New Delhi — India’s tourism and hospitality sectors are holding up well, thanks largely to strong domestic demand, even as international travel faces disruptions due to the ongoing West Asia conflict, according to an industry report released on Thursday.
The PHD Chamber of Commerce and Industry (PHDCCI) noted that the hospitality sector continues to remain relatively stable, supported by a sharp post-pandemic recovery and sustained demand from within the country.
However, the restaurant and food services segment is seeing a mixed picture. While steady domestic consumption and the rise of food delivery — which now contributes up to 30% of revenues for organised players — are providing some cushion, rising input costs (up 10–15%) and a dip in international customers are putting pressure on profit margins.
The report highlighted that domestic tourism remains the key growth driver, fuelled by evolving travel trends such as revenge travel, staycations, bizcations, and experiential dining.
On the other hand, inbound tourism has weakened, with foreign tourist arrivals dropping by 15–20%, especially in the leisure segment, as global travellers remain cautious amid geopolitical uncertainties.
PHDCCI pointed out that India’s tourism, aviation, and hospitality sectors — which together contribute around 8% to the country’s GDP and support over 40 million jobs — are once again facing external challenges due to geopolitical tensions.
Outbound travel trends are also shifting. Indian travellers are increasingly opting for short-haul destinations like Thailand, Singapore, and Vietnam, while demand for long-haul and transit-heavy routes has moderated.
Despite these challenges, the strong recovery momentum seen in 2025 has helped soften the impact. Branded hotel capacity has expanded to nearly 2 lakh rooms, and domestic air travel has surged past 5 lakh passengers per day, signalling continued demand strength.
The report also flagged operational challenges, noting that disruptions in key Middle Eastern air corridors have increased flight durations by 2–4 hours on several routes. These disruptions have also affected connectivity efficiency and led to higher airfares.
To improve resilience, PHDCCI has recommended diversifying international flight routes, strengthening bilateral connectivity, and rationalising taxes across aviation turbine fuel (ATF), hospitality, and food services.
Additionally, it stressed the need to improve digital travel systems, simplify visa processes, and promote Indian destinations more aggressively in alternative global markets.
The report concluded that while the West Asia conflict may create short-term challenges, it also offers India an opportunity to build a more resilient, diversified, and self-reliant tourism ecosystem.
With inputs from IANS