India Tourism Sees Major Shift as Holiday Rentals and Homestays Head Towards Nearly $4.36 Billion by FY29

India Tourism Sees Major Shift as Holiday Rentals and Homestays Head Towards ₹415 Billion by FY29, according to new Booking.com research. Rising demand for local experiences, family-friendly accommodation and flexible business stays is transforming India’s hospitality industry, creating fresh opportunities for property owners, regional destinations and tourism businesses nationwide.

India’s Alternative Accommodation Market Moves Into the Mainstream

India’s accommodation industry is undergoing a significant transformation as holiday rentals, serviced apartments and homestays become increasingly important to domestic and international travel.

A new report released by Booking.com on 14 October 2026, in partnership with travel research and advisory firm VIDEC Consultants, forecasts that India’s alternative accommodation market will reach ₹415 billion in gross booking value (GBV) by FY29.

The findings appear in the fourth edition of How India Travels 2026 – The Homes Edit, which examines traveller preferences, property management trends and the expanding contribution of non-traditional accommodation to India’s tourism economy.

The projected growth highlights an important change in how travellers select accommodation. Rather than relying exclusively on conventional hotels, more visitors are considering properties offering additional space, local experiences and flexibility.

Holiday Rentals and Homestays Record Strong Supply Growth

India’s alternative accommodation sector has expanded substantially over three financial years.

According to the report, digitally distributed accommodation listings increased from 102,200 in FY23 to 215,000 in FY26, more than doubling during the period.

The segment recorded a 26% increase in supply during FY26. Although this pace is expected to moderate, gross booking value is forecast to increase at a compound annual growth rate of 21.2% through FY29.

Alternative accommodation currently accounts for approximately 13% of India’s lodging gross booking value.

Consumer interest is also developing. Online searches for alternative accommodation increased by 6% between FY24 and FY25, compared with 2% for hotels.

These figures indicate that alternative properties are becoming a more established part of the accommodation market, rather than serving only as occasional substitutes for traditional hotels.

Ayodhya, Indore and Greater Noida Emerge as Growth Destinations

The expansion is no longer concentrated exclusively in established leisure destinations.

Although metropolitan centres and traditional holiday locations represented 46% of alternative accommodation inventory in FY26, smaller cities and emerging tourism markets are attracting increasing attention.

Greater Noida, Ghaziabad, Indore and Ayodhya recorded more than a doubling of alternative accommodation listings between June 2025 and June 2026.

Improved transport connectivity, religious tourism and changing domestic travel patterns are contributing to this geographical expansion.

The report also refers to a 2025 NITI Aayog assessment estimating a shortage of more than 200,000 hotel rooms across India.

Alternative accommodation could help address capacity shortages, particularly in destinations experiencing seasonal demand, major events and rapid visitor growth.

For local tourism economies, this creates opportunities for property owners, neighbourhood businesses and service providers to participate more directly in visitor spending.

Travellers Prioritise Local Experiences and Family-Friendly Stays

Accommodation is increasingly becoming part of the travel experience itself.

The research found that 87% of surveyed consumers believed alternative accommodation helped create more meaningful travel memories.

Another 85% associated these properties with authentic local experiences, while 83% considered them suitable for families and groups.

Value for money was also important, with 83% expressing a positive assessment. A similar proportion viewed alternative accommodation as a more sustainable choice.

These responses reflect consumer perceptions rather than independently measured environmental benefits.

The findings nevertheless demonstrate how accommodation preferences are changing.

Travellers increasingly want properties that offer greater independence, opportunities to experience local neighbourhoods and facilities suitable for longer or shared stays.

Business Travel Becomes an Important Growth Driver

Alternative accommodation is also attracting business travellers.

According to the report, business travel represented 19% of alternative accommodation bookings in FY26, with the share projected to reach 21% by FY27.

Serviced apartments and aparthotels are particularly relevant because they can combine accommodation, working facilities and everyday living spaces.

Among business travellers surveyed, 41% identified additional living space or separate work areas as an important consideration.

Another 40% valued accommodation suitable for accompanying colleagues or family members.

Local experiences influenced 39%, while 37% highlighted better value for longer stays.

These findings suggest that alternative accommodation providers can increasingly serve both leisure and corporate demand, potentially reducing their dependence on traditional holiday seasons.

Technology Helps Property Owners Improve Revenue

Digital distribution and professional property management are becoming important factors in the sector’s development.

The Booking.com and VIDEC research examined accommodation performance across Bengaluru, Goa, Hyderabad, Jaipur, Mumbai, Pune and Siliguri.

Properties with high dynamic-pricing scores generated between 108% and 190% higher revenue per available room (RevPAR) than properties using fixed pricing.

Goa recorded the largest difference, at 190%.

However, the findings demonstrate an association rather than proving that dynamic pricing alone caused the higher revenue. Professional management and stronger listing practices may also influence performance.

For accommodation operators, pricing technology, accurate property information and reliable guest services are becoming increasingly important competitive considerations.

Government Initiatives Support Regional Tourism Development

The report identifies public investment, financial accessibility and accommodation standards as important foundations for future growth.

Government programmes including MUDRA, UDAN, PM Gati Shakti, Swadesh Darshan 2.0 and PRASHAD are intended to strengthen connectivity, tourism infrastructure and business opportunities.

The Ministry of Tourism has also highlighted the importance of accessible financing for small homestay operators seeking to improve facilities and meet accommodation standards.

State-level initiatives, including classification frameworks in Kerala and tourism diversification efforts in Goa, illustrate the growing focus on formalisation.

Meanwhile, payment technology is evolving. PayU data cited in the report indicates annual online travel payment growth of 20% to 35%.

The share of travel transactions using flexible payment options, including instalment products, has also increased from 6% to 15% over 18 months.

Together, these developments could improve accommodation accessibility for travellers while supporting more structured business operations.

What the Findings Mean for India’s Travel Industry

The research signals an expanding role for alternative accommodation within India’s wider hospitality economy.

However, continued growth will depend on consistent property standards, transparent listings, dependable guest support and improved destination infrastructure.

The study collected 2,359 consumer responses and 1,131 responses from property owners and managers during June 2026. Its findings provide insight into market expectations, although the forecasts remain projections rather than guaranteed outcomes.

For tourism businesses, the central opportunity lies in balancing commercial expansion with local character, visitor confidence and operational quality.

The report suggests that holiday rentals and homestays are becoming a lasting component of India’s accommodation landscape.

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