)”, @ - World Economic Forum (WEF) report, # - as per ‘Emergence of Online Travel Agents’ report by ICRA Ltd