Room(s) For Growth: Hotels Anchor India’s Tourism Thrust Amid Global Uncertainty

For Union Tourism and Culture Minister, Gajendra Singh Shekhawat, that gridlock is both validation and warning. With a growing economy, more disposable income in people’s pockets, better connectivity, and social media induced travel FOMO (fear-of-missing-out, for the uninitiated), tourism is booming, but supply, especially rooms, hasn’t kept pace. 

“Ultimately, tourism’s first factor is hotel inventory,” he said in an open discussion with a select group of women journalists at his residence yesterday, outlining a plan that puts hospitality capacity at the centre of India’s tourism strategy. 

Rising Demand, Room Bottleneck

Global markets tremble at the mention of tariffs. Industries brace for turbulence. But, tourism in India may be one of the few sectors agnostic to the latest geopolitical ripples. 

Domestic travel has been growing. For first time travellers, spiritual travel remains the gateway, from Ujjain to Kashi. “Footfall at the temples has increased by 10 times in the last 10 years,” said Shekhawat. It’s not that people have more faith, it’s that they have more income to realise it.

Meanwhile, people who have already been to the likes of Shimla and Manali, are now on the lookout for “experiential tourism”. 

The pressure shows up in prices and availability at established destinations. Resorts in Udaipur, for instance, can cost Rs 35,000-Rs 40,000 a night, making a Delhi-Udaipur weekend as costly as a quick foreign getaway. “For that cost, a traveller can pay fare and stay in Dubai for two days for a new experience,” he remarked. 

For budget-conscious travellers who plan longer itineraries, this gap stings. Even with foreign tourists, India does enjoy unusually long stays, with an average of seven days compared to the global average of about three. But keeping them in-country depends on affordable, well-located hotels. 

Financing Fix

Shekhawat's prescription is straightforward: Build more rooms and diversify experiences, so competition pushes rates down.

The snag, he admitted, lies in hotel economics. The cost of building a quality hotel is very high, and so is the operational cost. The average investment comes around to Rs 1-1.5 crore per room, and takes around three years from plan to building, yet banks typically give only 6-7 years for repayment. 

“So, by the time the hotel is built, half the period is over. Then how will the hotel owner repay?” he explains. To facilitate entrepreneurs and corporates, and not just contractors and politicians with money, his policy push is to treat much of hospitality investment as infrastructure.

The construction of three-plus star hotels in areas that are not metropolitan cities will attract an "infrastructure status”, which will allow for 20-25 year tenures and lower interest rates on loans. 

“This will make building hotels viable and in the next 10 years. A huge inventory of hotels will come up,” he predicted. 

Evidence of momentum is emerging. The Taj Group, which once took decades to scale up, is now “adding 50 new hotels every year”, with Marriott, Park and Radisson also expanding aggressively. 

Post-2019, Kashmir has seen 10,000 rooms added, yet, in peak months, Shekhawat noted, “not a single room is vacant” in Pahalgam. The idea is straightforward: Where rooms appear, tourists follow, and so do job opportunities. 

“Each hotel room generates about 10 employees,” he said, framing hospitality expansion as one of the fastest routes to employment. A hefty 13.8 per cent of employment comes from this sector.

A 50 Destination Race With The States

To decongest hotspots and spread benefits, the Centre is banking on the states. Shekhawat disclosed a new process to identify 50 ‘iconic, global-standard’ destinations for development “in the next budget”. 

“The Ministry has floated this idea with the states and will convene a workshop next month, when every state tourism minister and secretary will have to present a 30-minute concept. After a month of cross-learning, there will be a competition to finalise the list,” Shekhawat said. 

This effort sits alongside a broader push to lift India on international rankings. He noted India’s climb on the Travel & Tourism Development Index — from 54 to 39 in 2024 — with an internal goal to reach the top-35 by 2029. 

The Ministry has begun city-level tasking that pulls in municipal bodies, police, railways and others to improve the “holistic experience” — from the moment a tourist books a trip, to when they leave.

Sustainability, By Incentive And Persuasion

With a growing hotel economy comes the question of over-construction and fragile geographies, especially in the Himalayas. On balancing growth with sustainability, Shekhawat said it was a difficult task. “The impact of climate change that we are witnessing, is scary,” he told The Secretariat. 

“Eco-friendly and sustainability practices must be built into how projects are judged,” he said. 

He has floated two ideas. First, an eco-rating akin to star categories, tied to funding priority for projects that adopt greener practices. Second, behaviour changes through a “Paryatan Mitra/ Paryatan Didi” style programme: Training the front line of the tourism economy — taxi drivers, homestay owners, hotel receptionists, e-rickshaw operators — to nudge visitors (bins in cabs, planting trees, etc). Some states, he said, are already experimenting, citing Sikkim and Uttarakhand.

But the hard limits, like building caps, zoning, and crowd control, sit largely with state governments. “We don’t have any control over the states. It is a federal structure,” he said, noting that even vehicle caps at hill stations tend to be temporary responses to traffic congestion. 

Shekhawat’s message is clear: India’s visitor economy is expanding, but to make it affordable and job-rich, destinations and rooms must multiply.

On sustainability, the tools he outlined lean on ratings, incentives and local stewardship, steps that may help at the margins, but leave the toughest decisions with states and municipalities.

It adds up to a simple test in the years ahead: Can India add the rooms fast enough to keep prices in check, without overrunning the very places people travel to see?