Travel and tourism are two of the largest industries in India, with a total contribution of about 122 billion U.S. dollars to the country’s GDP. The country is not just geographically diverse but also offers a variety of cultures that come with its own experiences, making it one of the leading countries in terms of international tourism expenditure. Over eleven million foreign arrivals and about two billion domestic visitors added to the market on yearly basis.
The country was one of the most popularly visited destinations in South Asia in line with a robust hotel industry. The southern state of Tamil Nadu made up the largest share of domestic tourism, with spending amounting to over 97 billion U.S. dollars. On the other hand, international tourists spent about 11.5 billion dollars during the same period.
The Indian travel market was largely made up of hotels and airlines. Over 40 percent of travel in the country came from the hotel market. Although largely fragmented, various types of accommodation were categorized as approved and unclassified by the government. Of the nearly two thousand in all, star hotels dominated the numbers, with homestays becoming popular since the pandemic. Furthermore, online aggregator OYO Rooms successfully leased and franchised mainly budget hotels, securing substantial funding in recent years.
While rail and road were economic means of travel, airlines made up nearly 20 percent of the tourism market in India. Domestic travel accounted for more than 60 percent of the sector. Home-grown players like IndiGo and Spice Jet benefitted from the push for domestic tourism.
As a people who value hospitality and convenience, it is no surprise that the travel service market was expected to complement tourism growth, continuing to be an important component of its revenue. Most of the income within this sector came from larger companies like MakeMyTrip, Thomas Cook, and Yatra. In terms of composition, however, MSMEs dominated the market, catering to a niche audience on a regional level. While this market is segmented by global, national, and local players, what drives it are competitive prices, customized services, and, more recently, digitalization. The need for travel services came largely from saving time and effort for a tourist navigating an arguably complex infrastructure.
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