Indians to spend US$ 410 billion on travel, accommodation by 2030 end: Report

Indians will spend US$ 410 billion on travel and accommodation by the end of the decade, aided by a growing economy, swelling incomes and youthful population, according to a study by travel aggregator Booking.com  and McKinsey & Company. This is about three times the amount (US$ 150 billion) spent in 2019, the last pre-covid year of average consumption.

According to the study, Indians prefer non-traditional accommodations such as hostels, campsites, vacation rentals and chalets. The average daily rate and the number of room nights booked in alternative accommodations is nearly twice that of hotels and managed chains, with the highest increase in average daily rates for niche alternative accommodations such as country houses and boats. 

The study further mentioned that India’s growing middle-income population is a prime driver. The number of households earning US$ 35,000 annually is expected to increase fivefold over the next ten years, driving a boom in discretionary spending. Unsurprisingly, the number of lodging units in India may also double to 290,000 units during the same period.

The report concluded by saying that the number of aggregate trips is expected to rise from 2.3 billion to about 5 billion during the period with demand being catered by the 1,600 aircraft the country will have by then, compared to just 659 in 2019.

According to the study, India is the fastest-growing aviation market in the world, with a projected growth in air trips by 7-8% between 2023 and 2030. To match the growing demand, Indian airlines have placed record orders for over 1,000 aircraft.

India saw the strongest post-COVID rebound in domestic and foreign travel among Asian countries, with traveller spending reaching approximately 80% of pre-COVID levels in 2022. This was followed by even stronger growth in 2023. the country will also rise from the sixth-highest global spender on travel to the fourth-largest by 2030.

While big metropolises like Delhi and Mumbai continue to be critical destinations, tier-II and -III cities such as Varanasi, Coimbatore and Kochi are seeing remarkable growth in travel.

The business of online travel agents (OTAs) is also growing four times faster than online direct ordering and offline intermediaries. The spending will be projected to double from US$ 2 million–US$ 3 million on OTAs to US$ 6 billion–US$ 7 billion by 2030.

Pre-covid, the hospitality industry experienced 8% growth in revenue in 2016-19, but the pandemic led to a reduction in occupancy rates from 65% in 2019 to 35% in 2020. In 2022, there was a rebound, with occupancy rates soaring back to nearly 90% of pre-covid levels.

In 2023, for every night booked at a camp, three nights were booked at villas and 14 nights at guest houses. In 2019, group travellers mainly were the ones booking alternative accommodation. The growth in weekend bookings for alternative accommodation in top leisure and business cities is four to five times higher in 2023 than in 2022.

Source: Mint