Pre-COVID 19 tourism recorded eleven million foreign arrivals and over two billion domestic visitors. The country was one of the most popularly visited destinations in South Asia. In 2020, 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 most profitable travel segmentsThe 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 2021.
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 tourism amidst the ease of restrictions within the country between two coronavirus waves in 2020 and 2021.
In late March 2022, however, the government reinstated international scheduled travel. This, coupled with the increased affordability and access to passports among the Indian population, was expected to boost international travel.
Agents to help package travelAs 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.
Despite the impact of the COVID-19 pandemic, the travel and tourism market in India was estimated to be on the road to recovery by 2027. With increasing vaccination rates and a resilient, adaptable approach to providing travel experiences, the government seemed determined to promote consumer confidence. This included campaigns to boost tourism, along with investing in digital technology.