India’s travel landscape is undergoing significant changes as the country establishes itself as a powerhouse in the tourism sector. While Indian travelers were previously known for their willingness to splurge on international trips, recent research highlights a shifting pattern. According to Booking.com and McKinsey, most Indians are now choosing to explore their own country rather than venturing abroad.
The data reveals that in 2022, Indian travelers embarked on an astounding 1.7 billion leisure trips, with the majority remaining within India’s borders. Only a mere 1% of Indian travelers ventured overseas. The study projects that by 2030, Indian leisure trips will reach a staggering 5 billion, and an overwhelming 99% of those trips will be domestic.
This trend can be attributed to several factors, such as India’s projected growth in middle-income households. The rising middle class will witness substantial growth in household earnings, with an annual increase of $35,000 by 2030. Additionally, India boasts a young population, with a median age of 27.6, making it significantly younger than most major economies.
Furthermore, McKinsey forecasts a twofold increase in the consumption of goods and services, including leisure and recreation, in India by 2030. As a result, the spending on travel and tourism is expected to surge from $150 billion in 2019 to an impressive $410 billion.
Booking.com and McKinsey have identified the top 10 cities within India that are frequented by Indian travelers. These cities include New Delhi, Bengaluru, Mumbai, Chennai, Pune, Hyderabad, Gurugram, Jaipur, Kochi, and Kolkata. Several of these cities have consistently held their positions since the previous study in 2015, with Kochi being the sole addition to the list.
The report emphasizes that India’s travel ecosystem is maturing, aided by various government schemes that aim to enhance connectivity and transform the country into a thriving tourist hub. Kanika Kalra, Managing Partner at McKinsey Mumbai, states that the evolving travel landscape in India has led to a growing interest in exploring smaller urban spots, including those in Tier 2 and Tier 3 cities.
India’s tier classification system categorizes cities based on their population size. Tier 2 cities are defined as having a population between 50,000 and 100,000, while Tier 3 cities have a population ranging from 20,000 to 50,000. Previously, popular destinations were typically highly populated Tier 1 cities like New Delhi and Mumbai. However, there is a noticeable shift as more and more Indians display interest in exploring smaller cities.
Jodhpur, Dharamshala, Bodhgaya, Bilaspur, Kodagu, and Raipur are among the emerging destinations that have caught the attention of international hotel chains seeking to gain a foothold in India’s booming travel industry. Deepak Rao, Director of Revenue Management at Hyatt Hotels in India and Southwest Asia, highlights the increasing business opportunities and travelers’ growing willingness to pay for standard services as reasons for the focus on Tier 2 cities.
According to the report, by the end of 2023, approximately 52% of hotels in Tier 2 and Tier 3 cities will be branded hotels, compared to just 27% in 2015. This growth in branded hotels reflects the rising interest in smaller Indian cities, which is largely attributed to ongoing infrastructure developments in transportation.
India’s government has made substantial commitments to improve transportation infrastructure, with plans to invest 10 trillion rupees ($120.96 billion) in capital expenditures by 2023. This investment, along with the growing number of aircraft acquisitions by Indian airlines, is expected to result in a significant change in the travel landscape. The report predicts that the total number of aircraft will reach between 1,500 and 1,700 by 2030, up from the current count of over 1,000.
While the majority of Indian travelers prefer domestic destinations, there is still a small percentage that embarks on international journeys. The top 10 overseas destinations for Indian travelers are Dubai, Bangkok, Singapore, London, Paris, Ho Chi Minh City, Ubud, Hanoi, Phuket, and Kathmandu.
These destinations offer a diverse range of experiences, from vibrant urban cities to exotic beach destinations and cultural getaways. Indian travelers who venture abroad are seeking unique experiences that differ from the rich tapestry of their own country.
India’s travel landscape is experiencing a notable shift as domestic travel takes precedence over international trips. The country’s middle-income growth, young population, and increasing consumption contribute to the expanding travel and tourism industry. Simultaneously, smaller Tier 2 and Tier 3 cities are emerging as attractive destinations, fueling the growth of branded hotels and encouraging broader infrastructure development. While Indian travelers continue to explore their own country, a fraction of them is driven by curiosity and seeks new adventures in foreign lands.
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